Buying a house with an annexe - lodgers etc

Aretnap

The wife and I are thinking of buying a "4 bedroom" house. The 4th bedroom is actually a converted garage which is physically separate from the rest of the house, so an annexe of sorts. It has its own en suite bathroom, but no kitchen.

As well as using it as a guest bedroom, we were thinking of renting it out to lodgers from time to time - ideally a few weeks at a time to placement students, junior doctors etc in between our parents' visits (we live near a big teaching hospital, a university and several research institutes, so anticipate that there'd be demand). This would not be essential to our purchase financially, but a bit of extra money here and there would be a definite bonus. Possibly we'd want to rent it out on a longer term basis at some point (eg if our parents pass on and we don't need so much space for guests - hopefully that's some time away).

My question is, are there any pitfalls that we should be aware of when renting out this type of annexe? As I say it's physically separate from the house but is not a fully self-contained unit - a lodger would still use our kitchen and probably our dining room/lounge. So would this still be classed as renting out a room in our own home, and eligible for tax free rent under the rent a room? Or would we risk it being classed as a separate dwelling and him being classed as a tenant rather than a lodger, with all the extra complications that come with that?

And any other pitfalls that we should be aware of when buying a house with this type of outside bedroom - other than the obvious one of Mum and Dad having to walk through the rain to go to bed?

davidmcn

Are you needing a mortgage? Lenders tend to view such annexes as a complication (leaving aside the tenancy issues).

pmlindyloo

One thing you need to check is the planning permission for the garage conversion. There may be a clause in ti saying that it cannot be rented out.

Aretnap

Thanks both. Yes, we would be needing a mortgage - I hadn't really thought about that angle yet. I'll look into the planning issue.

theartfullodger

As it is separate from the rest of the property they wouldn't be lodgers but tenants, "occupiers with basic protection" - see
http://england.shelter.org.uk/housing_advice/private_renting/occupiers_with_basic_protection
- and, should they decline to leave when agreed or asked nicely would need a court order to get them out. Changing locks etc would be illegal eviction, a criminal offence that landlords can & have gone to jail for.

Problem is, most tenants, landlords, agents, council, solicitors wouldn't understand this. Nor mortgage companies..

£5 says council (planning, building regs..) still think it is a garage...

aneary

theartfullodger wrote: »

As it is separate from the rest of the property they wouldn't be lodgers but tenants, "occupiers with basic protection" - see
http://england.shelter.org.uk/housing_advice/private_renting/occupiers_with_basic_protection
- and, should they decline to leave when agreed or asked nicely would need a court order to get them out. Changing locks etc would be illegal eviction, a criminal offence that landlords can & have gone to jail for.

Problem is, most tenants, landlords, agents, council, solicitors wouldn't understand this. Nor mortgage companies..

£5 says council (planning, building regs..) still think it is a garage...

Seeing as the OP said they would be sharing the livingroom and the kitchen I don't think they will be tenants as they are sharing the 'living areas'.

theartfullodger

Yebbutt.... he says

garage which is physically separate from the rest of the house, so an annexe of sorts. It has its own en suite bathroom, but no kitchen.

Put it like this: I'd not want to risk changing locks then finding a judge deemed a court order was needed, illegal eviction etc...

Aretnap

pmlindyloo wrote: »

One thing you need to check is the planning permission for the garage conversion. There may be a clause in ti saying that it cannot be rented out.

OK, the planning permission says..."The habitable room, hereby permitted, shall not be occupied at any time other than for purposes ancillary to the residential use of the dwelling known as (address of main property)"

Slightly opaque language... but is that basically saying that I can't rent it out?

Moneysaver666

When the council look at whether something is an annexe or not it comes down to shared facilities - as it does not have its own kitchen, this would not be considered a separate dwelling but ancillary to the house - this is good in that you would have a lodger, not a tenant. This is favourable for tax purposes, and means it does not require a separate council tax bill or anything like that.

G_M

I disagree with others here:

* They'd be lodgers.
* mortgage lender's consent is almost certainly not required
* I doubt there'd be a problem geting a mortgage

This is not a self-contained unit - as the Planning says: it is " ancillary to the residential use of the dwelling". Simply a 4th bedroom with ensuite. The fact it is physically seperate from the house is irrelevant.

If there were a kitchen as well, making it fully self-contained, that would be different.

As an added protection against any claim by the occupant to be a tenant, provide a service as well eg bed linen changed 1ce per week.

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with a resident landlord & shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' & 'same property' (S31 & Schedule 1 (10).

See:

LodgerLandlord (21 tips from solicitor Tessa Shepperson + General information site)

Landlordzone (Various articles on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (HMRC guide for tax-free income from lodgers)

CIS

Assuming England or Wales - Whether the VOA determine it is a self contained annexe or not would be their decision, not the council's.

Even if it was not deemed to be self-contained then the VOA can still band the parts occupied by the tenants/lodgers if they deem it meets sufficient criteria to be an individual dwelling in their eyes.

Craig