Granny annexes: what to consider?

Is a “granny annexe” the perfect living arrangement in later life? We explore the pros and cons.

When Malcolm Lewis’s daughter was married last summer in the garden of his Bristol home, her 92-year-old grandmother had to walk just 10 paces to attend. This was possible because she lives in a garden annexe.

These types of living arrangements in the UK only account for 2.1% of households in England and Wales, but they could gain in popularity as our society ages and more families experience the social and financial benefits of living together [1].

Other regions of the world embrace this type of arrangement often referred to as multigenerational living. Africa, Asia, and Latin America have a higher prevalence of such households, according to the United Nations. This is especially evident in countries like Afghanistan and Pakistan, where over 90% of elders live with family.

An annexe can provide the perfect blend of closeness and privacy for multi-generational households. But what should families consider before opting for a so-called “granny annexe”?

When would an annexe need planning permission?

“Do your research” is the headline advice from Michael Robinson, a planning consultant who previously worked in local government. If you are renovating an existing building such as a garage or outbuilding for a close relative, you probably won’t require planning permission. But it’s still important to understand how planning works.

By definition, an annexe is not an independent dwelling, however, planning permission is mandatory if the annexe to be built will be used as a living space. If you already have an annexe and want to convert it into a primary residence for a family member, you can apply for a "change of use" permit. However, it’s wise to find out if your project will need planning permission. You can do so by contacting your local planning authority (LPA) through your local council.

Garden rooms and studios: do they need planning permission?

The same applies to garden rooms and studios, which can often be constructed without planning permission under the Caravan Act [2]. The legislation doesn’t distinguish between touring and static caravans, explains Michael, defining a caravan as a portable structure with certain size limitations.

Many companies rely on this legislation to offer turnkey prefabricated annexes that can be erected in the gardens of family homes. This is a good solution for people who are in a hurry – as Debbie Hector and her two siblings were when their father had a mini-stroke two years ago and their parents were struggling at home.

Debbie arranged for a [prefab] garden studio to be erected in her south London garden in just two weeks. After her father died last year, she moved to the Wirral, taking her 80-year-old mother Ellen – and the studio – with her.

“It was back up within three days,” says Debbie.

Image credit: iHus

Not all studios are the same, nor is planning permission

However, anyone contemplating this route should have their site surveyed before proceeding. Malcolm decided to seek full planning permission for his mother-in-law Jill’s studio because annexes have to be delivered in two sections that can be bolted together to comply with the Caravan Act. This was impractical in his opinion, and having full planning permission meant the studio could be built on-site.

“You have to think about whether you can physically get the two units in,” he advises.

If such hurdles can be overcome, prefab and permanent annexes alike bring many advantages. Studios often come with mobility features as standard and cost-effective heating. Moving to an annexe within a family property can allow an older person to keep heirlooms and furnishings. But the combination of security and independence is perhaps the biggest gain.

“It takes the pressure off,” says Debbie. “We don’t have to worry if mum is coping, but she’s totally independent.”

Malcolm adds that his mother-in-law loves knowing she’s in charge and hasn’t given up.

What are the cost advantages of an annexe?

An annexe could be used as an inheritance tax planning tool. Malcolm’s mother-in-law gifted the money for her studio to her daughter, removing that sum from her inheritance. To make this work, she has to pay rent, further reducing the sum on which inheritance tax will ultimately be due.

Debbie says she discussed it with her father before proceeding: “The annexe became my inheritance, and my brother and sister got some money at the time he sold the house.” This arrangement allowed her brother to buy his first home.

You’ll just need to be mindful that if you give away more than £325,000 within seven years before passing, the recipient becomes responsible for the tax on the amount that exceeds that threshold.

Trust and transparency are the root of such arrangements – and perhaps the ultimate prerequisite for a successful annexe experience.

Summary

Want to build or convert a Granny annexe? Here are five things to consider

Planning permission: If you are building a granny annexe as a residence for a family member, you will need to apply for planning permission unless the building complies with the Caravan Act.

A prefabricated annexe: These annexes are delivered in sections and can be a quicker solution, especially if you need the space quickly. However, make sure the sections can be easily delivered to your site and meet size limitations.

Long-term needs of the resident: An annexe is a good way for an older person to maintain their independence while still having family nearby. Look for features like mobility aids and cost-effective heating.

Explore the financial benefits: There are tax advantages to granny annexes. The resident might be able to recoup the cost in a higher house valuation with no additional stamp duty for potential buyers. You can even use it for inheritance tax planning.

Communication is key: You’ll want to discuss the costs linked to building and maintaining the annexe with the person who will be living in it and be clear about any financial arrangements. Trust and transparency should go hand in hand with family members if money is involved.

[1] ONS

[2] Legislation