Minor Dwellings, Sleepouts & Multi-Unit Rules
Insight
Many New Zealand homes include sleepouts, minor dwellings or converted garages. These structures can offer extra accommodation or rental income, but only if they comply with council rules. Buyers frequently discover that what appears to be a “self-contained unit” is not legally approved. This affects lending, insurance, resale and how the building can be used.
This guide explains how minor units work, what makes them legal, and which documents to check before going unconditional.
What Makes a Minor Unit Legal?
A legal minor dwelling must:
- have a building consent for construction
- appear on the LIM or property file
- meet zoning rules for a second dwelling
- have approved plumbing and drainage
- comply with setback, size and design standards
A legal minor unit can usually be rented out. An unconsented sleepout cannot.
Risks of Unconsented Sleepouts or Units
Unconsented buildings create several risks:
- insurance may refuse cover
- banks may decline lending
- council may require removal or costly upgrades
- rental use may be unlawful
- resale value may be reduced
Many listings advertise a “sleepout with kitchen” — often a red flag.
Not sure if the second dwelling is legal?
A lawyer can check the LIM, consents and title to confirm whether the dwelling is lawful and rentable.
Zoning Rules for Second Dwellings
District plans control whether a minor unit is allowed on a section. Rules vary depending on the zone and council. Key restrictions include:
- minimum site size
- maximum unit size
- parking requirements
- height limits
- stormwater/drainage rules
Some zones prohibit minor dwellings entirely.
Title Issues: Easements & Covenants
Some titles include covenants restricting additional dwellings. Others have easements that affect where a minor unit can be placed. A lawyer can review whether the title supports the intended use.
Insurance & Lending Implications
Banks and insurers are cautious with unconsented units. Issues include:
- reduced lending
- higher premiums
- exclusions for damage in unconsented spaces
- loan declines if the unit is intended for rental use
Legal status directly affects financial risk.
Find a Lawyer for Minor Unit or Multi-Dwelling Issues
Providing the LIM, title, consents, floor plans and any agent representations helps match you with lawyers who regularly advise on minor dwelling legality and compliance.
Buying a home with a sleepout or minor dwelling?
We connect buyers with lawyers who specialise in secondary dwelling legality, compliance and rental restrictions.
Frequently Asked Questions
What is a minor dwelling?
A minor dwelling is a small, self-contained residential unit legally approved by council. It has its own kitchen, bathroom and living area, and must meet building and zoning rules. Not all small buildings qualify as legal minor dwellings.
What’s the difference between a sleepout and a minor unit?
A sleepout is usually a detached building used for extra sleeping space. It typically cannot have a full kitchen and may have restrictions on plumbing. A minor unit is a fully self-contained legal dwelling. Misunderstanding this distinction is one of the most common buyer mistakes.
How do I know if a second dwelling is legal?
A legal minor dwelling must be shown on the LIM as consented building work and appear on the property file. If it is not recorded, it may be unconsented or only partially approved. Bank lending, insurance and resale can be affected.
Can I rent out a sleepout?
Usually not — unless approved as a legal minor dwelling. Renting out an unconsented unit may breach tenancy law, council regulations and insurance policies. A lawyer can confirm what is legally permitted.
Do minor units increase property value?
Legal minor units often increase value and appeal. Unconsented sleepouts or converted garages may reduce value or complicate resale due to compliance risks.
You don’t need all the answers
Property issues can feel overwhelming — especially when you’re facing deadlines. Sharing a few details about your situation is enough for a lawyer to understand the context and guide you through the next steps.
Get Help Understanding Minor Units & Sleepouts
Sleepouts, minor units and second dwellings must comply with strict council rules. Sharing the LIM, title, building consents and agent disclosures helps match you with lawyers familiar with secondary dwelling compliance.