For decades, adding a second small home to your section meant months of consenting and tens of thousands in fees before a single pile went in. That changed in January 2026. The new granny flat exemption is genuinely useful, and it is also narrower than the headlines suggested. If you are weighing up a second dwelling, whether for a parent, an adult child, a worker or a tenant, the ten minutes it takes to read this could save you an expensive wrong turn.
1. What changed on 15 January 2026
Two separate rule changes took effect on the same day, and together they remove most of the red tape for small second dwellings:
- Building consent: Schedule 1A of the Building Act 2004 now exempts a new, single-storey, standalone dwelling up to 70 square metres from needing building consent, provided the conditions are met.[1]
- Resource consent: The National Environmental Standards for Detached Minor Residential Units (NES-DMRU) permit one minor residential unit up to 70 square metres on sites in residential, rural, mixed-use and Māori purpose zones without resource consent, subject to permitted activity standards.[2]
BRANZ estimates the consent cost saving at over $4,000 for an average exempt dwelling, before you count the weeks of waiting.[3] Council development contributions may still apply and will be flagged through the PIM process.
2. The conditions, in plain English
To use the exemption, the dwelling must tick every one of these boxes:[1][3]
- New build only. It must be a new, standalone, single-storey dwelling. Existing buildings, conversions, sleepouts, sheds and tiny houses on wheels are not covered.
- 70 square metres or less. Measured between the finished internal faces of the external walls. An attached or internal garage can be included in that figure.
- Simple design that meets the Building Code. The exemption removes the consent, not the Code. The dwelling must still fully comply.
- Lightweight construction. Timber or steel framing. Roof cladding no more than 20 kg/m², wall cladding no more than 220 kg/m².
- Licensed professionals. Design and building work must be carried out or supervised by Licensed Building Practitioners, and licensed plumbers, drainlayers, gasfitters and electrical workers where relevant. This is restricted building work.
- Setbacks and height. At least 2 metres from boundaries and other residential buildings. Floor no more than 1 metre above ground. Maximum 4 metres above floor level. No mezzanine.
- PIM first, documents after. You must get a Project Information Memorandum from your council before work starts, and provide final plans, Records of Work and compliance certificates within 20 working days of finishing.
- No solid fuel heating. Heating must be electric or gas. A wood burner puts you back into the consent pathway.
- No significant natural hazards. If the site is prone to flooding or slips and the risk cannot be managed, the exemption cannot be used.
One more change coming: The Government announced in 2026 that consent-exempt granny flats will also be allowed to be built off-site before a PIM is issued, with changes expected via the Building Amendment Bill. Off-site construction is becoming a first-class pathway.[4]
3. The catches nobody mentions
The exemption is real and useful. It is also easy to misread. These are the things that catch people out:
70 square metres is small for a real household
A comfortable two-bedroom home with a proper kitchen, bathroom, laundry and living space typically runs 80 to 110 square metres. At 70 square metres you are designing tight. For a single person or a couple it works well. For a family, or for anyone who wants a spare room and storage, it gets compromised fast.
The Building Code still applies in full
No consent does not mean no compliance. Insulation, weathertightness, fire safety, structure and plumbing must all meet the Code, and Licensed Building Practitioners must sign Records of Work. If the build does not comply, you face enforcement action, insurance problems and trouble at resale.[3]
It does not cover relocated or existing homes
The exemption is for new construction with lightweight framing. Lifting a solid existing home onto your section still goes through the standard consent process. That is not a reason to avoid a relocated home. It is simply a different pathway, and for many sections it is the better one, for reasons we will get to.
Development contributions can still apply
Some councils charge development contributions for a new self-contained dwelling. These can run to tens of thousands of dollars depending on the district. The PIM will tell you. Ask before you budget.
Services are the hidden cost
Water, wastewater, stormwater and power connections are outside the headline build price for almost every granny flat product on the market. On some sections, trenching and connections cost more than the foundations.
4. Where a relocated home fits, and when it beats a new granny flat
Here is the part most granny flat articles skip, because most of them are written by companies selling 70 square metre new builds.
If the second dwelling you actually want is bigger than 70 square metres, has real bedrooms, real storage and a bit of character, the consent-exempt pathway cannot deliver it. The standard consent pathway can, and a relocated home is usually the fastest and best value way through it.
What a relocated home gives you that a new granny flat cannot
- Size. Two, three or four real bedrooms. 80 to 150 square metres. A garage. A veranda. Room for the grandchildren to stay.
- Solid construction. Homes from the 1960s to 1990s were built with heavier framing and real timber joinery. Once insulated and double-glazed, they are warm, quiet and solid.
- Character. Villas, bungalows and classic weatherboard homes have street appeal that a flat-pack unit does not. That matters at resale.
- Value per square metre. New construction in NZ runs roughly $2,500 to $4,500 plus per square metre.[5] A relocated home, renovated and delivered as a complete package, typically comes in well under new-build rates for the equivalent floor area.
- Speed through the consent pathway. Because the house already exists, a Recycled Homes package runs 3 to 4 months from acceptance to handover, consent included. Under Section 112 of the Building Act 2004, the existing house does not need to be brought up to every current Code requirement, which keeps both time and cost down.
When the new granny flat exemption is the right call
Fair is fair. If you want a compact, brand-new unit of 70 square metres or less, on an accessible flat site, and the standard designs suit you, the exemption pathway is quick and the consent saving is real. For a studio or one-bedroom flat for a parent, it is a genuinely good option. We would rather tell you that than sell you something bigger than you need.
The honest decision comes down to one question: is 70 square metres actually enough for the way the dwelling will be used? If yes, look at exempt new builds. If no, look at a relocated home through the consent pathway. We can help you with the second one, and we will tell you plainly if the first one suits you better.
5. The costs, side by side
| Option | Typical size | Indicative all-in cost | Consent pathway |
|---|---|---|---|
| New exempt granny flat | Up to 70m² | $175,000 to $315,000+ build, plus site works, services and any development contributions | No building or resource consent if all conditions met; PIM required |
| Relocated home package (Recycled Homes) | 80 to 150m² | From $500,000 fixed price, complete: relocation, foundations, services, full renovation, CCC, 10-year guarantee | Standard building consent, managed by us, included in the package |
| New minor dwelling, consented | 70 to 110m² | $250,000 to $500,000+ build plus consents, site works and services | Building consent; resource consent depending on district plan |
Cost per square metre tells the real story. A 70 square metre new unit at $250,000 all-in is around $3,570 per square metre. A 110 square metre relocated home at $500,000 all-in is around $4,545 per square metre but includes land works, full renovation, consent and guarantee, and delivers a dwelling in a completely different class: more bedrooms, more storage, more character, more end value. On larger homes the per-metre figure drops further.
6. What Kiwis actually use second dwellings for
A parent moves onto the section
The most common reason by far. A parent sells their big house, a comfortable second home goes onto the family section, everyone keeps their independence and the family keeps the equity. Works in both directions: some parents put a dwelling on their own land for an adult child trying to get established.
A rental on land you already own
A self-contained second dwelling on an owned section can generate rental income against very little land cost. The maths depends on your district and the dwelling quality. Run it with your accountant before committing.
Worker or family housing on a farm
The NES-DMRU applies in rural zones too, and farms have space, access and services that make second dwellings straightforward. For staff housing specifically, the numbers and the process are covered in our farm staff housing guide.
Thinking about a second dwelling?
Tell us about your section and what you want the dwelling to do. We will tell you honestly whether a relocated home suits, or whether a small exempt new build is the better fit for your case. No pressure, no commission-driven sales.
Get in touch7. Questions people ask us
Yes, from 15 January 2026, if it is a new single-storey standalone dwelling up to 70 square metres, has a simple design, meets the Building Code, is built or supervised by licensed building professionals, sits at least 2 metres from boundaries and other buildings, and all other conditions are met. A PIM from your council is still required before work starts.
In most cases no. The NES-DMRU permits one minor residential unit up to 70 square metres in residential, rural, mixed-use and Māori purpose zones without resource consent, provided permitted activity standards like setbacks and site coverage are met. Check your specific zone with your council.
No. The exemption covers new builds with lightweight framing only. A relocated home goes through the standard building consent process. That pathway allows homes larger than 70 square metres, and Recycled Homes manages the whole thing as part of a fixed-price package.
Up to 70 square metres, single storey, floor no more than 1 metre above ground, maximum height 4 metres above floor level, measured between the internal faces of the external walls. Larger means standard consent.
New construction runs roughly $2,500 to $4,500 plus per square metre, so a 70 square metre new unit commonly lands between $175,000 and $315,000 before site works, services and any development contributions. A complete relocated home package through Recycled Homes starts from $500,000 fixed price for a larger dwelling, everything included.
Mostly terminology. The Building Act says small stand-alone dwelling, MBIE says granny flat, the Ministry for the Environment says detached minor residential unit, and district plans often say minor or secondary dwelling. All describe a self-contained second home on the same title.
Generally yes, subject to your district plan and standard tenancy law. Healthy Homes standards apply to rentals. A well-insulated relocated home with a heat pump comfortably meets them after renovation. Confirm any district-specific rules with your council.
We deliver complete fixed-price packages: we find a quality existing home, have it independently inspected, relocate it to your land, build new foundations, connect services, renovate it fully, obtain the Code Compliance Certificate and hand it over with a Halo 10-Year Residential Guarantee. Typical timeframe is 3 to 4 months. See our services page for the options.