Grab a granny flat! Demand for homes with self-contained annexes soars as councils continue crackdown on second homes

• Research from Purplebricks shows there has been a six-month surge in enquiries
• Second home owners face soaring council tax bills for their luxury properties
• Do YOU own a ‘granny-flat’? Email richard.percival@mailonline.co.uk 

Demand for homes with self-contained annexes have soared as local councils continue crackdowns on second homes.

Research from Purplebricks shows there has been a six-month surge in enquiries for properties with an annexe or so-called granny flat.

The increase in interest comes as second home owners face soaring council tax bills for their properties.

Online estate agents report seeing only a trickle of enquiries for the first seven months of 2023 – before interest spiked.

From the start of August last year to early January, there were around 10,000 enquiries. 

An annexe is exempt from council tax if it is occupied by a relative aged 65 or older, permanently disabled or severely mentally impaired.

However, if the family member is under 65, the owner can apply for a 50 percent reduction in council tax on the separate annexe.

According to Purplebricks, the increasing trend in enquiries also suggests buyers hoping to cash-in on the lucrative AirBnB market may be eyeing properties with on-site accommodation that has its own kitchen and bathroom.

AirBnB allows owners in Greater London to rent out a room for up to 90 days a year and other UK councils apply different limits. 

However, provided the annexe is used by the family for the rest of the year it should qualify for a 50 percent reduction in council tax.

Also, under the UK government’s Rent a Room scheme, homeowners pay no income tax on the first £7,500 earned on a spare room, or in this case annexe.

Purplebricks CEO Sam Mitchell said: ‘The rise of interest in annexes is a clear sign Brits are looking much closer to home when it comes to investing in property.

‘A so-called granny flat could be the cash-smart solution for families wanting to take care of an elderly relative, while protecting their independence.

‘Or those looking for rental opportunities could maximise their returns by reducing the potential tax burden of purchasing an entirely separate second property.

‘With second home owners facing uncertainty, it seems savvy home-hunters have spotted a clever way to have the best of both worlds.’

Purplebricks currently has a variety of properties with annexes on the market, including a modern six-bed house on the market for £525,000 in the Staffordshire town of Cannock.

The property comes with a ground-floor one-bed annexe that has both its own front door and is also accessible from the main dwelling.

Meanwhile, a three-bed farmhouse in Pembrokeshire with a four-bed annexe on the side is on the market for £895,000.

It is set in 19 acres of land comprising of pastures, woodland and gardens with a fishing lake and stables.

A five-bed home in Wakefield with a separate one-bed bungalow in the garden is also being offered for sale on the site for £650,000.

Purplebricks is also offering a five-bedroom detached house with a three bedroom detached annexe in Truro, Cornwall for £725,000 and a four bedroom detached house with a self contained annexe in Sleaford for £600,000.

Recently, the Labour run Welsh Government allowed local authorities to hike council tax on second homes by up to 300 per cent in April last year.

Speaking at the time, Rebecca Evans, minister for finance and local government, said: “We want to ensure councils have the powers available to them to strike the right balance in local housing supply.”

Rates have since been increased by five Welsh councils including Flintshire, Powys, Anglesey, Conwy and Gwynedd – which charges the UK’s highest second home premium at 150 per cent. 

Meanwhile, north of the border in Scotland, owners face paying double council tax from April this year on second homes. 

From April 1, new legislation will treat second homes like long-term empty homes.

Currently, second homes are subject to a default 50 per cent discount on council tax. 

However, local councils can vary charges and the majority already charge second home-owners the full rate of council tax, the maximum allowed.

Public finance minister Tom Arthur said in November: “We want everyone in Scotland to have a home that meets their needs. We know second homes can sometimes benefit local communities, but they can also restrict the availability of housing and increase costs for people who want to rent or buy.”

Meanwhile in England, local authorities have called on the UK government to give them more powers to deal with empty properties and holiday homes.