Council Tax Guidance for Properties With Separate Dwelling Granny Flat / Annexe

SteeleyScott

Hello,
Had two not so pleasant letters through this week. Regarding a property we purchased back in March that has an Annexe in the back garden. 
1) A Letter from the Valuation Office Agency addressed directly to the annexe; saying they're banding the Annexe as Band A for valuations and council tax purposes. (The main building here is band G)
2) A letter from our local Council addressed to the annexe; saying we need to pay £1,090 per calendar year council tax.

Honestly I didn't know you paid two lots of council tax on properties with annexes. So the first thing I did was look around online and found very mixed and inconsistent findings. Some places saying the concept of paying two lots of tax was scrapped in 2014. Some places saying you get 50% off if its being used by the residents of the main property. Most places saying if you move an elderly relative in there whos >65, its entirely tax exempt. 

So I call our local council (who have zero guidance on their website I assume due to there not being alot of annexes in our borough) and they can't give me very clear guidance either, everything they quoted regarding reductions were rules that are consistent with empty let properties. I.e you get 1 month free if its empty and 25% off if its a single person living there...It sounded like they had absolutely no idea what to suggest to me and are just seeing it as a separate property, which ofcourse it isnt, it's just a separate dwelling of the same address.

So, has anyone got any experience with this and can shed some light on how you challenged/proceeded? I'd be quite happy with 50% off and would happily arrange my living style to account for that. But £1,200 PA for something that we're not planning on using so much yet....seems excessive, I suspect my local council are just inexperienced here.

Thanks so much.

Scott

Rodders53

https://www.gov.uk/guidance/understand-how-council-tax-bands-are-assessed

oldbikebloke

The VOA is the body responsible for banding.
What was the status of the annex when owned by your vendor? The fact the VOA has only recently banded it implies it was either exempt or "unknown".

if in England and "in use", yes, 50% discount, read:
https://www.moneysavingexpert.com/news/2015/03/got-an-annexe-check-if-youre-due-a-council-tax-discount/

sounds like some council staff need educating

also sounds like you may want to considering making structural alterations to the building so it can no longer be classed as a separate dwelling. Did you buy it because of the separate annex or in spite of a separate annex?

You would need to talk to the VOA for exact guidance on what to do, but in principle an annex is a dwelling because it has basic facilities such as own kitchen bathroom and toilet which make it self contained for living in. Remove those and it is no longer self contained, so no longer a separate council tax building. Obviously the down side of that is the "main" building will be larger so its own CT band may go up, but that probably won't be as much as the 50% of Band A for the annex as is ...  

SDLT_Geek

What advice did you get about stamp duty land tax on the purchase?  Did you consider multiple dwellings relief?

SteeleyScott

oldbikebloke said:

The VOA is the body responsible for banding.
What was the status of the annex when owned by your vendor? The fact the VOA has only recently banded it implies it was either exempt or "unknown".

Very interesting,  
Status of the annex before we purchased the property. Previous owner built it and I believe one of his kids was living there. Yes I agree, the VOA letter was "a notice of banding change" so definitely either exempt or unknown before now. I would've assumed when the property sold they either seen the floor plan and realised it needed to be banded... OR yes, exempt previous.

oldbikebloke said:

if in England and "in use", yes, 50% discount, read:
https://www.moneysavingexpert.com/news/2015/03/got-an-annexe-check-if-youre-due-a-council-tax-discount/

sounds like some council staff need educating

also sounds like you may want to considering making structural alterations to the building so it can no longer be classed as a separate dwelling. Did you buy it because of the separate annex or in spite of a separate annex?

You would need to talk to the VOA for exact guidance on what to do, but in principle an annex is a dwelling because it has basic facilities such as own kitchen bathroom and toilet which make it self contained for living in. Remove those and it is no longer self contained, so no longer a separate council tax building. Obviously the down side of that is the "main" building will be larger so its own CT band may go up, but that probably won't be as much as the 50% of Band A for the annex as is ...  

Ah thats great, so the 50% rule does stand if we're using it? I'll have a proper read of that link.
To answer the rationale of when we purchased; Yes the annex was like a nice bonus really, loved the house anyway and would've purchased without but with it being here it does present the option of moving my mum in in the future if life went that way you know? much better than being in an old persons home. But I can't see that for the next few years at least. 

Talked to VOA already, their definition was pretty clear, could someone live in it without using the main house? To be fair; Yes. it has a kitchen, living room, bedroom, bathroom. I had considered removing some of this and adding it back onto the property. It would undoubtedly put it into band H though and the difference between G and H is almost as much as 50% of A. Plus the cost of all the work to change it. 

Reading the link @Rodders53 posted :-  https://www.gov.uk/guidance/understand-how-council-tax-bands-are-assessed
I wasn't aware either of the concept of a "Class T" annex, one that is a separate dwelling that cannot be let out without breaching planning rights. In which case it would be exempt from council tax. We've got no plans and never would have plans to let it out as its in our back garden. I can't think of many things worse than my privacy being ruined especially in the current climate haha. So potentially there's something there too.

That said id be happy just to do 50% reduction for the foreseeable, then be fully exempt if/when the day comes where my mum moves in.

SteeleyScott

SDLT_Geek said:

What advice did you get about stamp duty land tax on the purchase?  Did you consider multiple dwellings relief?

It's a good question, so we got ZERO advice from our broker or conveyancer. Though 3 weeks into living here, loads and loads of SDLT rebate letters started coming through the door. Seemed very reminiscent of the PPI stuff. "YOU'RE OWED THIS!.... get in touch!" 
I thought hey nothing to lose and yes, we were able claim back £17,000 in stamp duty. The provisions being; it must not be changed to not be an annex for the next 4/5 years (from memory).

 

oldbikebloke

SteeleyScott said:
I would've assumed when the property sold they either seen the floor plan and realised it needed to be banded...

I thought hey nothing to lose and yes, we were able claim back £17,000 in stamp duty. The provisions being; it must not be changed to not be an annex for the next 4/5 years (from memory). 

yes, very possible it was as a result of the sale. There was presumably an "improvmenet indicator" against the property, so a sale would have triggered the review, at which point the existence of an annex would have resulted in its banding rather than the whole property being "upbanded" for "an extension" adding extra space to the property 


SDLT refund rather resolves the possibility of you doing work to delist it then!
so all your efforts should be directed towards understanding the 50% rule so that you can educate your council 

your idea re planning is a red herring, by definition, if subject to planning permission at the time it was built (which obviously you should found out as part of your purchase), then you can't change at a later date to make it's use restricted; it is what it was. 

SteeleyScott

oldbikebloke 

your idea re planning is a red herring, by definition, if subject to planning permission at the time it was built (which obviously you should found out as part of your purchase), then you can't change at a later date to make it's use restricted; it is what it was. 

I see, I didn't read the bit saying its not possible for it to be re-defined as a class T. Correct me if im wrong but the same link says Class W means its got an elderly relative living in it? so if there's a protocol to change it to a W...there definitely isnt one to change it to a T? 

RE: part of the purchase.... Concerningly the conveyancer didn't even realise it had an annex. They just assumed it was an out-house. Fairly poor form and its a huge brand name too. The anxiety there comes from the matter that our mortgage lender may not know either, and that could have; and will potentially be an issue at the end of our 5year fixed term, that said the ambition is to have paid it off by then, hopefully a moot point. 

CIS

Class T and Class W are a matter of fact, there's no 'protocol' for changing the exemption type, it's just down to applying to the council.

Class T applies only to an unoccupied annex with a planning restriction. Technically the planning restriction could be added at any time but the council, in real terms, won't add the restriction after the fact.

Some places saying you get 50% off if its being used by the residents of the main property.

Depends if it's banded as a S3 dwelling or under Article 3 of the Chargeable Dwellings Order.

SteeleyScott

Interesting, thanks. A few questions based off of that then, to make sure I understood that correctly

CIS said:

Class T applies only to an unoccupied annex with a planning restriction. Technically the planning restriction could be added at any time but the council, in real terms, won't add the restriction after the fact.

RE: it being unoccupied, im happy for it to not be occupied until future of moving a >65 in then applying for a class W.

RE: The planning restriction, what is the 'fact', in after the fact? as in when it was first built? If they wont add it, does that mean this just can't ever be added?

CIS said:

Some places saying you get 50% off if its being used by the residents of the main property.

Depends if it's banded as a S3 dwelling or under Article 3 of the Chargeable Dwellings Order.

Reading that article here :-  https://www.legislation.gov.uk/uksi/1992/549/made/data.pdf
 
"Where a single property contains more than one self contained unit, for the purposes of Part I of the Act, the property shall be treated as comprising as many dwellings as there are such units included in it and each such unit shall be treated as a dwelling."

I couldn't see anything about S3, but  It sounds like it should be banded as so...?  Where is the literature that states it needs to be banded under Article 3 to qualify for the 50% off? Do I need to do anything to ensure it is banded appropriately? I assume that based on the letter from VOA saying it is now a band A property, it should qualify?

SteeleyScott

O.K so from chatting with our conveyancer today, it appears that the order of events so far look like this
Planning permission was granted to extend behind the garage back in 2007, this is what's now the annexe. Same building size/footprint but obviously they must've changed it's "use" from a huge single room extension to it's current setup comprising of:- a living space/kitchen/bathroom/bedroom.

It would appear that there were permissions granted to build the building, but no further permissions were requested to turn that building into an annexe/granny flat. Do you need extra permissions for the latter? 

So I guess the question now is IF they did need permissions to turn the extension into a self contained dwelling, they're clearly not there, so now it's my problem if I pick this process up and the application to turn into an annex gets rejected?

 This certainly means there's no Class T here either, so if I wanted to proceed with getting all this sorted, I imagine applying the restriction making it a Class T, would be part of the permission process by ringing the local planning control office to get them up to speed?