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Plan to end Council Tax on granny flats

Very good news in the Daily Telegraph today that, under a proposed new scheme, householders who convert part of their property into an annex for an elderly relative (or anyone else) will no longer have to pay two sets of Council Tax. Under current rules, even if the annex doesn't have its own front door, it is treated as a separate dwelling.

Planning rules would also be changed to make it easier and cheaper to get permission to convert garages and other outbuildings.

I wonder what the implications would be for the TV licence fee.

Communities Secretary Eric Pickles says:

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

Up to 300,000 families would benefit currently. Although, of course, the point is to encourage more families to help their relatives in this way. The BBC talk about the "substantial loss" to council revenue. It could be around a thousand pounds a time so perhaps £300 million. There would probably be some interest from Town Hall finance officers as to whether they were to take the hit for some or all of this or whether a Government grant would compensate them for it.

But there would be financial benefits to councils as well. Some of the elderly are currently living on their own at heavily subsidised rent in council homes with spare bedrooms. Adult social care costs local councils £14.5 billion. Does it really make sense for councils to obstruct and punish families that try to look after themselves?

On the other hand, central government finances would be helped to. There would be an ease on the burden to the NHS, and the £21 billion housing benefit bill would be reduced if housing supply increased. Another measure the Government should take to free up the housing market would be increasing the Rent a Room tax relief.

6pm update: Sir Merrick Cockell, Tory leader of the LGA doesn't quite understand the announcement - thinking that granny flats are already exempt --

 

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