Annex

An annex (also spelled annexe) is a secondary unit of accommodation attached to or within the grounds of a main dwelling, typically a converted garage, garden studio, loft extension, or side addition with its own sleeping area and bathroom. Annexes range from fully self-contained, with their own front door, kitchen, and bathroom, to semi-self-contained, sharing some facilities with the main house. Sometimes called a granny flat, the term is most commonly used in planning and property law to describe accommodation that is ancillary to a primary residence but may also function as an independent home.

The self-contained vs semi-self-contained distinction

The single most important question when letting an annex is whether it qualifies in law as a separate dwelling. A unit that has its own kitchen, bathroom, sleeping area, and a secure and private means of entry, typically its own external door, is generally treated as self-contained and therefore a separate dwelling. The Valuation Office Agency (VOA), which assesses council tax bands, considers these as the key indicators, as does HMRC when determining eligibility for SDLT Multiple Dwellings Relief.

A unit that shares any of these essential facilities with the main house, a communal kitchen, a shared entrance, or a connecting internal door that is not lockable from both sides, is more likely to be treated as semi-self-contained. In that case, an occupier who lives there while the main householder is also resident may be a lodger rather than a tenant.

Planning permission and ancillary use conditions

Many annexes are built or converted subject to an ancillary use condition, a planning restriction attached by the local planning authority stating that the annex cannot be occupied separately from the main dwelling. This condition is commonly applied to annexes approved for family or dependent relative use, and letting the annex independently without first obtaining a Certificate of Lawfulness or a change of use consent from the local planning authority would breach that condition. Before marketing an annex to let, always check the planning history of the property and confirm with your local planning authority whether any such condition applies. 

Even where no ancillary use condition exists, if the annex was constructed as a permitted development extension to the main house, rather than as a standalone dwelling, it may still require a formal change of use application before it can be let commercially as a separate property. This varies by local planning authority and the specific facts of the development.

Tenancy type: assured tenancy or lodger arrangement?

If the annex is genuinely self-contained and used as someone's only or main home, any letting is likely to be an assured tenancy, bringing the full framework of landlord obligations under the Renters' Rights Act 2025, including deposit protection, safety certificates, EPC requirements, Right to Rent checks, PRS Database registration, and possession-ground-only eviction. You would need to treat the annex as a separate regulated letting in every respect.

If you live in the main house and the annex shares meaningful living space with it, a kitchen, bathroom, or main entrance, the occupier may instead be a lodger with more limited security of tenure and no requirement for a court-ordered possession process. The key test is whether the occupier has exclusive possession of a self-contained unit. If they do, they are almost certainly a tenant, not a lodger, regardless of what the agreement says.

From working with self-managing landlords across the UK, we find this is one of the most commonly misunderstood areas in residential property. Labelling an arrangement as a "lodger licence" when the occupier has exclusive possession of a self-contained annex does not make it a lodger arrangement in law. If the annex is self-contained, the occupier has an assured tenancy and all the statutory protections that come with it. Attempts to mislabel the relationship to avoid those protections are likely to fail in enforcement or dispute proceedings.

Council tax: separate banding, discounts, and exemptions

Where an annex qualifies as a separate dwelling, the VOA may assess it separately for council tax purposes, giving it its own council tax band, typically Band A. The annex occupier then becomes the primary liable person for that band's council tax bill.

A 50% council tax discount is available on the annex bill where the annex forms part of a single property and is occupied by a relative of the person liable for council tax on the main property. A dependent relative living in the annex as their main home may qualify for a full council tax exemption. An unoccupied annex that cannot lawfully be let separately, for example, because of an ancillary use planning condition, may qualify for a Class T exemption from council tax entirely. Landlords and homeowners should check the specific rules with their local authority, as they can vary.

SDLT Multiple Dwellings Relief

If you purchased a property that includes an annex, you may be entitled to a reduction in Stamp Duty Land Tax under Multiple Dwellings Relief, which applies where the transaction includes more than one separate dwelling. To qualify, the annex must meet HMRC's definition of a separate dwelling, its own kitchen, bathroom, sleeping area, and private access, and the value of the annex must represent at least one third of the total transaction price. Use our Multiple Dwellings Relief calculator to check whether your annex meets the criteria.

For a full guide to the rules around accommodating occupiers within your own home, including the Rent a Room scheme, lodger agreements, Right to Rent checks, and deposit handling, see our guide to taking in a lodger in 2026.

Frequently asked questions

Can I use the Rent a Room scheme to let my annex tax-free? 

Only if the annex is not fully self-contained and you share meaningful living space with the occupies, such as a kitchen or main entrance. A fully self-contained annex let to an occupier who does not share any facilities with you creates an assured tenancy, not a lodger arrangement, and income from it is treated as rental income rather than Rent a Room receipts. The £7,500 Rent a Room exemption applies only to income from lodgers sharing your home.

Do I need an EPC for an annex I want to let? 

Yes, if the annex is self-contained and let as a separate dwelling. The minimum EPC rating requirement, currently Band E, with Band C proposed from 2030, applies to the annex as its own rated unit. If the annex has never been separately rated for council tax or energy performance, you will need to commission an EPC assessment before letting.

What if my annex was built without planning permission? 

This is a separate question from whether you can let it. If an annex was built without planning consent, or in breach of an ancillary use condition, letting it independently could compound an existing breach. You should seek planning advice and potentially apply to regularise the position before entering into a tenancy. In some cases, enforcement action by the local authority could require you to stop letting and restore the property to its previous condition.