Annexe or a separate home in the garden?

What is the difference between an annexe and a separate home?

An annexe is accommodation used as part of the main house, typically by a relative, sharing the garden, the access and usually the address. A separate home is an independent dwelling that someone unconnected to your household could live in, with its own front door, services and outdoor space.

The difference is about use and planning status more than appearance. A well-designed annexe can look just like a small bungalow, and a small separate home can look like an annexe. What matters is how it is lawfully allowed to be used, which comes from the planning permission and any conditions on it.

Does an annexe need planning permission?

Usually, yes, if it includes living accommodation such as a bedroom, kitchen and bathroom. Planning Portal guidance for England says permitted development rules for outbuildings do not cover use as separate self-contained living accommodation, so a garden building designed to be lived in normally needs an application.

Converting part of the house, or a garage attached to it, can be different, and Wales has its own permitted development rules. Ask the council or a planning consultant before you assume anything. A new separate home always needs planning permission; it is never permitted development.

Councils judge annexes on whether they are genuinely part of the main home. They typically look at how close the annexe is to the house, whether it shares the garden, access and parking, its size compared with the house, and whether it could easily be split off. An annexe that is large, fully self-contained and has its own access may be assessed as a new dwelling, with all the tests that go with it.

What are ancillary conditions and why do they matter?

An ancillary condition is a planning condition saying the annexe may only be used for purposes ancillary to the main house, often adding that it must not be sold, let or occupied as a separate dwelling. It is the main way councils allow annexes in places where they would not allow a new house.

The condition runs with the land. A future buyer of your house takes the annexe on the same terms, which can limit its appeal and value. Breaching it can lead to enforcement action by the council.

Changing an annexe into a separate home later needs a new planning permission or the removal or variation of the condition, and the council will then judge it as a new dwelling against current policy on access, privacy, garden space and parking. Some annexes that were acceptable as part of a household would not pass as a separate home.

How does each option affect your title and ability to sell?

An annexe stays on the same title as your house and is sold with it. A separate home can be split off with a transfer of part at HM Land Registry, giving it a title of its own, which is what lets you sell it, give it to a family member or borrow against it independently.

If you think you might ever want to sell the new home on its own, design and apply for it as a separate dwelling from the start. Retrofitting independence onto an annexe later is often harder and more expensive than building it right first time.

Can you get a mortgage on an annexe or a separate home?

An annexe is generally treated as part of the main house, so it is covered by the mortgage on the house rather than financed on its own. Tell your lender before you build, because works that change the property can affect its security.

A separate home can usually be mortgaged on its own once it is complete, but most lenders expect a structural warranty, usually lasting 10 years, or for some lenders an architect’s or surveyor’s certificate, plus building control sign-off and a clear title with proper access and services. If the plot is cut from a mortgaged garden, your existing lender must also agree to release it from its charge.

How does council tax work for annexes and new homes?

A separate home is a new dwelling and will be banded for council tax in its own right. Annexes are often banded separately too, even when used as part of the main household, but reductions or exemptions can apply depending on who lives there and how it is used.

In England, regulations give a 50% council tax reduction for some annexes, for example one used by the main household or occupied by a relative of the person who pays council tax on the main house. Other exemptions may apply, and Wales has its own rules. Check with your council’s council tax team, because the details depend on your circumstances.

Will you pay the Community Infrastructure Levy?

It depends on whether your council charges CIL and on which exemption you can claim. GOV.UK guidance says residential annexes built within the grounds of the owner’s principal residence can be exempt, but the claim must be made before development starts and a commencement notice must be submitted before work begins.

The annexe exemption is withdrawn if, within three years of completion, the annexe is let or either the annexe or the main house is sold separately. A separate home may instead qualify for the self-build exemption if you build or commission it to live in yourself, again claimed before work starts. Missing these steps can mean paying the levy in full, plus surcharges.

How is VAT different for an annexe and a separate home?

Building a new dwelling is normally zero-rated for VAT, but an annexe that cannot be used or sold separately usually isn’t. HMRC’s VAT Notice 708 gives a granny annexe that cannot be used or disposed of separately as an example of work that can’t be zero-rated, because it doesn’t fully meet the conditions of a building designed as a dwelling.

The DIY housebuilders scheme, which lets people building their own home reclaim VAT on materials, follows the same logic. GOV.UK says you’re not eligible if a term in the planning permission means the property cannot be sold or used separately, or if you intend to sell or let it. Claims for homes completed on or after 5 December 2023 must be made within six months of completion, and you can only claim once.

VAT on annexes and mixed projects can be technical, so take advice from a tax adviser before you sign a building contract.

Which is right for your family?

An annexe usually suits a household that will stay together, such as a parent who needs to live close by, and where the plot or local policy would make a separate house difficult. A separate home usually suits people who want flexibility: to sell, let or pass the home on independently, or to keep it if family circumstances change.

For example, a family planning a home for an elderly parent might choose an annexe because it is simpler to get through planning, then find that once it is no longer needed, they cannot let it. Another family might choose a separate home, accept a longer planning process and a stricter design, and end up with an asset they can sell or let later.

Wales needs some extra thought. Every new separate home there must have sprinklers, and schemes may need drainage approval from the SuDS Approval Body; ask building control and the council how those apply to an annexe design too.

• Who will live there now, and in ten years?
• Would you ever want to sell, let or mortgage it on its own?
• Does the plot have room for separate access, parking and garden space?
• Can you claim the relevant CIL exemption before work starts?
• Does the VAT difference change your budget?

How can we help you decide?

We design and build both annexes and separate homes, and the first step is a free garden plot appraisal: a desktop check and a conversation, then a site visit if it looks viable. That appraisal looks at whether the plot could support a separate home, which keeps the better-value option open if it is realistic.

After design and survey, you get a written quote. Our guide price ranges are on the prices page, and planning decisions are always the council’s.