Feature article

How will a studio sleepout add value in 2020?

With more Kiwis working from home in 2020, a separate studio is becoming an item of desire.

Real estate agents who are selling homes with studios or sleepouts say they’re attracting a larger pool of buyers.

Professionals’ Pt Chevalier agent Lawrence von Sturmer, whose market in Auckland has a number of smaller houses and studios, believes a home with a sleepout or a studio is more sellable and attracts a wider range of buyers.

“It adds to the saleability by making the smaller house appeal to a wider range of buyers, creating more demand and therefore a better result,” he says. He thinks this extra space could add between $50,000 to $100,000, depending on the property.

Barfoot & Thompson agent, Ryan Harding, says he attended a recent lively auction, and the two remaining bidders who went against each other for the latter part of the sale wanted the home for its extra studio accommodation.

Because they went on bidding for another $70,000, he says you could argue this second property was worth another $70,000 to them.

The Auckland agent believes that if you were going to build the perfect, most saleable home in New Zealand at the moment, it would include a studio because of the “work from home transition” that people are experiencing at the moment.

A house with a studio can “swell” when it needs to and revert back to a smaller single dwelling as the numbers contract, he says.

A plan to do more with your land

The Barfoot’s agent is seeing inner Auckland homeowners wanting to do more with their land by adding another sleepout or studio. He spoke to a client last weekend who has built a new cottage on her inner Auckland section. Her aim is to “make the land work for her” because it’s so expensive now, he says.

Mr Harding, who’s currently selling a villa in Grey Lynn’s Richmond Road, says a number of buyers are interested in the property due to its separate studio in the backyard.

321 Richmond Road, Westmere, Auckland

"We’ve got people who have come specifically because of the studio….the studio is giving them a way to reconfigure the house in a flexible manner,” he says.

One interested buyer, looking to downsize, is thinking of the sleepout space as her photography studio.

There are a number of scenarios that work for buyers at this property, says Mr Harding. People can work from home in the studio, or those who want to downsize can live in the villa and put the child in the studio until they’re ready to leave home and then they can use it as an Airbnb.

Location of your studio matters

It might be that you want to extend the garage, adding a studio onto the back or over the top.

Devonport Bayleys agent, Linda Simmons, is marketing a home which has a carport and studio above that was built a couple of years ago at the front of the house. The vendor’s university-age son is currently living in it.

18 Wairoa Road, Devonport, Auckland

The positioning of this modern studio at the front of the house means that the family can have the large north facing back garden to themselves, so if they were renting it out, they wouldn't be disturbed by a tenant coming and going.

When marketing a home with a great retreat like this well-designed space, even if people don’t have a specific need for it, it’s always a nice to have, says Ms Simmons.

The Bayleys agent targets the expat community for her Devonport listings and a studio space is very attractive to them, she says.

“We all have friends who want to come and stay, and having them stay in the house isn’t always convenient. The studio is a good alternative for friends and family. It also works well for au pairs and teenagers, she says.

Do it properly if adding a studio or sleep out

It may be easier to look for a home where the studio has already been added. But if you like the idea of adding one to your current home, you’ll need a bullet list of people to speak to first, says Mr von Sturmer. He suggests the council, an accountant, a planner, a lawyer, Tenancy Services, among others.

The accountant is key. In Auckland or Wellington, you might be able to rent a studio in a nice suburb for $300 to $400 a week. But before you start counting the money, you’ll have to declare this income, and if you’re renting it out on Airbnb for more than 28 days a year then your rates will change and go up.

Also, don’t take advice from friends in other parts of the country. Every council has different rules on different zones, so the first step is to talk to the local council about what’s possible on your site.

Agents warn that all the appropriate regulation and compliance must be strictly adhered to or these studios can actually detract from a home’s value if not code compliant.

Fixing mistakes and getting a retrospective resource consent can be expensive and stressful, adds Auckland planner, Michael Campbell from Campbell Brown.

Key advice from Campbell Brown planner, Michael Campbell:

Landowners thinking about adding a new building need to ensure compliance with two areas of regulation. One is the Building Act, which looks at the safe structure of the building and if you’re connecting services like water and electricity to the studio. You’ve also got to adhere to the Resource Management Act (RMA) which deals with the use or amenity of the building, its effects on the environment, rules for sunlight (height to boundary) and outlook, so how it affects your neighbours.

RMA planning rules differ in each district and these rules might cover issues including:

  • Yards.
  • Building coverage/impervious surfaces, landscaping.
  • Height in relation to boundaries (sunlight controls).
  • Outlook or private open space.
  • Earthworks.
  • Located in character areas like Ponsonby and Mt Eden.
  • Tree works or vegetation removal.

Most councils have a planning help desk and yours can tell you the zoning and the rules that apply to your site. Generally, if you comply with the rules, you’re a permitted activity and you can construct the building under the RMA.

Note, if you’re adding a kitchen to a sleepout, you need to be careful because that could be classed as a second dwelling. There are usually rules that determine how many dwellings you can have on a site, so it’s best to ask. Some districts provide for minor dwellings or a granny flat of around 65 sq m or less. Many councils charge a development contribution for a new dwelling or minor dwelling which can run into the thousands of dollars.

A sleepout that’s just a bedroom, perhaps in a garage, and the occupant uses the rest of the house, is very different from a minor dwelling.

A lot of council rules are seeking to embrace a more multi-generational way of living but each area is different.

Do it right the first time and seek advice.