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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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My wife and I and two grown up sons live in a 3 bedroom

Resolved Question:

My wife and I and two grown up sons live in a 3 bedroom house. I am thinking of building an extension to my house which will be a flat with a bedroom, bathroom and living room (we would share the kitchen in the main house). We will all work together to pay for the remortgage required to build the extension.
My worry is that my eldest moves out before paying off the remortgage amount and I cannot cover the payments. So as a backup plan I would have to rent the studio flat.1. Is there any legal reason we cannot rent the flat (if needed)
3. Would CGT have to paid if we rent the flat even for just a year or two (only one person or couple at any one time)
4. Could I rent the extension even without access to the kitchen in the main house
5. If I can only rent with a kitchen is there any issue with adding a kitchen to the extension i.e. the extension becoming a self-contained dwellingRegards
Submitted: 1 year ago.
Category: Law
Expert:  F E Smith replied 1 year ago.

If it is self-contained accommodation, it pays its own council tax.

You would require planning consent for change of use to rent it out as a separate darling and of course need to install a kitchen of some description.

You can’t rent it as residential accommodation unless it has a kitchen facility of some description

There is no CGT payable until second dwelling is sold and only then if it sold at a profit.

If you are going to rent it out, and you don’t have your lenders consent, you breach your mortgage conditions and the lender may not consent or they put you on higher rate.

This can be problematical for you if there is a falling out with the children (it does) because they have a financial share in the house then.

Can I clarify anything for you?

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We can still exchange emails if you wish.

Best wishes.

FES.

Customer: replied 1 year ago.
If I did not put a kitchen into the extension i.e. only bedroom, lounge and bathroom, and then rented this out with access to a shared kitchen in the main house would this be classed as renting out space in your own house, if so:1. Would I still need planning permission for change of use
2. Would CGT be payable when house sold
3. Would I still need consent from the mortgage lender
Expert:  F E Smith replied 1 year ago.

You don’t need planning permission if the use is ancillary to the main house. Hence, if you were renting it out even without a kitchen, you would need planning permission for change of use.

CGT would be payable on the increase in value of the rental element.

You would still need consent from the mortgage lender

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