Under existing rules, “granny flats” are regarded as separate dwellings and are liable to be charged full rates of council tax by local authorities, which typically exceed £1,000 a year.
Officials estimate that the change could benefit as many as 300,000 households in England.
The reforms, which are likely to require legislation, are expected to form part of a package of policies to address the shortage of affordable homes over the next two years. The Government has already supported moves to encourage pensioners to downsize and allow councils to rent out their family homes.
Research last year estimated that 25 million bedrooms in England were empty.
At the same time, high property prices are forcing young families to squeeze into small homes. With almost a fifth of the population expected to be older than 65 by 2020, ministers believe “radical and urgent” reforms are needed.
The annexes could also be used to accommodate young people looking to make their first step on to the housing ladder.
Currently, an annex does not need to have its own front door to be counted as a separate dwelling but it would be expected to have distinct living and sleeping areas, and a kitchen and bathroom.
Some discounts for the elderly living in annexes already exist. However, when part of a house has been adapted as a “granny annexe”, it continues to be counted separately for council tax, even when it is no longer occupied.
Ministers also intend to review legislation to remove red tape that can make it more difficult for home owners to adapt properties.
Currently, garage conversions require planning permission and officials are concerned that too many councils refuse to approve schemes.
The review will also consider scrapping the need for households to pay for planning agreements on how the flats will be used, which can cost more than £1,000.
A government source said: “Such a policy would make it easier for families to expand their homes and offer accommodation to extended families, without the hassle and cost of moving home.”
The Department for Communities and Local Government acknowledged in a policy document on the proposals that the law on council tax for annexes was “complex”.
Ros Altmann, director-general of Saga, the over-50s group, said the reforms could be a “benefit” for families that would otherwise struggle to afford the cost of care for relations.
However, she warned that the elderly must not be forced to move out of their own homes.
Sorry but this shows a total lack of coherence of government policy. At the same time as the government is cracking down on ‘sheds with beds’ which in large part are a problem because it is too easy to build outbuildings and convert garages if you claim that they are for ‘family members’. So instead the government proposes to add fuel to the fire and what is more subsidise them. The answer is not to remove planning consent but to extend it but to make it easier and cheaper in genuine cases, such as at the side or rear of a house for those who can demonstrate close family membership. The section 106 issue referred too is an easy one to solve, simply publish a standard unilateral undertaking and then the cost is only the engrossment fee – £25 rather than £1,000. Their is a basic error also, the conversion of a garage per-se will normally not be development. What might require PP or be PD is either the subdivision of the dwelling or the replacement of the front garage door with a window. Do we really want to remove PP for the subdivision of dwellings with the acute subdivision problems we see in many areas that have paralell ‘beds with sheds’ problems, where you often see small properties subdivided and occupied to victorian slum levels? Yet again a DCLG fail in terms of analysis and solution – not every problem can be solved through only ‘cutting red tape’. The DCLG has to move back from the failed ideological slant to determining what mix of regulation and deregulation is suited to the task, and also determining what the multiple objectives of policy, pushing in different directions, are. This includes both helping genuine cases of aiding elderly and disabled members of a family (not just any extended family which is open to abuse) whilst clamping down on excessive subdivision and outbuildings which result in overcrowding and poor conditions. One solution to this has to be minimum room sizes and occupancy controls,