Granny flat

A granny flat is an informal term for a self-contained or semi-self-contained secondary dwelling within the same building or grounds as a main residence, for example, a converted garage, a loft annexe, or a detached garden building with its own bedroom, bathroom, and kitchen. It is a sub-type of annexe, the broader term for all secondary accommodation units at a property. Granny flats are traditionally associated with housing elderly relatives, but they are also used for adult children, carers, or unrelated tenants. From a landlord's perspective, the term has no legal definition, what matters is how the space is constructed, used, and whether it qualifies as a separate dwelling under planning law, council tax rules, and tenancy law.

Planning permission

A self-contained granny flat built as a new detached structure in a garden almost always requires full planning permission. The key principle is that Permitted Development (PD) rights do not extend to new buildings used as separate, self-contained living accommodation. GOV.UK's guidance on permitted development for householders confirms that outbuildings may be built under Class E PD rights, but only where they are not used as independent residential units. A granny flat with its own bedroom, kitchen, and bathroom, functioning as an independent home, falls outside PD and needs a planning application.

Conversions of existing attached structures (such as a garage or loft) may be handled differently and can sometimes be permitted as an extension to the main dwelling, but the self-contained nature of the intended use remains the critical planning test. Planning authorities typically impose a condition requiring the annexe to remain ancillary to the main dwelling, which can restrict the right to let it independently or sell it separately.

Council tax

Where a granny flat is assessed as a separate self-contained dwelling by the Valuation Office Agency, it will be given its own council tax band and the owner will be liable for that charge in addition to the main property. However, two exemptions may apply. First, where the annexe is occupied by a dependent relative of the main household, including an elderly or disabled family member, it may qualify for a full council tax exemption under Class W. Second, where it is occupied by a relative of a person living in the main home, a 50% discount may apply. Neither exemption is automatic, the owner must apply to the local council, which makes the determination based on the specific facts.

Stamp duty - Multiple Dwellings Relief abolished

Until 1 June 2024, buyers could claim Multiple Dwellings Relief (MDR) on stamp duty when purchasing a property that included a self-contained granny flat, potentially reducing the SDLT bill significantly by treating the transaction as involving two dwellings. That relief has now been abolished in England and Northern Ireland. Properties purchased on or after 1 June 2024 are assessed as a single residential purchase for stamp duty purposes, regardless of whether the property contains a granny flat. MDR remains available in Wales. Our MDR calculator reflects the current position for England, Wales, and Northern Ireland separately.

Tenancy type - the key test

The single most important question for any landlord with a granny flat is whether the occupant is a lodger or a tenant, and if a tenant, whether they hold an assured tenancy or a non-assured tenancy. The answer depends on whether facilities are genuinely shared with the main household.

Lodger. If you live in the main property and the granny flat occupant shares some facilities with you, for example, a kitchen or entrance hallway, the occupant is likely a lodger rather than a tenant. Lodgers have more limited security of tenure and are not covered by the full Renters' Rights Act framework.

Non-assured tenancy. Where you live in the main property and the granny flat is truly self-contained, its own entrance, kitchen, bathroom, and no shared facilities, the occupant may hold a non-assured tenancy rather than an assured tenancy. Under the Housing Act 1988, a tenancy cannot be assured if the landlord also occupies another dwelling in the same building as their main home and the building is not a purpose-built block of flats. A non-assured tenancy does not require deposit protection, and possession starts by serving a notice to quit rather than Section 21 or Section 8. This is a significant and frequently misunderstood distinction.

Assured tenancy. If the granny flat is let independently, you do not live in the main house, or the main house is separately tenanted, the occupant is likely to hold an assured tenancy under the Renters' Rights Act framework, with full protection on notice periods, rent increases, and possession grounds.

From working with self-managing landlords across the UK, August finds that the non-assured tenancy position catches owners off guard most often when they have moved out of the main house, or when a previously family-occupied annexe is first let to an unrelated tenant, situations where the tenancy type assumption flips without the landlord realising it.

Safety and compliance

Regardless of tenancy type, any granny flat let for money must meet the same safety standards as any other rental property. This means a valid EPC (minimum rating E, rising to C by 2030 under proposed MEES rules), an annual gas safety check and CP12 certificate if there is a gas supply, and an Electrical Installation Condition Report (EICR) every five years. Where the granny flat qualifies as an HMO by virtue of occupancy, for example, if it is let to multiple unrelated people, HMO licensing may also apply.

Rent a Room scheme

If you live in the main property and let the granny flat to a lodger who shares some facilities with you, you may be eligible to use the Rent a Room scheme, which allows up to £7,500 per year in rental income to be received tax-free. The scheme does not apply where the annexe is fully self-contained and the occupant holds an independent tenancy. Our guide to taking in a lodger covers the Rent a Room rules and the practical checklist.

Frequently asked questions

Can I rent out a granny flat without planning permission?

Only if the granny flat was built with permission that permits independent letting, or if the planning authority has not imposed a condition restricting use to ancillary family accommodation. Many annexes are granted planning permission with an ancillary-use condition, which means letting to an unrelated tenant would breach that condition and expose the owner to enforcement action. Always check the planning decision notice before letting any granny flat commercially.

Does a granny flat need its own EPC?

Yes, if it is let as a separate self-contained unit. An EPC must be obtained for each dwelling that is let. If the granny flat shares services with the main house and is not a separate dwelling for energy purposes, this assessment is less straightforward, but where any doubt exists, obtaining an EPC for the annexe is the safer approach.

Is a self-contained granny flat an HMO?

Not on its own, a single granny flat let to one household is not an HMO. However, if the main house and the granny flat together form a property where three or more unrelated people share facilities across both units, the HMO licensing threshold could be met for the overall property. This is a fact-specific analysis that depends on the physical configuration and who occupies each part.