Opinions on house

[Ferguson0909]

I am an empty nester living in a large house in a good area but with little spare cash to enjoy myself. The house is worth about 850k with a 300k mortgage.
i have a good set of neighbours but am not thinking of moving far so not really an issue.
I have two options.

1. Downsize so I have no mortgage.
2. convert the garage/utility/4th bedroom to an annex and let it out airbnb.

estimated income from airbnb roughly same as mortgage. The house is where we brought the children up after moving from the area where I am now looking. We could not have afforded this house when we first started out. we probably could have afforded it if we had bought it with the separate annex and let it out until we needed more space or could have afforded it. I am thinking if I do sell I could leave it with a separate annex so people had the extra income. But I am not sure whether a separate annex would be an advantage/ disadvantage. the question is: when you were starting out, would you be willing to buy a bigger house that you could make extra income from until you were able to afford it totally for yourself. Or would the separate annex put you off if you were, say, moving from a starter home to your forever home?

You need to look into the tax implications of Airbnb.

Downsize. Keep it simple. Running an Airbnb is work. Selling a house with an annexe to run an Airbnb relies in finding a buyer that wants the extra work.
Honestly make your life easier and freer, just downsize and free up the extra money to enjoy yourself.

Easy, downsize.

Trying to run an airbnb will get stressful and annoying real fast. Take the money, buy something smaller that you love and enjoy your life.

Downsize.

All you need is one idiot to do a lot of damage and wipe out all you profit. Council tax implications as well.

Wouldny consider buying with an annex unless specifically looking for elderly parents. It will limit buyers for sure, or reduce the price as people will want to switch it back.

Many thanks for the replies. I am an accountant and have other airbnbs in the area so I am aware of the implications mentioned.
However, the comments are very interesting as it seems a lot of people could not be bothered with it. Because I have other airbnbs there would not be that much extra work as I have people managing them.

personally, I would have bought it with an annex when I couldn’t afford the whole thing but it appears I am in a minority.
I would still like to hear others thoughts.

Why not offload one of the AIRbnb and pay off the mortgage. CGT payable maybe.

I don't understand - you have other Air bnbs but have little money to enjoy yourself? Maybe you have other committments, not judging!

I would have loved the annex if I was starting out.
But you should definitely downsize

Downsize keep it simple and enjoy it! X

Having other air b&b’s does make a difference to you running it easily enough. With this extra info, I’d base It on more whether you want to stay in the family home or downsize.

I would have thought that when it comes to selling, there will be buyers specifically looking for houses with an annexe to house an elderly parent.

When I was starting out it wasn’t the size of the monthly mortgage payment that was a limiting factor, it was the amount I could borrow in total. Having an annex with associated income potential wouldn’t have made a better house/ area any more accessible for me.

Wasn't there a thread on here recently about someone that had bought a house with an annex and it had been recategorised as needing its own separate council tax plus the council had a policy of double c tax on second dwellings? So they were basically at risk of paying 3 x council tax. It all sounded horribly stressful and complicated.

Definitely think there is a market for annexes, in fact I think they are an incredibly useful thing. Lots of houses where we are (rural but commutable, lovely place for lots of short break type activities) have annexes and we made a granny annexe from garages.

makes a house so versatile - nanny annexe, then teenager annexe, then home office, then granny annexe, then annexe for you also your kids can buy the main house - not to mention airbnb.

i think city houses could benefit also - god knows our kids won’t be able to buy their own house - and I sure as hell won’t want them living in my house forever.

Many thanks to those who have taken the time to reply. However, I am not looking for ‘what do you think I should do?’

I have other properties and am aware of all that goes with it. Tax/damage/council tax etc. You would not believe the amount of business and property advice people have given me over the years. However, the people who are qualified to give advice rarely do.

I am more interested in,’would you consider burning a house with an annex if you couldn’t otherwise afford it.’ This is the only factor in my decision that I cannot easily research myself and am interested in whether people would consider it.

I have one friend who when looking for somewhere was specifically looking for somewhere to house and elderly DP alongside the family home but judging from all of my DFs that isn't often a criteria.

I would downsize personally.

I don't think an annexe would necessarily put people off. As well as renting it out, it could be used for other family members (elderly parents or teenagers) or as a lovely guest suite.

I think people would be more likely to buy a house with an annexe for an elderly relative rather than to help pay the mortgage. I know a few people who have done this, a couple of them both them and the elderly relative sold their properties to buy a bigger property with an annexe together.

Personally I wouldn’t unless I needed it specifically for an adult DC or housing elderly parents - and then there’s the question of whether it becomes a separate dwelling for council tax purposes etc. as I know different LAs can treat them differently.

I am more interested in,’would you consider burning a house with an annex if you couldn’t otherwise afford it.

No but I don't think what others would consider is a factor? Surely if you want to downsize or sell, you put your house on the market and people who are interested torn up?

If I couldn't afford the house without the rental income off an annex then I almost certainly wouldn't buy it, unless it was an absolutely amazing house and a bargain. Because the hassle for me wouldn't be worth it, even with people managing if for me (which presumably cuts the profit as they take a fee). Whilst you might not find the admin and council tax and HMRC aspects offputting, lots of people would.

If I actively wanted an annexe for a home office, teenagers, visitors or as a granny flat then it would be an advantage But not as a potential income.

For me it would depend upon the layout and set up. It wouldn't put me off though I don't find Airbnb that fun to do so I wouldn't be looking for it particularly. I considered one house like this but it felt like the annexe really impacted on the privacy of the rest of the house - windows overlooking garden/potential to hear noisy guests etc so for me it would depend on how private the annexe would be

I wouldn't buy a house with an annexe to make money from it. I would buy it to use as future accommodation for a parent, or for older teenagers to enjoy.

In your situation, I would downsize and enjoy the extra money with less stress.

Well only if I was in circumstances where I needed one specifically, for example needing a space for an elderly family member but I certainly wouldn’t pay over the odds for one if I didn’t need it when I could get something similar without one in the same area for less money.

in all likelihood most people (not all) couldn’t be arsed renting it out or want to buy knowing that they needed to do that to cover the mortgage.

No as very unlikely you’d get the mortgage based on a possible rental income.