Renting out annexe?

[irregularegular]

I'm interested in an amazing house which has a fairly large annexe. At the moment the annexe is lived in by the owner's elderly parents, but the only way we could afford the house would be to rent it out (or even sell it). Does anyone have any experience of doing similar? What are the implications likely to be for the mortgage? planning? insurance? Where would be the best place to go to find out? The annexe has an independent entrance, but at the moment there is one internal door (which obviously could be closed).

[IShouldBeSoLurky]

I can't comment as an owner, but when we were looking for a place to rent we viewed an annexe. It wasn't connected to the main house (think it may have been a garage originally, although it was a decent size with 2 double bedrooms), but the idea of renting someone's granny flat made it an instant, total no for us. To be fair, the EA was marketing it as a "detached house" or some such bollocks, so I was cross anyway. But I think they were finding it almost impossible to find a tenant for it.

[specialsubject]

I did look into this with a couple of properties. I very much doubt you could sell it and then you'd end up with some VERY close neighbours.

renting it either as a standard rental or a holiday let could work, with obviously lots of work and expenses to consider on both. Holiday let if you are in a suitable area, done up to high standards, assume max 20 weeks per year. Standard let; all the work and research of becoming a landlord, insurance, having your tenants very close, allow for void periods etc etc etc. Certainly mortgage implications on both.

as a relatively minor issue, once you don't have relatives living in it you have to pay separate council tax for it.

[irregularegular]

Thanks. Yes, I'd be a bit nervous about selling it even if we could as we would lose control over what happened to it.

It's about 1100-1200 square feet, so not small at all. It would be just like living in a semi detached house really. A large 2 bed, all on one floor, and you could give it a decent garden. Very nice quiet location but close to village centre, lovely views. There are a lot of retired people living here, so I think that is the market - older down-sizers. Some holiday demand but probably not really enough.

It's probably all a bit of a risky stretch really. Shame. It feels like it almost works.

[neepsandtatties]

There would be planning implications - you'd need to find out what its status is in terms of planning permission, i.e. whether it is considered a separate dwelling (if so it will be council taxed as such) or whether permission to create it was granted as being "ancillary to the main accommodation" (in which case you wouldn't be able to let it out without a change of planning permission).

[irregularegular]

It was given planning permission in the 1960s. There is no wording like "ancillary to the main accommodation" though it is described as an extension to the existing house. No mention of separate council tax rating (though I thought all annexes had council tax implications these days?). In fact council tax rating for whole property is bizarrely low. Lower than ours, which makes no sense whatsoever!

[Sunnyshores]

You would need PP to change it into a separate dwelling (or to use it as a holiday let). This may not be too difficult if its say a starter home and your area doesnt have many. It would need its own parking and garden. The council should be able to give you a fairly clear No by phone. A yes will be much more non-committal.

You would then need legals to split the title and raise a new title. Not that costly or difficult. What would cost is installing new gas/electric/water pipes and meters.

You'd need to offset this value of the new house, against what you'd lose on your previously detached house.

[irregularegular]

Actually, previously a semi...Huge old house already split once. Parking and garden fine - there are two acres to go round.

Only utility that is not already separate is electricity.

[Sunnyshores]

It sounds as if there would already be 2 titles then (selling solicitor would know), I dont think planners could refuse if so. But could be a problem with the mortgage company. Def sounds worth investigating if the 2 halfs could be worth more than what you'd pay to buy it as one.

[ExConstance]

We used to have a house with an annexe - tiny kitchen and sitting room downstairs, just one bedroom and bathroom upstairs. We used to let it out to people who were working in the area on a short term basis ( lots of professionals doing things at the local power station that was being decommissioned) We also had a horsy lodger in our orchard. it gave us an income when we were doing up our bit of the house and all our tenants were good company. Don't think we told the mortgage company.

[NotCitrus]

We have an annexe - part of our semi. Mortgage - have to have a mortgage that allows part of the property to be rented out while you live in the main part, but not a buy-to-let because we're living there. Turned out we got the same rate we would have done otherwise. Buildings insurance is a pain but now I just go through a broker and pay what they say - a couple hundred more than it would be.
Deposits have to be registered with the DPS, some councils require all landlords to be licensed (Croydon, luckily I'm not there).

If there's still an internal door you may be able to argue it's still one dwelling for council tax, but probably not. Should have separate electrics before you rent it out, so a tenant isn't at a landlords's mercy for light. Need to service boiler annually.

We've rented our flat now for 10 years and out of 6 tenants, 5 were perfect and the other was fine for a year before becoming a nightmare - but the courts and the bailiff were lovely! Do sums assuming 10 months a year rent, to be on the safe side.

[plipplops]

What about Air BnB-ing it? My mum lives a few hundred miles away and has expressed an interest in us buying a house with an annex so she can come and go as she please (she'll pay a chunk for it), we were thinking if we did we could let it through Air BnB in the meantime to raise a little extra cash??

[irregularegular]

I did think of that plipplops (having used airbnb ourselves a couple of times recently), but I suspect that kind of short-term rental would be more trouble than it is worth! Better to get a longer term tenant if possible.

[irregularegular]

Where did you get your mortgage from NotCitrus?

[NotCitrus]

irregular - used a mortgage broker we originally found off the Guardian website, and mortgages have been with lenders like Abbey, Santander and currently NatWest. If you otherwise would qualify for a mainstream mortgage, it's unlikely to be a problem - as they see it it reduces the chances of you defaulting on payments and if necessary it's not hard to evict someone renting with a ASH tenancy in 3-4 months.

Brokers are worth it just to have someone else spending time on the phone for you and chasing everything. And being very sarcastic to Santander on my behalf!

[irregularegular]

Thanks!

[irregularegular]

I've not even seen the house yet - viewing tomorrow! But I've been thinking about it for a while - I was just waiting for the price to drop, as it now has, bring it almost in reach, but it is still a complicated stretch. Possibly too complicated.

[PrimalLass]

Would it not be covered under the rent a room scheme?

[irregularegular]

Possibly Primal, but I think it would probably be considered a separate residence, so no. And I'm sure be considered a separate residence if we closed up the joining door - which I would prefer to do.

[NotCitrus]

Rent a room scheme covers up to £450 a month or thereabouts - so depending on where you live wouldn't be sufficient.

We have carefully planned walls and kitchen units etc so a door could be easily put in between our dining room and the flat - the original doorway has our downstairs loo in it.

[PrimalLass]

That's going up next year though - to £7500/year.

[PrimalLass]

But looks as though it wouldn't count if separate door etc.

buytolet.org.uk/renting_out_a_room.html

[PrimalLass]

Actually, if you only locked the joining door you would be ok.

"Where an individual lets furnished accommodation in a self-contained flat in the individual's only or main residence he or she is eligible for rent-a-room relief provided:

he or she is a qualifying individual (see PIM4001), and
the division of the residence into a self-contained unit is only temporary."

www.hmrc.gov.uk/manuals/pimmanual/PIM4004.htm

[irregularegular]

It's confusing - other stuff I read suggest that if it has all its own facilities (bathroom, kitchen etc) then it doesn't count.

Even £7500 a year would not be enough, it's a very expensive spot - but at least you would get partial tax relief presumably?

[irregularegular]

Saw house. Very much in love. Owners are even potentially interested in buying ours.

Talking to the estate agent's mortgage adviser later. But I'm not sure we can make the numbers add up without some rather heroic assumptions if I'm totally honest. It would probably be a bit crazy.

[Sunnyshores]

Id suggest with its own utilities, separate door, rented out long term, such earnings take into account to get the mortgage etc the division is not 'temporary' and therefore you wouldnt get rent a room relief. Also it would have to be let furnished which may reduce its rentability (and your profits).