You own a quarter-acre block in Perth. It’s a good size, but most of it feels wasted. You’ve considered subdividing, but the costs and approvals seem overwhelming. Or maybe you’ve heard about “house behind house” development and wondered if it’s right for your property.
This guide walks you through exactly what house behind house developments are, how they differ from side-by-side duplex builds, the financial upside, and whether it makes sense for your Perth property.
What Is It Called When a House Is Behind Another House?
The technical term is “ancillary dwelling” or “secondary dwelling,” but in real estate and development, it’s commonly called a “house behind house” development. It’s also known as a “back-to-back development” or “house in house development.”
Essentially, you’re building a second dwelling on the rear portion of your existing block, behind the primary residence. Both homes sit on the same lot, but they’re separate, self-contained properties. The front house occupies the street-facing portion; the rear house sits deeper into the block, often accessed via a rear driveway or shared right-of-way.
What makes house-behind-house different from other small-dwelling options: unlike a granny flat (which is permanently ancillary and can’t be sold separately), a house-behind-house development creates two legally separate properties that can eventually be subdivided and sold independently.
What Is Side-by-Side Development?
Side-by-side development also called “side by side duplex” or “dual occupancy”places two homes next to each other on the same block, sharing a common boundary wall or fence.
Side by side differs from house-behind-house in layout:
- Side-by-side: homes sit parallel to each other, both facing the street (or one faces street, one faces rear)
- House-behind-house: one home sits in front (street-facing), one sits behind on the deeper part of the block
In Perth’s market, side-by-side developments suit corner blocks or wider rectangular blocks. House behind house developments suit deeper blocks where you have 20+ meters of depth.
Why House-Behind-House Development Makes Financial Sense
A house-behind-house development lets you unlock value from land you’re not using. Here’s the economics:
Your block: $600k, 700 sqm, Nedlands
Option 1: Keep the primary residence, do nothing
- Property value: $600k
- Land utility: 50% (rear half wasted)
- Rental income: $0
Option 2: Sell and let someone else subdivide
- You sell for $600k
- New owner develops, sells two homes for $800k+ total
- You miss the $200k upside
Option 3: House-behind-house development
- Build rear dwelling: $160k-$200k
- Rent rear home: $400-$500/week = $20k-$26k annually
- After expenses, net yield: 8-12% annually
- Option to eventually subdivide and sell both homes separately for $800k+ total
20-year financial scenario:
| Scenario | Upfront cost | Annual rental income | 20-year rental total | Final property value | Total gain |
| Keep original home | $0 | $0 | $0 | $750k (appreciation) | $150k |
| House-behind-house | $180k | $22k | $440k | $850k (both homes) | $530k |
The difference: building a house behind house nets you $380k+ more over 20 years compared to doing nothing.
How House-Behind-House Differs From Granny Flats
Both involve building a second dwelling on your land, but they’re legally and financially different:
| Aspect | House-Behind-House | Granny Flat |
| Legal status | Two separate properties (or path to subdivision) | Permanent ancillary dwelling |
| Separation | Completely independent (separate titles possible) | Tied to primary residence |
| Rental potential | Full rental home can rent at market rates | Limited rental (usually family only) |
| Resale | Can eventually subdivide and sell separately | Must be sold with main house |
| Council approval | Variable by council; stricter in metro areas | Straightforward in WA; standardized process |
| Cost | $160k-$200k to build | $140k-$180k to build |
| Long-term value | Two properties worth $400k + $400k = $800k | One property worth $700k-$750k |
The key difference: A granny flat is permanently linked to your main home. A house-behind-house is a pathway to owning two legally separate properties.
The Costs and Timeline for House-Behind-House Development
Building a house-behind-house in Perth typically costs:
Construction costs: $160k-$200k for a 1-2 bedroom, 70-90 sqm rear dwelling
- Standard finishes, brick/render exterior
- Full kitchen, bathroom, living area
- Built to modern building codes
Land preparation: $10k-$20k
- Rear driveway or right of way
- Utility connections (water, sewerage, electricity)
- Site leveling if needed
Council approvals and fees: $5k-$15k
- Development application
- Engineering reports
- Council processing fees
- Variance requests (if needed)
Professional fees: $8k-$15k
- Architects/designers
- Surveying
- Building inspections
Total project cost: $183k-$250k (depending on block complexity and council requirements)
Timeline:
- Council approval: 6-12 weeks (varies by council)
- Construction: 18-20 weeks
- Total: 6-7 months if approvals are straightforward
Which Perth Councils Approve House-Behind-House Development?
Approval varies significantly by local council. Some actively encourage dual occupancy; others are restrictive.
Councils generally supportive (approvals more likely):
- City of Canning
- City of Melville
- City of Cockburn
- Town of Victoria Park
- Shire of Kalamunda
Councils moderately restrictive (approvals possible but scrutinized):
- City of Nedlands (heritage/character focus)
- City of Perth (inner-city density limits)
- Town of Mosman Park
- Shire of Peppermint Grove
Councils typically restrictive (difficult approvals):
- Shire of Claremont (high-value single-dwelling focus)
- Shire of Cottesloe (luxury residential area)
The key factor: councils in lower-value suburbs (Canning, Cockburn) actively encourage infill development to increase housing supply. Councils in high-value areas (Nedlands, Claremont) prefer large single dwellings and resist density.
Before committing to a house-behind-house development, verify your specific council’s policies. Many councils have published development guidelines that show whether dual occupancy is encouraged, allowed with conditions, or restricted.
The Real Challenges of House-Behind-House Development
- Council Approvals Can Be Unpredictable
Some councils require “compatibility with character” assessments, heritage reviews, or extensive neighbor consultations. Others fast-track approvals. The same design can sail through one council and face 3-month delays in another.
- Rear Access and Shared Rights-of-Way
If your rear home needs access via a shared driveway, that creates a permanent right-of-way easement on your title. Future buyers of either property need to understand this legal arrangement. It complicates eventual subdivision.
- Future Subdivision Can Be Complicated
Once you own two dwellings on one lot, separating them into two titles involves:
- A new surveyor-prepared plan
- Council certification that both properties meet current zoning requirements
- Strata or surveyor subdivision fees ($5k-$10k)
If building codes have changed since construction, the rear dwelling might not meet current minimum standards and could become “non-conforming.” This doesn’t prevent sale, but it complicates the subdivision process.
- Financing the Rear Dwelling
Banks view house-behind-house differently than traditional developments. Some lenders:
- Won’t provide construction finance until council approval is confirmed
- Limit loan-to-value ratios (may require 20-30% down instead of 10%)
- Charge slightly higher interest rates (0.25-0.5% premium)
- Ongoing Maintenance Complexity
Two homes on one block means:
- Two sets of maintenance issues
- Coordinating repairs (roof, exterior, driveway)
- Two separate utility connections and rates
- Potential conflict if rear-home tenant doesn’t maintain their share of shared structures
Making House-Behind-House Financially Work
To ensure profitability, focus on three things:
- Choose the Right Block
- Minimum 700 sqm (ideally 800+ sqm)
- Minimum 20 meters depth
- Good frontage (15+ meters preferred)
- Soil and slope suitable for two buildings
- Council that actively supports dual occupancy
Wrong block: 600 sqm, shallow depth, restrictive council = $50k+ delays and approvals won’t be granted
Right block: 850 sqm, 25m depth, supportive council = fast approvals, lower costs, higher final value
- Build Modest, Not Premium
Build the rear home at market standard, not premium luxury. Rear dwellings typically command lower rental and resale prices than front homes because they lack street frontage.
Standard 1-2 bed, 80 sqm rear home: rents for $400-$480/week Premium 2-bed, 100 sqm rear home: rents for $450-$520/week
The extra $20k in finishes doesn’t generate proportional rental income. Build lean, rent at market, maximize yield.
- Plan for the Long Term
Profitability depends on holding for 5-10+ years:
- Years 1-3: Pay off development costs via rental income
- Years 3-7: Build equity, generate cash flow
- Years 7+: Consider subdivision and separate sale for maximum profit
Don’t develop house-behind-house if you need the rental income to vanish in 2 years. This strategy works when you’re willing to hold, rent, and eventually sell both homes separately.
Frequently Asked Questions
What is it called when a house is behind another house?
A house-behind-house development, also called back-to-back development or secondary dwelling development. Legally, it’s an ancillary or dual occupancy arrangement.
What is side-by-side development?
Two homes built parallel to each other on the same block, sharing a boundary wall or fence. Side-by-side suits wider rectangular or corner blocks; house-behind-house suits deeper blocks.
Can I build a house behind my house in Perth?
Yes, if your council approves and your block is large enough (700+ sqm, 20m+ depth). Councils like Canning, Melville, and Cockburn actively encourage it. Councils like Claremont and Cottesloe typically reject it.
What’s the difference between a granny flat and house-behind-house?
A granny flat is permanently ancillary and can’t be sold separately. House-behind-house creates two independent dwellings that can eventually be subdivided and sold as separate properties.
How much does house-behind-house development cost in Perth?
Total project cost (construction, land prep, approvals, professional fees): $183k-$250k. Varies by block complexity and council.
What’s the timeline for house-behind-house development?
Council approval: 6-12 weeks. Construction: 18-20 weeks. Total: 6-7 months.
Can I rent out the rear dwelling?
Yes. Market rent for a 1-2 bed rear home in Perth: $400-$500/week. This generates 8-12% annual yield depending on costs.
Is House-Behind-House Development Right for You?
Ask yourself these questions:
Do you own 700+ sqm with 20m+ depth in a supportive council? If no, this development type won’t work.
Are you comfortable with a 5-7 month development timeline and council uncertainty? If no, this isn’t for you.
Can you hold both properties for 5-10 years, or do you need immediate returns? House-behind-house works long-term. It’s not a quick flip.
Do you have $30k-$50k to fund the gap between construction costs and rental income? You need working capital while the rear home appreciates and generates rental income.
Is your goal to maximize land value, or to keep one home for yourself? House-behind-house maximizes land value. If you want to live in the front home permanently, the rental income is a bonus, but that’s not the primary driver.
If you answered yes to most of these, house-behind-house development could unlock significant value from your Perth property.
The Bigger Picture: Why This Matters for Perth’s Housing Crisis
Perth faces housing supply constraints. House-behind-house developments increase supply without sprawling outward. On a 700 sqm block, you’re creating two homes instead of one. Scaled across Perth, this matters.
Councils that encourage house-behind-house development (like Melville and Canning) are actively addressing the supply shortage. Councils that resist it (like Claremont) contribute to housing scarcity and rising prices.
If you’re a homeowner, house-behind-house development is a legitimate wealth-building strategy. If you’re concerned about Perth’s housing affordability, supporting councils that permit dual occupancy helps solve the problem.
Next Step
If you own a suitable Perth property and are curious about house-behind-house potential, start here:
- Check your block size (700+ sqm?) and depth (20+ meters?)
- Review your local council’s development policies (supportive or restrictive?)
- Talk to a builder experienced in dual occupancy projects
- Get a rough cost estimate before committing to detailed plans
Pioneered Modern Engineering specializes in house-behind-house and side-by-side developments across Perth. We manage council approvals, design efficient rear dwellings, and deliver projects on time and on budget. Whether you’re exploring options or ready to develop, we’ll guide you through the process transparently and help you understand the financial upside for your specific block. Request a consultation with our team let’s talk about your land and what’s possible.