Pickles cuts Council Tax for granny flats

The Communities and Local Government Secretary Eric Pickles has been having a busy August - including announcements to help motorists, to make it easier to fly the flag, to diminsh wheelie bin blight on our pavements and to encourage more bungalows. He has also attacked Labour's plans for a tourism tax and encouraged councils to take action against illegal traveller sites.

However the item that I was especially pleased by was the Council Tax cut for those who build an annex to their home with it's own entrance. Those providing "granny flats" should be encouraged rather than punished. The alternative is for the state to step in with institutional care - and spiralling costs to adult social care budgets for local authorities.

At the moment there are estimated to be 24,150 family annexes in England. The Government would like there to be far more annexes - as well as more conversions of outbuildings and new extensions. Apart from the Council Tax cut the government has streamlined planning permission for conversions and is also confirming that it intends to remove the community infrastructure levy on self-build properties, including all extensions, family annexes and home improvements.

Ministers also intend to seek to remove Section 106 housing levies on such annexes and extensions – a ‘stealth tax’ slowly being introduced by town halls.

It is true that for pensioners there is already this exemption regarding the Council Tax. However the arrangement is unsatisfactory. What happens when the elderly relative dies? Then the garage or basement or barn that has been converted into a flat might sit empty yet still is being taxed at a higher level - around £500 a year more - than if it hadn't been converted.

Also what if it is a son who wants a bit of independence from his parents but can't yet afford to buy or rent his own place?  Or a grandmother (or aunt) who is not yet a pensioner but would be pleased to be closely placed to assist with child care?

Mr 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.

A welcome reform.