What is Dual Occupancy

Understanding the Value of Dual Occupancy Homes in Perth

Dual Occupancy homes are a relatively new concept to the Perth West Australian building industry. To realise the benefits, you need to understand the cost savings and returns on rental yield. A dual occupancy residence offers a second livable area under the main roof of a new home. The additional cost to create a second livable area is vastly cheaper than creating a second standalone home or granny flat.

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Dual Occupancy versus Single Occupancy

A 4 bedroom 2 bathroom Single Occupancy home built within a green fields estate (“4x2 family home”) typically generates rent of around $680 per week. A Dual Occupancy home that could be built right next door on a green title lot can achieve $560 pw on one side and $400 pw on the other, offering a total combined rent of $960 pw.

$680pw v $960pw….. Unless you have a massive tax problem because you earn too much, your accountant would typically pick the investment that resembles that of a healthy business……Profitable.

Potential Financial Benefits of a Dual Occupancy Home*

In comparison to a standard residential 4 bed 2 bath home, a Dual Occ investment has only increased by approximately $90,000. This creates the additional family area, kitchen, bathroom, garage and alfresco areas (where applicable). If these rooms were to be replicated as a freestanding form (“a standalone residence”), the costs would be up to quadruple — approx $250K to $350K+.

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With talk now on the table to discuss possible eradication or amendment of negative gearing, investment properties now need to work smarter. Our property designs and packages offer the most durable rental income we are aware of.

As a further comparison, a typical duplex development consists of two freestanding dwellings — usually 3 bedroom, 2 bathroom with a double garage. The development (Construction costs only ) would easily cost in excess of $900K+ to complete to a turnkey level, or about $450,000+ to $650,000+ each per freestanding dwelling*.

Traditional Duplex Development versus Dual Occupancy Development 

"A Dual Occupancy Home allows the benefits of a typical Duplex income without the additional costs".

The rental yield is what continues to make these house designs the most impressive and in-demand option among our clients. 5%+ rental yields are still very achievable, especially with well-designed Dual Occ layouts.

Do people really want to live in a one or two bedroom Studio??

The number of people per household in Perth is steadily declining. Twenty years ago, it averaged close to 3 people per dwelling — by 2030, it’s projected to drop to around 2.2.

“In 2001, there were 1.1 million people aged 75 and over in Australia, representing 6% of the population. By 2026, this is projected to reach 2.5 million — more than double — making up 10% of the population.”

Source: Australian Bureau of Statistics

This is where the real value lies in owning a dual income property. There’s a growing segment of the population that no longer wants — or needs — a large, high-maintenance family home. This is exactly where the term "Granny Flat" came from… and demand for this style of living is only increasing.

The Benefits of Dual Occupancy

- A dual occupancy property does not need a second title which will add to ongoing rates and taxes. They can be built in large lot estates, and not devalue the neighbouring areas because the overall structure is equal in size to existing properties and looks identical from the streetscape and elevation. You can have whatever frontage you wish or dress up the elevation to satisfy the Developer covenants. We have also had requests for the dividing walls to not be structurally bearing so the home can be opened up in the future to a 5 bed 3 bathroom with games area!

Over the next 10 years, we believe Double Income Properties will become the standard for high-quality yield investing. Apartment growth is also taking off at an unprecedented level in Western Australia. Multi-unit Apartments (or “Class 2” by the construction industry) are cheap and great for cash flow but offer the investor no land content for stronger valuations. They can suffer by being replicated continuously, plus have additional strata fees & management costs. For this reason, they will never be the best investment for the smart investor nor recommended by a long-term-thinking financial planner!

Dual income properties offer sole land ownership, and can sit amongst family households, which coincidentally have the highest median house price compared to units, apartments and villas. Dual Income households can hence, ride the tail of the median house price.