Everything you need to know about granny flat agreements
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Moving into a granny flat is a great way to live close to loved ones while providing them with a first home or investment property, but before committing to such a drastic change in living arrangements it is crucial that a lawyer helps to draw up a granny flat agreement.

A granny flat agreement can help elderly parents to receive a pension and take advantage of Centrelink concessions such as rent assistance. According to the Australian Bureau of Statistics, 8.2% of people aged over 65 years live with their family with the living arrangement more likely as you get older, with 12.2% of people over the age of 85 living at home.

Many families make an informal agreement between themselves about how an older person would be cared for while living in a granny flat on the family property.

Not only does this appear the easier option - without paperwork - it appears frugal, helping children to the primary dwelling while avoiding any capital gains tax which might be incurred through a property transaction.

However, the Australian Law Review Commission (ALRC) found in its 2017 report Elder Abuse - A National Legal Response that under an informal granny flat arrangement, if the relationship between parents and children breaks down or the promise of care is not delivered, the older person is put at a disadvantage.

In some cases, an older person may even be left homeless. The ALRC urged that the use of legally enforceable family agreements would be a useful measure in preventing elder abuse because such agreements protect the rights of the older person.

The ALRC's next report and suggested reforms were due mid-2019, and may lead to more stringent laws around granny flat agreements. Until then, it is highly recommend a legally binding granny flat agreement is written by a lawyer to protect your rights.

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