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What is an annexe and can it add value?

Whether you're making a separate living space for grown up children or elderly parents, or you’re thinking of starting a holiday let, an annexe could provide the right solution.

That said, as with any major home improvement, adding an annexe will take time and investment. If you want to add value to your home, it’s important to keep an eye on costs and make some key decisions ahead of the build.

Help is at hand with our guide to annexes, with tips on what you should do to add the most value to your home.

What is an annexe?

An annexe is a standalone living space, usually within a larger property, equipped with essential amenities for independent living, such as a kitchen, bathroom, and at least one bedroom. It must also share the same address as the house it’s a part of.

There are many different types of annexes. It may be a smaller building, away from your house or a room or level of a house specifically sectioned off to create a self-contained studio or flat.

Does an annexe add value to a house?

The value added by an annexe is a hotly contested topic, with some estimates suggesting an increase of 20-30%.

The added value very much depends on the size and construction of the fully self-contained unit - whether it’s connected to utilities, and its suitability for year-round living.

With the rise of property prices and the cost of living, annexes are becoming more desirable for buyers who may want a separate space for their children to live in, as well as older family members.

Can I build an annexe without planning permission?

Do you need planning permission to build an annexe on your property? Well, as with most things to do with home improvement, the answer is never simple.

If you’re planning on renting out your annexe or moving family members there, you would need to apply for planning permission. If it’s purely for recreational use, it would be known as an ‘incidental building’ and be covered by your existing planning rights.

Consult an architect ahead of commissioning the build to check that your build falls under this as the rules can be confusing.

Is an annexe liable for council tax?

If the annexe is included in your existing building, you won’t have to pay further council tax. Likewise, if no one is living in the annexe, you won’t have to pay council tax. If it is in a stand alone unit and is occupied however, the rules get a little trickier to navigate

You will be exempt from paying council tax if a dependent relative - that is someone who is over the age of 65 or permanently disabled or mentally impaired - lives in the annexe. If you’re renting to a non-dependent relative, you may still qualify for a 50% discount.

There are lots of other rules around council tax exemptions and discounts so get in touch with your local authority or read this guide for more information.

Can I rent out my annexe?

Whether you can or can’t rent out your annexe will depend on the level of planning permission you have for the unit.

You’ll find more information in our landlord’s guide to permitted developments.

Using an annexe as a short term let

If you’re planning on renting your annexe out as a short term let or through an Airbnb, you would also need to do a couple of extra things as well.

  1. Notify your mortgage lender

The way you are using your property will affect the mortgage that you’re offered. For instance, if you were buying a buy-to-let property, you would need to apply for a buy-to-let mortgage.

That said, some mortgage lenders will allow a certain number of rooms in your home to be let for a short period of time (often up to 90 days). In any case, you’ll need to seek permission from them before you do.

  1. Renegotiate your home insurance

Inform your home insurance provider if you’re planning on renting your annexe, particularly if you’re doing so through platforms like Airbnb.

As you might imagine, holiday lets come with their share of household damages so it’s important to check that you’re covered ahead of letting your annexe out. Failure to do this may invalidate your policy.

Selling a house with an annexe

An annexe can add value to your home and make it more appealing for a greater number of buyers. With more adults still living with their parents, homes which offer more flexibility - such as those with independent living quarters - are highly sought after.

Speak to your local Martin and Co agent to find out whether adding an annexe will increase the saleability of your home.

Further reading

Outdoor planning permission: A guide to outbuildings

Planning a conservatory? Here's everything you need to know

The Landlord's Guide to Permitted Development

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