What should I do as a landlord with my annexe now?

Like so many others on the forum are finding, the recent changes in the property rental market are forcing undesired changes, making it feel like a game of chess when trying to decide the way forward after 35 years of being a landlord.

The latest conundrum concerns a property I purchased from my grandmother all of those years ago, which had a building behind it, which, when built 125 years ago, was a bake house and wash house for the 3 cottages in front of it. My grandmother lived in the cottage and rented out the bakehouse, which she had converted to a small, studio-sized property, calling it the Annexe.

I believe this to be the smallest, detached, occupied dwelling in the UK at 26 square metres, and would be keen to hear from anybody who knows of anything smaller.

Many years ago, after a tenant had left, as they had become unemployed and signed on, it seems that as the council deemed it a separate dwelling, with its own entrance, then Council Tax was payable. Because of this, I was able to legally separate the property into 2 places, despite stiff resistance by the council. So, for 35 years, I’ve kept it in tip-top condition, and it has provided a home for a number of people, most of whom have enjoyed living there, especially the large garden, but now it looks like this is all about to end.

Why? Because there is no sensible way of achieving an EPC of C or above, especially as there are no cavity walls. Somewhere as hot as a bake house didn’t need insulation!

There is a large external wall surface, to small internal volume, and so it very much depends on the tenant and their lifestyle as to whether there is a damp issue or not. At a rental of £550pcm, which seems to be the ceiling for a small property in a low-wage area, it attracts those at the lower end of the social scale, who can’t, or don’t want to, afford to heat the place.

The last tenant, who left today, told me that the internal temperature last week was 16C, and that she was happy with this, and was still drying her washing within the house, which she informed me she had always done, wherever she lived. Needless to say, there was a damp problem.

With Awaab’s Law coming into force for the PRS, I’m in a no win situation, especially as if there was anything that I could have sensibly done, I would have done it by now, and even if there was a possible avenue, with a rental of £550pcm, it makes no financial sense, and even less so as I’m now retired.

So, if I now found a new tenant today, it would be on a 6 month agreement, which would be useless in 5 months, as it would become a rolling tenancy on the 1st May, and so if a tenant was one who creates lifestyle dampness, then I would be legally obliged to fix an unfixable problem, whilst providing alternative accommodation, and potentially fined, and wouldn’t be able to end their tenancy.

Needless to say, I’m not renting the place out again, and in an area where there is a dire shortage of 1-bed properties to rent! So what do I do with the property, especially as it has no mortgage?

As 40 years ago, the place was being used as a workshop on the upper floor, and storage on the lower, I’m looking to turn it back into a workshop, especially so that I don’t have to pay council tax, which doubles after a year, of nobody living there, as I’m having to do on another property whilst I do it up for holiday rental. I presume the very nice kitchen and bathroom will need to be removed, and services disconnected?

If need be, I’ll have it demolished and sell the bricks, which are in demand, but would rather not, especially as it still has the original bake oven in situ.

Has anybody done this sort of thing before, and if so, what is the pathway? I guess that the Planning Dept need to be involved, and doubtless various costs along the way?

Thanks,

Martin