Can I rent out my annexe?

Have you ever wondered if that unused space in your garden could be used for more than just storage? Renting out your annexe can be a lucrative source of income. Transforming that neglected space into a cosy cabin or a holiday hideaway can feel like a goldmine of opportunity. And while it is possible, it’s essential to understand the benefits, risks, challenges, and implications of annexe rental before you start counting your profits.

What types of annexes are normally rented out?

There are numerous types of annexes including attached, detached, self-contained, garage or loft varieties. However, there isn’t a particular type that is favoured by renters. Rental requirements are as varied as the accommodation itself. The types of annexe that get rented out will often depend on the needs of the landlord. Landlords should consider their desire for privacy and the layout and features of their space - as well as their capacity to meet planning rules and regulations.

What are the benefits of renting out your annexe?

Renting out an annexe can offer various benefits to landlords. Namely, it can provide you with additional income and diversify your income streams. In addition to this, it may also increase your property value.

What are the risks of renting out your annexe?

There are risks associated with annexe rental. Some risks include:

Damage to the property
Unexpected repairs or maintenance costs
Troublesome tenants
Late or overdue rent payments
Economic downturns
Periods of low occupancy
Failure to meet regulatory requirements

Challenges and Implications for Material Change of Use

When it comes to renting out your annexe, you may need to apply for a “material change of use.” This process involves obtaining permission from your local authority to change the use of your annexe from an ancillary extension of the main dwelling to an independent living space.

This shift makes the property subject to the standards of full residential use, which can be challenging to navigate and fraught with obstacles. The approval process may include time-consuming paperwork and consultations with local authorities, neighbours, and community stakeholders. While these measures ensure the property complies with local regulations and does not negatively impact the environment and neighbourhood, they can pose unexpected and expensive complications for landlords.

What happens if you fail to adhere to material change of use requirements? You may be liable for both financial and legal repercussions, from steep fines and costly remediations to insurance invalidation and civil lawsuits.

Changing the use of your annexe will have an impact on the value of your property and its marketability. Property values can be affected by a number of factors, such as whether you adhered to the material change of use requirements. Is there demand for your type of annexe in the market? What competition is there? How appealing is your property overall?

You can mitigate risks around material change of use by ensuring the following:

Do your research to understand all the legal requirements
Seek professional advice and expertise to navigate the approval process
Communicate with stakeholders to build positive relationships and address concerns
Plan for delays and challenges to stay on track and in budget

Keep detailed records of all permits, approvals, and actions

When is an annexe a separate dwelling?

An annexe can only be considered a separate dwelling once it has undergone a material change of use. Without this change, they are considered extensions of the main property and not independent living spaces.

Do you need planning permission to rent out an annexe?

Whether you need planning permission to rent out your annexe will depend on a few factors, including the frequency and duration of lets. These are crucial considerations. Extended leases are more likely to cause disruption to your neighbourhood through traffic, parking and noise disturbance.

On top of this, the residents in the main property will also need to use the annexe between rentals to maintain its status as an ancillary extension. This will prevent the need for a material change of use and the associated planning permissions. It’s essential to check with your local authority and to consult with a legal professional to ensure you are compliant with the relevant regulations.

What are some alternative ways to rent out your annexe?

It is possible to rent out your annexe without having to navigate the complexities of material change of use. Landlords may consider using rental platforms and short-term lets as annexe rental alternatives that don’t require long-term commitments or legal alterations. However, you should still double check with your local authority to ensure these comply with your local regulations.

An alternative way to rent out your annexe may be through Airbnb and other rental platforms. These services can be flexible and convenient, giving you access to a wide pool of guests, flexible rental terms, and significant earning potential.

Another annexe rental option landlords could consider is short-term lets. These rental options can cater for a more diverse audience with a greater range of needs, including providing space for workshops, events, photo shoots or storage. These type of lets can offer you even greater flexibility, higher earning potential and multiple income streams.

What should you do when renting out your annexe?

Renting out your annexe can be a rewarding venture. To ensure it is as positive and successful as possible, there are some key steps you should prioritize once you’re up and running:

Determining your rental rates
Setting clear rental policies and guidelines
Establishing procedures for maintenance
Implementing feedback and communication systems
Ensuring you have the correct insurance
Screening potential tenants rigorously
Planning for vacant periods and marketing

haart can help

Get in touch with your local haart branch to for advice and support renting out your annexe.

Is buying right for you?

You might have your eyes on your dream home, but it could turn into a nightmare if you don’t do your due diligence. Can you afford the mortgage payments on your new property? How much would you expect to sell your current property for? Have you got spare funds in your budget if refurbishments are needed on a new property?

Using the Just Mortgages mortgage calculator will help as you scrutinise your finances.

Work out the full cost of buying

Your new mortgage and running costs won’t be the only expenses involved when you buy a house. You also need to factor in:

Removal costs
Survey fees
Conveyancing fees
Stamp duty
Estate agency fees (if you are selling your current property)

Read our complete guide to the costs of buying a property.

Arrange a mortgage in principle

A mortgage lender will want to know if they will be able to lend the funds you need to complete the property purchase. This is called a mortgage agreement in principle (AIP). You will need to provide details of your income and monthly outgoings, and a credit check will be carried out. An AIP does not guarantee that you will receive a mortgage offer.

Sell before you buy

If you are selling at the same time, estate agents and vendors won’t take you seriously until you have accepted an offer on the property you are selling.

Consider resale potential

Assuming you are not planning to live in the property for the rest of your life, consider its resale potential.

Is it in a good location? Does the property have curb appeal? Are the local schools well regarded and the neighbourhood safe and quiet? Is the property floor plan or footprint of the property likely to appeal to the widest range of buyers? For example, single storey homes are very popular with both older buyers and families with very young children.

Use property search tools

Searching for properties online is your first step to finding that dream home. Most property websites will enable you to filter by price, number of bedrooms, location and property type, and you may also be able to use keywords or exclude particular property types from your search results.

Check out the neighbourhood

You should do some research on the local area, finding out about schools and transport links. What’s the traffic noise like? Is there enough car parking? If it is a property without off-street parking, check if there are enough spaces to park, or ask the vendors if permits are needed. Are there shops or amenities within walking distance?

Ask plenty of questions when viewing

There are many important questions you can ask the vendors while viewing a property. They include:

How long has the property been on the market?
Are curtains and light fittings included in the sale?
What are the neighbours and the local area like?
Have they done any major renovations?
How long have they lived there?

Items to check when viewing a house

Exterior – are there any obvious structural problems, loose tiles, bricks or damage to guttering or pipes?
Interior – is damp evident anywhere? Mould and peeling wallpaper are tell-tale signs.
Garden – who is responsible for the fences? Is the garden north or south facing?

View at different times of day

A street may be perfectly quiet at the time of your viewing in the middle of the day, but go back during the early morning or early evening to find out how busy or noisy it is at peak periods.

Research how much to offer

Before making an offer on a property do some basic research to check how much similar houses or flats in the area have sold for. You might find that you can offer less than the asking price and save yourself several thousands of pounds! There are lots of tools to find out this information on property websites.

Ask the seller to take if off the market

Once your offer has been accepted make sure you ask the vendor or their estate agent to take the property off the market. This will ensure that a rival offer cannot be placed, and confirms the vendor’s word of mouth agreement to sell the property to you. However, it does not guarantee that the sale will proceed, or that ‘gazumping’ won’t take place.

Get fixtures & fittings in writing

The vendor’s solicitor will have provided a “fixtures and fittings” document that the vendors should complete. This document sets out to you, the new buyer, what the home comes with and what the current owners intend to take with them. So if they plan on leaving their dishwasher that will save you the expense of disconnecting and moving your current one.

Instruct your solicitor or conveyancer

After your offer has been accepted it is time to instruct a conveyancer to act on your behalf in your property transaction. They will liaise closely with your sellers’ solicitors to finalise the draft contract, resolve any pre-contract enquiries, obtain copies of any existing guarantees and planning consents, and conduct local authority searches.

Get the right survey

Before you buy a property you should arrange for a survey. A survey will tell you if a property is a good investment, or whether there are structural faults or significant problems you should address. There are four different types of survey:

Valuation report – the most basic survey, required by all mortgage lenders to establish that the property offers sufficient security to cover the loan
Home Condition report – assesses the condition of the property through a traffic-light system to highlight any areas of concern
Home Buyer’s survey – a more thorough survey of the fabric of the property which goes into greater detail about the condition of windows, walls, doors, roof, stairs and exterior features. This is the most popular survey chosen by homebuyers
Building survey – ideal for very old or run down properties, this offers the most thorough examination of a property’s condition and construction.

Get home insurance quotes before buying

Mortgage lenders will usually make it a condition of a mortgage agreement that buildings insurance is in place before exchange of contracts. Shop around for the best insurance quotes.

Compare removal costs

Get a few quotes from local removals companies. Ask friends and family if they can recommend a company, as you want a firm you can trust with your belongings. They will usually want to come and visit the property you are moving from, so that they know what size van and how many staff they will need on the moving day.