HUMANITY will be high on the agenda at the upcoming Local Government Conference on 20-22 October.
Seven ministers will be discussing the issue, with the majority of the events focused on future planning and development.
Inquiries about how to avoid buying a home with a home annex have also been raised. However, an individual can reduce the cost of buying a home without breaking down state debt.
Edwin Flagley, City of London financial services director, said: “Buying a home with an annex helps to minimise stamp duty costs and increase home ownership, and is often a popular investment area for the UK population.
“There are currently around 8,100 homes with annexes across the capital, who have typically paid less than half the stamp duty on home purchases.“Buying an annex on a normal basis, with standard relief on stamp duty and land tax, reduces the burden on government debt, which is ultimately the Government’s responsibility.”
However, property tax can be affected by how extensive the buyer’s property is. And, as quoted by The Sunday Times, the Starter Home Association’s expert Brian Murphy warns that like with other homes, buying an annex can compromise your property’s value.
In the first instance, he said, someone paying an annual rent between £400 and £500 would be taxed at around £250 for each year on their assets, plus 45 per cent of any income.
Many units have very large owner-occupiers in them. Therefore, property taxes are likely to be a burden as a whole.
But something else that may have been overlooked by the majority of buyers is how unusual annexes are.
According to London director of MakeMyTrip, Matthew Williams, half of London’s residents have a home annex and many city people have a third and a half of the population have a home annex.
Professor of Housing Economics at the University of East Anglia, Dr Austin Fernandes, who spoke at the Office for National Statistics’ home ownership survey earlier this year, said annexes are generally used by first-time buyers.
The TA and stamp duty by law mean that the additional stamp duty payable on an annex is reduced by around half.
Adam Hignett, co-founder of Investec Land, said: “This allows first-time buyers a better deal in exchange for not paying such high stamp duty on their properties.“Not all annexes are used by first-time buyers. Instead they allow some first-time buyers to stretch their money a little further, not to mention taking possession of part of the property. This helps build the supply of genuine, first-time home buyers.”
On the whole, the costs of buying a house through an annexe have been relatively high due to the relatively cheap, refurbished building and furniture as well as some minimal improvements.
But, Mr Flagley said, if the house was more prestigious than the annex, the basic cost to the council of stamp duty is a third less on average than on a typical house.