What is a duplex house and what are its pros and cons?

It sounds like the perfect deal: building one house and getting the return on investment from two.

This is the biggest drawcard for duplex homes. But what should investors consider before committing to building a duplex rather than a free-standing house? Are there any hidden considerations for first-home buyers who might be looking at duplex homes as the more affordable option?

Here’s our guide on everything you should know about buying a duplex.

What is a duplex house?

A duplex is a residential building that consists of two homes that are separate but share a common wall or roof. Each dwelling typically has its own entrance, kitchen, bathroom and living areas, making them completely self-contained.

Duplexes can exist on a single title and then be sold together, or on separate titles and be sold or rented separately. In either case, it’s important to know the intricacies of your local building and subdivision regulations.

PRD chief economist Diaswati Mardiasmo says if you’re considering subdividing, be sure to check with your local council and seek professional legal and planning advice to understand the costs and implications involved.

“You need to check if the duplex house is under one or two titles,” she says. “In Queensland, for example, duplexes have either single or dual titles. Dual-title duplexes incur higher costs due to separate fees for rates, water and insurance.”

What’s the difference between dual occupancy and a duplex?

A duplex consists of two attached homes sharing a common wall, which can be on a single title or subdivided into separate titles, allowing for individual sales.

Dual occupancy refers to two separate dwellings on a single block of land, which can be attached or detached, and usually remain under one title unless council regulations allow subdivision.

Duplexes are typically seen as investment properties, while dual-occupancy homes are often used for extended families or rental income.

What to consider when building a duplex home

If you’re an investor looking at buying a block of land to potentially build a duplex on, there are a few things to consider and numbers to crunch:

• Local council regulations: Duplex developments are subject to zoning laws and building codes which vary depending on the council area. It’s crucial to check if your property is eligible for duplex construction.
• Block size and shape: Not all lots are suitable for duplex construction. You’ll need enough space to accommodate two separate dwellings while meeting setback and frontage requirements.
• Design considerations: Think about the layout, privacy and functionality of each unit. Features like separate driveways and private outdoor spaces can make duplexes more appealing for both buyers and renters.
• Construction costs: Building a duplex can be more expensive than a standard home due to additional requirements like separate utilities and fire-rated walls.
• Future potential: Consider whether you plan to live in one unit and rent out the other, or if you’ll sell both. This will influence your design and investment strategy.

Is a duplex worth buying? The pros and cons

Whether you’re an investor or a home buyer, here are some advantages and disadvantages for duplexes.

Benefits of a duplex

Affordability: Alex Haddad from Property Services Agency says duplex homes can be a more cost-effective option than standalone houses, offering great value for money.

“You are getting into the area you would like to move into for about a 15-20 per cent saving,” Haddad says. “For example, if a free-standing house in the area you want to live in is, say, $2.5 million, you can buy a duplex for about $2.05 million to $2.1 million. It can also have less maintenance.”

Rental income: Living in one unit and renting out the other can provide a steady source of passive income.

Family living: Mardiasmo says duplexes can be ideal for multigenerational families who want to live close but still maintain privacy. Haddad agrees, saying, “They’re great for owner-occupiers because it can create an option for multigenerational living at minimum cost as you don’t have to buy two houses.”

Capital growth: If the property market grows, owning two units on a single block can potentially lead to increased property value.

Versatility: You have flexibility in terms of selling, renting, or even subdividing in the future.

Disadvantages of a duplex

Shared walls and driveway: While duplexes are self-contained, sharing a wall or driveway with your neighbour may impact privacy and noise levels.

Operating costs: Investors should keep in mind whether running the duplex will incur property management fees and, if the duplex is strata titled, ongoing fees for maintenance and shared services.

Resale complexity: Some buyers may prefer standalone homes, which can make duplexes slightly harder to sell.

Design limitations: Duplexes often have limited space compared to detached homes, which could affect your preferred floor plan and layout of the house.

Is a duplex right for you?

Duplex homes can offer a great mix of affordability, flexibility and potential for rental income, and make them an attractive option for many Australian buyers.

If you’re thinking about buying or building a duplex, consult with property experts and financial advisors to help you make sure it’s the right move for your needs and a smart choice in your location.