Self-contained garden flat

[immortalben]

My partner and I are buying our first house together in the next couple of months. We've had to borrow a lot of money from both banks and family to get it, and the repayments are going to be pretty crushing - especially for the next five years or so - but we will as of moving-in day have a fairly decent sum available to renovate/extend/etc.

Looking for ways to improve the financial situation, I hit on the idea of building a self-contained flat at the end of the (fairly long) garden and letting it out. We're in Cambridge and there's a lot of demand for rented accommodation, so I'm confident that it would generate enough of an income stream to offset our mortgage/family loan payments.

Obviously we need planning permission for this as a change of use - I'm well aware I should seek professional advice, but as this is all going to be done on a shoestring budget (not more than £20k, and probably closer to 10) I want to gather as much free and informal guidance as possible beforehand, not least to ensure we don't waste money on the wrong kind of professional input. I'm really hoping people here might be able to help...!

There are two specific topics I would love experienced people's input on:

1. From reading around, it seems like planners are reluctant to grant change of use for projects like this because of the potential for the owners to subsequently sell the flat off as a separate freehold from the main house, shrinking plot sizes/reducing average property values/etc. etc. If that's really the major point of objection, there must be some way to legally block that possibility. I think the answer might be to enter into a covenant not to sell the flat separately, but the volume of possibilities to research here is huge - can anyone offer guidance? Is it possible to just apply for planning permission with "I won't sell it separately" as a permanent condition?

2. I spoke on the phone to a (staggeringly unhelpful, but I think she was probably required to be) duty planning officer about this, and she mentioned that if permission were to be granted there would be "legal agreements" involved that would be likely to cost "thousands" - but she wasn't willing to go into more detail. Can anyone hazard a guess at what she's referring to? I'm thinking it might relate to s106 (tho' I find it hard to imagine how adding a one-bed flat to a densely populated residential street is going to adversely affect local services, when just renting out a room in our house apparently wouldn't) but given the tight budget I really need to understand as much as possible about any charges/fees/promise-its-not-really-a-bribe-guvs that will be required along the way. In particular if anyone who's recently done a project like this could list off all the red tape they had to pay for, I would be incredibly grateful

Happy to provide more information if it's useful!

 

[OwainDIYer]

I would be very surprised if you could build a new dwelling to habitable Building Regs standards for £20k let alone £10k.

Even a decent second-hand static caravan will cost more than that, and you'd still have siting and services expenses.

Remember if you add another dwelling within your existing curtilage this will affect your mortgage and insurance as it will be treated as build-to-let not owner occupied.

Adding an extra bedroom and taking in a lodger is likely to add more to the value of the house, cost less to do, and give you a better return on investment - especially as the first £4000 income is tax-free

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

 

[immortalben]

I would be very surprised if you could build a new dwelling to habitable Building Regs standards for £20k let alone £10k.

I'm not certain either - this is very much an idea. The materials costs look provisionally within budget, assuming a certain amount of salvaging and that we do absolutely all the work that doesn't legally require a skilled tradesman ourselves. (I am consistently astonished at the number of people who seem willing to e.g. pay for an electrician to spend hours running cables under floorboards when he's only actually needed to fit socket fronts and connect to the mains...)

Remember if you add another dwelling within your existing curtilage this will affect your mortgage and insurance as it will be treated as build-to-let not owner occupied.

I didn't know that at all - many thanks for the tip!

Adding an extra bedroom and taking in a lodger is likely to add more to the value of the house, cost less to do, and give you a better return on investment - especially as the first £4000 income is tax-free

That's our backup plan, although the lodger room(s) would still be a separate structure in the garden - just without kitchen plumbing, so it doesn't count as a separate dwelling. But we're fairly private people and don't particularly like the idea of someone else being in the house, even just at mealtimes, if it can be avoided.

Thanks for the input!

 

[tony1851]

But we're fairly private people and don't particularly like the idea of someone else being in the house, even just at mealtimes, if it can be avoided.

Lots of people 'don't like it' but have to to pay the bills; you can't be that hard-up, then.

 

[immortalben]

Lots of people 'don't like it' but have to to pay the bills; you can't be that hard-up, then.

Er... I don't think I claimed to be? I'd just prefer not to spend money I don't actually have to, which I'm sure anyone can identify with, however hard up (or not) they may be! Apologies if I gave offence...

 

[tony1851]

no offence taken...