Ministers to remove granny flats ‘penalty’

Ministers believe families who currently pay extra council tax to cover self-contained accommodation attached to their homes could save an average of £485 per year.

Annexes occupied by pensioners or severely disabled family members are already exempt from council tax. The Government is now proposing to offer a discount on self-contained accommodation occupied by any immediate family members.

Local Government Secretary Eric Pickles said: “I believe the Government should be supporting hard-working families who do the right thing. Removing the family tax penalty on annexes and home improvements will help provide more affordable housing and strengthen the bonds that tie society together.

“By cutting town hall taxes on family annexes, extensions and home improvements, we are supporting aspiration and choice, as well as giving a boost to the construction sector and local traders.

“These common sense tax cuts will increase the provision of
affordable housing to those on lower and middle incomes. Encouraging extended families to stay together will reduce social care costs to the taxpayer, and protect independence and dignity for the young and old.”

There are an estimated 24,150 family annexes in England, but Ministers believe far more households could be helped by tax cuts that encourage more annexes and more conversions of outbuildings and new extensions.

Mr Pickles has set out plans to remove another charge known as the community infrastructure levy from self-build properties and extensions.

Town halls will also be told they cannot impose charges known as section 106 agreements on families who extend or add annexes to their homes.

The agreements are more usually used to secure funds from developers of major property schemes to spend on improving local facilities.