'Granny annexe' - for part year use, pitfalls to be aware of?

[Joul]

We're toying with the idea of a garden annexe for my Dad, fit & well, recently widowed. He'd keep a small retirement type flat in his home town (200 miles from us).

We have a big garden, but the way the house is situated isn't suitable for an extension.

Annexe would have bathroom and kitchenette. I've seen plenty around our area so I'm assuming planning is not a huge issue (but will be needed).

We couldn't afford it without increasing our mortgage. Dad could relatively easy and has been thinking of getting a small flat in our area, so this would be an alternative.
My idea would be that he would loan us the money upfront (and get that documented) and we would pay him back gradually, whilst charging him his share of utilities & food etc.

He would then divide his time between his home town and here.

Any advice or pitfalls to watch out for?

I haven't done this myself but to bump your post a bit - I guess the potential issues to consider are twofold - practical/financial and emotional/family - on the practical front you seem to have the financials fairly well covered with the loan agreement although I suppose you should consider the worst case scenarios e.g. what would happen if you/DH lost your jobs before you'd repaid the loan to your Dad or otherwise defaulted on the loan, and also to what extent the addition of the annex is likely to hold it's value in the long term compared to a separate flat, and whether in say 10-20 years time it would need significant maintenance to not be a liability/eyesore? Also do make sure you get it properly insured under your buildings insurance and that in the build/plans you consider your Dad's likely longer term needs, e.g. it would be good if the bathroom is a wetroom or walk in shower rather than a bath/shower over bath arrangement he may find harder to use as he gets older, and if access is level without internal steps that would be sensible too... Also I am sure you expect and hope your Dad to be in good health for many years to come but if the very worst did happen and he was to die or become seriously ill there could be possible IHT issues with the loan (i.e. as the money would still be part of his estate you could have to pay IHT on it) or with needing to use the money to pay care fees so worth just checking that out...

On the emotional front, I suppose it's just about making sure everyone (you, your DH/DP and your Dad) really communicates and agrees what the 'deal' is here as multigenerational living is tricky - for instance is everyone agreed and on board with how much time he expects to spend with the family when living in the annex, are you expecting him to eat all his meals and spend all his days/evenings with you or only some? I can absolutely see that all day every day could be too much for many people (I know I couldn't have my Mum around that much without wanting to kill her!), but then again can forsee a scenario where he feels pretty sad and lonely sitting in his annex on his own only a stone's throw from your house (that he has paid to buy) and yet 'not welcome' in the main house. Even if he is independent now, as he doesn't currently live locally and isn't planning on being there permanently/full time, is it realistic to think he'll be off socializing or doing hobbies etc in your area if he doesn't know anyone there, or is it more likely he'll rely on you and your DH/DC for all his social contact? I can see the moving back and forwards between his current area and yours could end up being unsettling. Not saying it isn't possible for him to build his own life in your area if he's energetic and in good health of course, but personally I have had relatives taken by surprise when they've moved their previously sprightly and sociable elderlies to be nearer them, imagining they would find plenty to do (volunteering, church, courses, hobbies, friends, whatever) and found them totally unable/unwilling to do so, and ultimately end up lonely and totally dependent on them for everything. I guess from the elderly person's point of view they've done all that once in their life and why would they want to start all over again, and particularly if they've been bereaved or aren't in totally good health I can guess it's really hard to find the energy. Much easier just to slip into the pattern of 'well I moved here to be close to my family so I'll spend all my time with them'...

Also, sorry meant to add, inspired by the big AIBU thread going on on a similar topic, do you have any siblings and have they been informed/consulted about the plan including how it's to be financed? Obviously it's up to your Dad and he doesn't need 'permission' to live where he wants or spend his money how he likes but that thread is a good example of the pitfalls of not communicating properly as a whole family...

Is access independent from the house ? Would it be wheelchair friendly if need should ever occur ?
What would you do with it once your father has died ? ( sorry )
In some cases it would actually impact the value of the house / or make it harder to sell.

maxelly
I was thinking of the same thread when I read the OP.

@LolaSmiles

maxelly I was thinking of the same thread when I read the OP.

Same here! Is this a reverse?

I don't think so Lola, in the AIBU thread the sister was having not only the 'cabin' in the garden but also the purchase costs/bigger mortgage of buying a larger house to put the cabin into, fully funded by the FIL, and the whole thing was being treated as a gift/'inheritance' to the sister and her family rather than a loan to be repaid in time, so different to the OP here. But it's still an interesting thread to read the issues posters mention about 'granny annexes' and multigenerational living beyond the purely financial - I think the AIBU consensus was the OP of that thread was U to be worried about the money per se as it's the FILs to spend as he wished, but NU to be worried that he wouldn't be properly looked after and welcomed by the SIL and her nasty-sounding DP, and that the whole thing would end in tears and with the FIL having wasted his money and homeless. That outcome doesn't sound likely here as the father in this instance is keeping his own flat and not expecting to live full-time with OP in any case, but some of the potential problems could be relevant e.g. conflict on how much the FIL could reasonably expect to rely on his daughter for care if he ended up in ill health and not able to afford a care home as his assets were tied up in the annex/cabin could possibly be relevant here?

Same here! Is this a reverse?

Ditto!

OP: consider planning permission and don't just assume it will be granted.

Do you have any siblings who might think you are trying to snaffle their future inheritance?

Agree, this sounds familiar.

if you have siblings and your dad died before loan paid off how would you manage his estate,
could him loaning you money be seen as deprivation of assets if he needed care so could you be liable or be forced to sell up to release funds
I think someone who is providing long term care to a parent on their property can be treated slightly differently to other siblings in will in your case siblings would get a share of his flat in town but if sold to pay for care home fees you are not expected to sell your house and annexe to even it up but it might mean because you have an enhanced property you get no cash from sale of the flat or a smaller proportion of it
you need a family meeting where your dad explains what is happening, what happens if he dies before loan is repaid, if he can't be looked after even with carers in his annexe how care is going to be paid for,
you need to make sure the garden annexe is well insulated people feel the cold more as they get older, make sure access is not through your house if possible definitely set up agreements as to how much he is in your house and also when he needs to be left alone like the grandchildren can't just go in at anytime any day
right now he doesn't need care but if he needs daily visits or care what happens if you go on holiday would your siblings stay at your house 1-2 weeks a year to look after him so you get a break or would he need to pay for respite care
you all need to look well into future
1 there's the immediate future fit and well moves back and forwards between A and B needs very little assistance this stage to last years

1. next stage travel becomes more difficult some minor issues so decides to sell rent ot flat and live in your garden permanently still independent unless weather bad or ill needs some shopping done and help with non routine things

3 physically or mental decline dementia or immobility starts to need daily care on one or both fronts no longer able to drive can't leave him for more than a few hours 4 can't be left if you go out you can be in your home but not out needs care 4 times a day 5 no longer able to stay even with visiting carers not everyone goes through all 5 stages before death but the finance and practicalities of all scenarios needs to be discussed as does LPA both financial and welfare 2.

Thank you everyone, lots to think about. No this isn't a reverse or related to any other thread!

I have to go a call so will read through properly later.

Just to say if my Dad does need care in later years the responsibility will probably fall to us anyway - we're actually closest currently geographically and would rather him closer for those reasons! Ie if a care home was required we would want him close.

Presume you've considered the council tax etc.

One of my siblings has LPA, they live even further away but if Dad wanted to move there I would be ok with that. The worry is that he's now on his own far from all of us.

The stages of care are useful to have in black & white, thanks teacup. Dad has enough money (I think!) to be able to pay for care for a while if needed, and tbh it would be needed wherever he was. I will have to make it clear we won't ever be in a position to provide care if dementia was to be an issue. Also if needs be the kids are approaching teenage years - could turf one of them out into the garden to make way inside!!

We could scrape together/re-mortgage if we needed to find the balance of the loan in a worst case.

Both DH & my parents never had a bean in inheritance and it's not something I've ever factored into my life choices despite Dad currently having decent pension & investments & asserts.

Boundaries - yes we'd need to lay ground rules. Likely that he'd spend time visiting us anyway (we have a spare room) so extra space of his own can only be better right?

Agree that planning may be an issue. And council tax, not least of all if we need to sell. I don't think a garden room annexe would detract value - it would go in an otherwise unused bit of garden. Accept we would lose on what we spent on it though.

for info my DF is 97 and is at stage 3 he was at stage 1 from 65 ( retirement until 91, stage 2 from 91-95, now needs stairlift to go upstairs my DM doesn't like to leave him for more than a cople of hours while shopping ( she is quite a bit younger and still drives) as he is deaf can't manage a mobile phone he still potters in garden he gets confused when too tired and sometimes forgetful but still thinks we are governed by a bunch of clowns!!!!

Having seen family and friends juggle care for elderly relatives, you need an extra bedroom to allow for potential overnight carers going forward. It gives far more options and means people can stay longer in their own homes. As a pp mentioned it needs to be suitable for future reduced mobility - either a wheel chair or walking frame. Both of these ideally mean the rooms need to be large enough to fit in necessary furniture and have wide walkways around.

Personally I think a 2 bed flat near by would work better - both while he was alive and then allowing it to be sold at a later date. Not convinced an annex in the garden is as much of an asset as it might cost to build/maintain.

You may also find that you can get planning for an annex for part time use, but not for him to live in full time. I had neighbours at one stage who wanted to build a garage with a room / en-suite etc above so that they could move one of their teenagers into it - the kids argued with each other so much but couldn’t afford to leave home and they thought this would be a good solution. But the permission would only allow for occasional occupation so they didn’t go ahead.

you need to speak to your planning dept before you do anything. There is a big difference between a cabin/home office and somewhere that someone lives - even putting cooking and bathroom facilities in puts it into a whole new category. Often they wont mind a loo, but the idea is that it is 'incidental' to the home - ie an extra bedroom, and that the family member still eats and bathes in the main house.

I vaguely remember a thread months ago where someone had bought a house that had a second kitchen and found themselves liable for twice as much council tax as it was deemed two residences.

I may be wronf but I don't think an annexe with a separate entrance is subject to council tax if it is is occupied by a family member. Obviously, worth checking though.

I have several friends who have done this and for two out of the three it didn’t work out well. Either there have been issues over the ‘inheritance’ with other siblings or the couple building the annex have separated—very complicated for the elderly parent.

Generally speaking, as a carer i have found it to be better for an elderly person to be ‘settled’ somewhere, particularly for medical and care needs-not to mention the problems of lockdown etc. Moving about continually can be tricky, especially if dementia or similar becomes apparent. I would look for somewhere nearby, possibly in sheltered housing or similar depending upon his needs and personality. His own property could be sold or rented out .

@Authenticchicken

I may be wronf but I don't think an annexe with a separate entrance is subject to council tax if it is is occupied by a family member. Obviously, worth checking though.

I lived in an annex to my parents house when I had my baby and had nowhere to go. For years it had been occassional use for granny staying etc. Had a little kitchenette and a bathroom, upstaits bedroom and a lounge downstairs. Council came and told my folks they would assess it for council tax unless my dad removed the kitchen. It only had a double ring hob and a baby belling and a fridge.

Ah, I think it is over 65s who are exempt if they are a family member and other family members can get a discount.

the-green-room.co.uk/blog/granny-annexe-council-tax

I think a flat nearby would be a much better idea. You don’t know his things will work out: what if you’d like to move, but he wouldn’t? Just as an example. And you might end up liable for two council tax bills in the future.

Recipe for disaster all round in my book.