Questions about renting out annexe

Cissi

We're buying a house with a separarate annexe/studio appartment (separate entrance) and would like to explore the possibility of renting this out. It isn't necessary in order for us to afford the purchase, but would certainly be a bonus as it would allow us to make some improvements to the house. We may have someone who is interested in renting it (family member - at this point we wouldn't want to rent it out to strangers).

I realise that there are a lot of things we need to consider/find out more about, just want to make sure that we're aware of all the implications. Firstly, we don't even know yet if the annexe is registered as a separate residence (we think not) - would this be necessary in order to rent it out? If so, how would we go about doing this? Or would it be possible to have someone move in as a lodger, even though it's a separate flat with its own entrance? What are the implications with regards to council tax, for example?

I'm sure there are lots of other things to consider... Being currently tenants ourselves we're aware of the rules regarding protecting deposits and gas and electricity safety checks - what else do we need to think about? The prospective tenant would bring some of their own furniture, but we'd mainly furnish it ourselves - how do you make sure that everything complies with fire safety regulations etc? Would it be ok to just buy a bed, mattress etc from say IKEA?

I'd be grateful for any input as I'm a complete novice at this Thanks!

lincroft1710

Many "annexes" had planning permission which would not allow annexe to be sold separately from main house, sometimes pp would not allow it to be rented out, so you should check with your council's planning dept.

Despite the fact under planning law an annexe may not be a separate dwelling, in Council Tax law, providing it has facilities for living/eating/sleeping/food preparation and a WC, it will be a separate dwelling and should have its own CT band. Check Valuation Office Agency website to see if it has own band. Some family members are exempt from paying CT on annexes, usually close relatives over 60 or disabled dependent relatives of any age.

Cissi

Thank you lincroft. I've checked, and it only comes up as one dwelling, even though it does have all the facilities that you list. I believe it has previously been run as a B&B (but it's early days yet, so we haven't seen any of the seller's documents and don't know what kind of planning permission it has).

If there isn't permission to rent it out separately, could it be possible to let it to lodgers? The tenant/lodger in question is young and able-bodied, so would almost certainly not fall into any category exempt of CT.

Cissi

Ok, now this has raised another question! The annexe doesn't appear to be registered as a separate dwelling for council tax purposes, but reading the definitions on the website it looks as if it probably should be. Does this mean that we will have to pay council tax on it separately, even if we don't rent it out (hence don't use it as a dwelling at all, or only for occasional guests)???

Fire_Fox

If you rent it as part of your home you may not have to pay income tax on the first several thousand pounds of income. If the annexe is classed as a separate dwelling you will need to declare the rental income and can offset some of your mortgage interest/ repairs etc. Might need an accountant the first year since the situation is not exactly crystal clear! You will definitely need a separate TV licence if the flat has it's own lockable entrance.

Cissi

Fire_Fox wrote: »

If you rent it as part of your home you may not have to pay income tax on the first several thousand pounds of income. If the annexe is classed as a separate dwelling you will need to declare the rental income and can offset some of your mortgage interest/ repairs etc. Might need an accountant the first year since the situation is not exactly crystal clear! You will definitely need a separate TV licence if the flat has it's own lockable entrance.

Good point about the TV licence, hadn't thought of that!
It doesn't seem to be classed as a separate dwelling - is it possible to rent it out as part of our home, then? The tenant/lodger would probably have access to the main house, but the annexe is separate

Tim_Deegan

Cissi wrote: »

We're buying a house with a separarate annexe/studio appartment (separate entrance) and would like to explore the possibility of renting this out. It isn't necessary in order for us to afford the purchase, but would certainly be a bonus as it would allow us to make some improvements to the house. We may have someone who is interested in renting it (family member - at this point we wouldn't want to rent it out to strangers).

I realise that there are a lot of things we need to consider/find out more about, just want to make sure that we're aware of all the implications. Firstly, we don't even know yet if the annexe is registered as a separate residence (we think not) - would this be necessary in order to rent it out? If so, how would we go about doing this? Or would it be possible to have someone move in as a lodger, even though it's a separate flat with its own entrance? What are the implications with regards to council tax, for example?

I'm sure there are lots of other things to consider... Being currently tenants ourselves we're aware of the rules regarding protecting deposits and gas and electricity safety checks - what else do we need to think about? The prospective tenant would bring some of their own furniture, but we'd mainly furnish it ourselves - how do you make sure that everything complies with fire safety regulations etc? Would it be ok to just buy a bed, mattress etc from say IKEA?

I'd be grateful for any input as I'm a complete novice at this Thanks!

All Ikea furniture will comply with fire regulations for domestic use. However if you want the furniture to last you may be better buying from somewhere else.