Garage converted to annexe with mother's money

mrsmerlot

lincroft1710 wrote: »

If the annex has its own entrance, or entrance off a hallway or corridor of the main house, has facilities for food preparation, washing, room for living and sleeping and a WC, then a separate Council Tax band is applicable.

The annexe will have its own door, as would a side entrance to a utility room for example, but will also be part of our main house with e doorway from our living room, not the hall or a common entrance area.

mrsmerlot

ethank wrote: »

Quite often families do this type of thing out of love and they end up making a massive change, without discussing all of the consequences.

All of things should have been discussed prior to the conversion.

We did have long discussions about this, but her living in another country and us having full-time jobs and not being legal or financial experts limited our expertise, hence posting on this forum! It's not too late to sort it out, it's not even built yet, so we are trying to work out the best way to go. I would love to let her do what she wants with it, but we are all in tight financial straits and we agreed from the outset that there would be some split in rental income. Thanks for all your input. It's very helpful....:j

Lily-Rose_3

FWIW I think any rental income should be split equally between you.

Good luck with it all. It's very nice of you to do this.

Do you really need a tenant in there though? Can your mother not just move in when it's built?

jamie11

My sister did exactly this in her daughter's house. Sadly things did ot work out S she would have liked, partly because ghe daughter is bi- polar.

Eventually she abandoned the annex tl live elsewhere.

Just cautioning you go think long and hard about it.

AdrianC

Legal or financial expertise is not really needed here. What IS needed is to sit and talk about it between the three of you - even just on the phone.

She's passing some money your way, to convert your garage into habitable accomodation, on the basis that she might live in it in the future. She's happy for somebody to rent it and live in it full-time, but you can't come to an amicable arrangement between you on how the rent should be divided, and she's not happy for you to use it as a spare room occasionally...? Sorry, but this doesn't sound to me like a trustworthy basis for a workable ongoing business relationship...

What happens if you need to sell the house before she's ready to move in?
What happens if she dies, and you then find that she's not left you her estate?
What happens if either you or her go bankrupt?

Mojisola

mrsmerlot wrote: »

It's not too late to sort it out, it's not even built yet, so we are trying to work out the best way to go.

mrsmerlot wrote: »

She has paid for the conversion and slight extension of our garage to create a 1 bed studio flat (cost £25,000).

We have had a huge shed built in the garden to house garage contents, thereby losing about a third of our garden. We have also lost a well-used garage and a bit of our driveway.

The services (water, gas and electricity) will be running off our house and we will be dealing with tenants, losing some of our garden to them (it will be fenced off), losing our privacy, have the hassle of tenants, etc.

Also, if she doesn't rent it out, she is saying we would not be allowed to use it at all, say for guests, as it is "hers" and she is afraid we will "wreck" her haven. All feedback gratefully received.

Don't do it. A lot of disruption for you while the work goes on. You lose out all round on space and privacy. She doesn't trust you to use the room.

It will be an ongoing, stressful pain and could well spoil the family relationships for ever.

seven-day-weekend

Rental income half-and-half. She has paid for a future home, you lose part of your garden and have extra expense.

That's mho anyway.

Why is she worried about the family wrecking it but not worried about tenants doing so????

mrsmerlot

AdrianC wrote: »

Legal or financial expertise is not really needed here. What IS needed is to sit and talk about it between the three of you - even just on the phone.

She's passing some money your way, to convert your garage into habitable accomodation, on the basis that she might live in it in the future. She's happy for somebody to rent it and live in it full-time, but you can't come to an amicable arrangement between you on how the rent should be divided, and she's not happy for you to use it as a spare room occasionally...? Sorry, but this doesn't sound to me like a trustworthy basis for a workable ongoing business relationship...

What happens if you need to sell the house before she's ready to move in?
What happens if she dies, and you then find that she's not left you her estate?
What happens if either you or her go bankrupt?

You make some valid points and raise pertinent questions and I would be interested in your answers or opinion on these. It is happening and we want to settle it amicably and just need some external perspective. Thank you.

lincroft1710

mrsmerlot wrote: »

The annexe will have its own door, as would a side entrance to a utility room for example, but will also be part of our main house with e doorway from our living room, not the hall or a common entrance area.

As it has its own door it will have a separate CT band. I'm ex VOA and dealt with many annex situations. If you do let it out, in law the tenant will be responsible for paying the CT.

franklee

Raise the 25K and build it yourself as it's a decent rental return. Then if in future mum wants it she can rent it. The 25K build costs are small fry compared to the provision of land for residential building, plus you are losing a significant part of your garden privacy and having to pay the bills as presumably it'll be heated off your boiler and lit off your electricity meter. Plus you will be finding the tenants, complying with the regs and dealing with repairs. No way would I do that if not allowed to be in control of it and use it. If mum thinks she's going to get a bad deal suggest she looks at what realistic return 25K would get elsewhere. She isn't going to get a 29% per year gross yield anywhere else which is what she'd get of she got all the rental income! I'd be offering her a 6%-10% return on her investment - that's still far better than cash in the bank.

PS sounds like an annexe to me.