Tax breaks for granny flats?

Communities Secretary Eric Pickles was reported at the weekend as planning to exempt 'granny flats' from council tax in a bid to tackle the housing crisis.

He told the Daily Telegraph that the government is considering abolishing council tax for annexes used by family members, removing ‘red tape’ such as planning regulations governing the conversion of outbuildings and garages, claiming it was “fundamentally unfair” for households to be charged twice by paying council tax on their homes as well as the annexes.

Pickles told the Daily Telegraph:

“We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations. We should support homeowners who want to improve their properties and standard of living. These reforms should also play a role in increasing the housing supply.”

The paper reported that DCLG officials estimate that the change could benefit as many as 300,000 households in England.

Currently self-contained units of accommodation within a property must each be treated as separate dwellings for council tax purposes. However, there is an exemption for an annex, occupied as their main residence, by a dependent relative (aged 65 or more, or severely mentally impaired or substantially and permanently disabled) of someone who is a resident in the main dwelling.

The latest proposals would extend the exemption to relatives of any age and could provide an separate home for adult children unable to afford to move away from home.

In a consultation document published in March the government asked "in what circumstances if any do the rules requiring the separate banding of self contained units of accommodation within a hereditament give rise to unfairness?". The majority (84 per cent) of respondents said that the rules were not unfair or that they were unfair if the annexe is no longer used separately.

Hilary Benn, Labour's communities spokesman, claimed:

 “This cynical spinning shows that, once again, the Tory-led government is over-claiming and under-delivering for our nation's pensioners.

“This seems to be nothing more than an attempt to deflect attention from their housing crisis. We need to get building and get the economy moving again.”