How much a large garden and an annex can increase the value of a property?

[SyAmore]

I'm in the process of buying a house with a large garden. It's around 45 meters, or almost 150 feet.

I offered £440 on this house. When I look at the sold houses on the street, this one is definitely the most expensive. They recently sold one on the same street for £380K. It has however a much smaller garden. But still that's a difference of £60K...

The house that I'm buying has also a self-contained annex that can be rented out for around £900 a month.

I just don't want to fall into the trap of "buying the most expensive house on the street".

Do you think the I'm overpaying for that house? My plan is to live there for around 10 years and then either rent it out or sell it.

I don't think that's necessarily that big a difference...we are currently buying a house on a long street of mainly 3 bed semis and there is a difference of 100k between the most and least expensive depending on condition/if they've extended etc.

I would think more if the extra garden space/annexe is worth the extra money to you?

I think the annex is worth around at least £70K as it's self contained with a kitchen, bedroom, living room. It's around 46 sqm. I have spoken with several agents and they tell me I can easily rent it for £900 a month.

But I still don't know if people will be willing to pay that extra amount when I sell the house. I guess they will be comparing with the next most expensive house on the street?

The cheapest one on the same street was sold for £315K in 2020, another one was sold for £350K in 2022, and lastly one sold for 380K in 2024. They are all 3 bedroom semi detached houses.
The one I'm buying is marketed as 4 bedroom, although the main house is 3 bedroom, and they include the bedroom in the annex, to make it a 4 bedroom property...

Annexes can be a double edged sword - some will see them as a negative if registered separately for council tax

Are the other houses on the street on the exact same side and getting the same sunshine as yours? A house on the opposite side of the street, will presumably get the opposite type of sun to yours (morning or evening sun etc) so might be priced slightly differently due to that alone.

If you plan to live there 10yrs, then you have no idea whether in that time, someone else will build an annex, convert a garage or summer house they rent out etc. If you love the house/area and want to live there- then buy it. Who knows what the property market will be in 10yrs time?

Yes, the annex has a separate address and its own council tax. But in case it's rented out, I guess the tenant will pay for it. Not sure what's the situation if it's for its own use.

The annex is "A band" and the annual council tax is around £1500 * *

A self contained annex which you plan to let out may well make mortgaging the property as a single residence more difficult for you, so I’d run that past your mortgage broker as a priority. In addition to which, I wouldn’t want to let an annex on my property unless I was an experienced landlord.

It sounds like a case whereby the current owners and the agent have established a value for the property based on this annex adding value which neighbouring properties don’t have, but which doesn’t come without complications and thus isn’t purely added value alone. I think you need to put your financial hat on rather than doing a like for like comparison with properties which are single family homes.

Just as a slight warning, annexes are not usually simple to rent out. In planning terms, the typical situation is that they are not separate dwellings, their use is to be ancillary to the main dwelling. So occasional Airbnb might be acceptable, but a proper tenancy is not. Most often, you would require planning permission before letting it as a separate unit.