Renting a self contained Annexe?

by Readers Question

8 months ago

Renting a self contained Annexe?

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Renting a self contained Annexe?

Last year, we converted our detached double garage into an annexe. It has one bedroom, a shower room and a kitchen living area.annexe

We have financial problems currently and therefore would like to rent it out on a 6 month basis. The garage conversion was undertaken using the permitted development rules and no formal planning was needed.

To rent it out – will we have to pay council tax on the property? Could this lead to planning issues? If the property is separate for council tax will we have to pay that if it is empty? Sorry if these questions seem basic but I can’t find any reliable information.

Many thanks

Amber

Comments

Neil Patterson

8 months ago

Hi Amber,

As a separate household the tenants will pay Council Tax.

However I couldn't tell you if you have broken planning regs by now creating a separate dwelling/household.

* Will we have to pay council tax on the property?

https://www.gov.uk/council-tax/working-out-your-council-tax

Changes that may affect your Council Tax band
Your property may be revalued and put in a different band in some circumstances, for example if:
2. you alter your property to create 2 or more self-contained units, for example an annexe - each unit will have its own band

That of your house might possibly go down but you will have the extra of the separate unit such that the combined total will be significantly greater. but the tenant will be liable for the separate unit.

* Could this lead to planning issues?
Worst a case scenario is probably that you are issued a planning enforcement notice to stop using it as a separate dwelling. Planning breaches only become an offence once you have failed to comply with enforcement - and you are usually given plenty of time to do that. If it has not been enforced against within four years it becomes legal development.

If the annexe was built under permitted development guidelines but a certificate of lawfulness was not sought at the time, you may be required to apply for one (i.e. prove that what you built was in fact permitted development).

* If the property is separate for council tax will we have to pay that if it is empty?
Probably. You may get an empty home exemption for a period or reduced rate. But rules vary from council to council.

If you have a mortgage I'd be more concerned about the lender finding out than I would about the planning or council tax officer - as they could possibly demand immediate repayment.

That said, I rented a self contained granny flat out in my previous home without making any planning or CT changes. Like you, I intended it to be for six months to help with cash flow and it somehow turned into ten years. I never had a problem but there is not guarantee that you would not.

Don't forget that you will be due to pay tax on the income.

Pamela Potter

8 months ago

Hi Amber

I bought a house that already had a garage conversion just like yours. I am the situation where the Annexe has a separate council tax bill. It's on a separate banding because it's a smaller dwelling.

However, when the planning permission to build was given to the previous owner the conditions imposed meant that the Annexe is only to be used as an extension to the existing property and therefore can only be occupied by members of the family and cannot be used to create revenue. I'm not allowed to charge rent to anybody living there.

So they apply council tax as a separate dwelling but I'm only allowed to use it as an extension to my house. You'll need to check with the Planning Department at your local council and ask them what the restrictions are on usage.

I could fight it but I haven't had the time or the energy and I suspect it would get me nowhere.

The irony of it is, prior to my understanding these limitations I actually let it out to a vulnerable man who had mental health issues and his rent was paid for by THE COUNCIL!!! So when I discussed the situation with them they were a little red faced when I told them that they had actually rented it from me. It was a sort of 'Well, thank you but it's very naughty and don't do it again!'.

On a second point, I now let my partner's son live there rent free. It means the council tax is covered and he pays the utility bills so it's worked out I suppose. Unfortunately, I seem to live within a twitchy curtain community and have been reported to the council for misuse of the annexe. Had a Planning Permission Office come and inspect the premises and make sure I was using it for its proper purpose. Which it was obviously. What a waste of tax payers money!

So, to get back to your point. That will be your dilemma I suspect. Separate council tax, can't use it separately. On a more positive note. These kinds of properties are much sought after. I have had people knocking on my door asking me to give them first dibs when I come to sell as so many people want to combine their money and their elderly parents money in a way that allows them to take care of their elderly without living them or without paying hefty care costs.

Good luck.

Pam

Harry Chunk

8 months ago

The way I see it is that if the whole thing was just one room, ie studio style, with an ensuite shower then it could be classed as just another bedroom. That could be let under the Rent a Room scheme tax free if the income was less than £7500 per annum. I think the key is ONE room not a bedroom and separate living room so remove the partition.

Carol Gray

8 months ago

We were among the first people in the country to build a 'granny annex' back in the early 1990's. My elderly parents were upstairs in the main bungalow and we had a one bedroom apartment built below it. We went through planning with no difficulties and I can't remember exactly when the Council Tax problem raised its ugly head, but it wasn't long. At the time we set up a group to get this overturned as the combined tax on both properties worked out to be the very highest band. We fought a prolonged battle with the Inland Revenue but in the end the only solution they offered us was to 'remove the kitchen', thus making the property uninhabitable.
We moved out in the end, but some years later we moved back in and installed a second hand kitchen. We lived there for some time until my parent's circumstances changed, at which time we bought the property. We sold the property some years later, the new owner rented out the annex and as far as I know, still does.
I am not 100% sure what the criteria is for a 'kitchen' but I'm sure there is a way around that for someone who is able and willing. Dot the i's, cross the t's and then go your own way.

Claire Smith

8 months ago

For the rent a room scheme I believe that you have to have some shared facilities and so this would not apply to a separate annexe. If it shares a door (or could be altered for that) and you share e.g. kitchen or laundry facilities then you would probably not be liable for council tax rebanding and also would have a substantial tax allowance under the rent a room scheme. I suspect otherwise it isn't worth the future council tax bills to get an income now, but you would need to do your own calculations.

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