Buying a Property With a Granny Flat or Dependent Person's Unit (DPU)

Granny flats and Dependent Person’s Units (DPUs) on existing residential properties solve a real housing problem — accommodating ageing parents, adult children, or rental income. But the planning framework is restrictive. Many older granny flats were built without permits or with conditions that have been long forgotten. Some carry obligations to demolish them when the dependent person no longer occupies. Buying a property with one — or planning to build one — needs careful contract-level due diligence.

This guide covers what a DPU actually is under Victorian planning, how it differs from an additional dwelling, and the conditions that bind future buyers.

The legal definition — DPU vs second dwelling

Under the Victoria Planning Provisions, a Dependent Person’s Unit (DPU) is a self-contained unit on a residential lot, constructed for the use of a dependent person related to the primary dwelling occupant. Key conditions:

• The DPU must be moveable or removable
• It cannot be sold separately from the main dwelling
• It must be occupied by a dependent (typically a relative needing care or support)
• When the dependent ceases to occupy, the DPU must be removed (typical condition of permit)

A second dwelling is fundamentally different — it’s a permanent structure intended for any occupant, often subdivided from the main dwelling. Second dwellings face stricter planning triggers, especially in Neighbourhood Residential Zones.

Planning permits — what you need

Common conditions on DPU permits

DPU planning permits typically include conditions that bind future owners:

• The DPU may only be occupied by a dependent of the primary occupant
• The DPU must be removed within 60 days of the dependent ceasing occupation
• The dwelling must remain on the same title (no subdivision)
• The DPU cannot be rented or sold independently
• Council must be notified of changes in occupancy
• Section 173 Agreement registered to enforce these conditions

The unpermitted granny flat — the trap

Many Victorian properties have granny flats built without planning or building permits. Common scenarios:

• Backyard shed converted to a self-contained unit
• Garage with kitchen and bathroom added, used as a separate dwelling
• Studio with bathroom and kitchenette used for rental
• Caravan or transportable on a permanent connection used as a long-term dwelling

Buying a property with an unpermitted granny flat creates risks covered in our unpermitted works guide:

• Council can issue building orders requiring removal or rectification
• Insurance may be voided
• Resale becomes harder — disclosure obligations apply
• Rental income can disappear if council enforces

Section 32 and contract checks

1. Council building permit search. Confirm a permit was issued for the granny flat / DPU.
2. Council planning permit search. Confirm planning permit covers the structure.
3. Section 173 Agreement on title. Look for a s173 imposing DPU conditions.
4. Visual confirmation. Compare the structure to the permit drawings — additions or modifications may not be covered by the permit.
5. Occupancy. Confirm whether the DPU is currently occupied by a dependent, by a tenant, or vacant.
6. Building inspection. Verify the structure complies with building code as a habitable dwelling.

Buyer scenarios — what each means for you

Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.