Granny Flats to Get a Tax Break?

by Mark Johnston

Increased life expectancy, falling pension funds and rising child care costs are likely to lead to an increase in demand for ‘granny flats’.

Granny flats can also be part of a solution for families caring for elderly dependents.

Granny flats are so called because they are usually occupied by pensioners, they are self contained annexes built on to existing properties.

At the present time these properties do not require their own front door to be treated as a separate dwelling, although they do need to have their own bathroom, kitchen and distinct living and sleeping area.

Under existing rules, granny flats are regarded as separate dwellings and are therefore liable to be charged council tax by local authorities; this can typically exceed £1,000 a year.

Eric Pickles, the communities’ secretary, said this was “fundamentally unfair for households to be charged twice by paying council tax on their home and annexe as well”.

Although some discounts for the elderly living in annexes do already exist, it seems the government are now considering scrapping council tax altogether for annexes. Experts have estimated that as many as 300,000 households inEnglandalone could benefit from the change.

However, Hilary Benn, shadow Communities secretary, stated “granny flats have been exempt from council tax since 1997. This seems to be nothing more than an attempt to deflect attention from the governments housing crisis”.

In light of this it seems therefore unclear which pensioners the government expects to benefit from the changes they are considering. Many experts believe that all this shows is that the government yet again are “over claiming and under delivering” for the nations pensioners.

This ‘so called’ tax break is all pert of a package of policies to address the shortfall of affordable homes over the next 2 years.

As part of the package ministers are also intending to review legislation to remove red tape that can make it more difficult for home owners to adapt their properties. They are keen to remove tax and other regulatory obstacles to families having a live in annexe for immediate relations.

Peter Lynas, of the Relationship Foundation, says “it is surely time we made it easier to look after our elderly relatives. Planning laws should adopt a presumption in favour of granny flats”.

Experts believe that such a policy would make it easier for families to expand their homes and therefore offer accommodation to extended family.

The Centre for Social Justice has also recommended tax incentives of up to £20,000 should be offered to families wanting to build granny flats.

Although there are some who are against these ideas as they feel that these schemes are simply trying to make it attractive for pensioners to give up their homes and move in with their family, thus getting their family to look after them and saving the government money while also freeing up properties.

Ministers have already recently tried to encourage pensioners to downsize and allow local authorities to rent out there homes.

Ros Altmann, the director general of the over 50s group, Saga, said of the various schemes “the elderly should not be forced to move out of their own homes”.

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