By . Chris Richards . PUBLISHED: . 03:53 EST, 2 June 2012 . | . UPDATED: . 06:40 EST, 2 June 2012 . Hundreds of thousands of families are set to be offered tax breaks on so-called 'granny flats' under plans to ease the housing crisis. The Government is expected to abolish council tax on these annexes, typically used by householders to home older members of their family. Ministers are also considering overhauling planning regulations and fees to make it easier for people to convert garages and other outbuildings into 'granny flats'. At present, residents are required to pay council tax on both their main home and any annex they own. Tax break: The Government is looking to abolish council tax on annexes dubbed granny flats . Communities Secretary Eric Pickles said the existing taxation regime was 'fundamentally unfair'. 'We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations,' he told the Daily Telegraph. More... Record high of 4m homes where no one goes to work blamed on recession and benefits . House prices 'stable' but market still suffering from lack of supply, says Nationwide . 'We should support home owners who want to improve their properties and standard of living. 'These reforms should also play a role in increasing the housing supply.” At present, granny flats are treated as separate dwellings and, as such, can be charged full rates of council tax by local authorities, which often exceed £1,000 a year. Government officials believe the change could benefit as many as 300,000 households in England. Reforms:  Communities Secretary Eric Pickles says cutting council tax on annexes could help increase housing supply.  However, shadow communities secretary Hilary Benn says the move is 'cynical spinning' The reforms, which would likely require legislation, are expected to form part of a raft of policies to address the nationwide shortage of affordable homes over the next two years. Ministers have already supported plans to encourage pensioners to downsize and allow local authorities to rent out their homes. It is believed that as many as 25 million bedrooms in England may currently be empty. Annexes do not presently need to have a front door to be counted as a separate dwelling, although they are required to have distinct living and sleeping quarters, plus a bathroom and a kitchen. The Government is also planning to review existing legislation to make it easier for home owners to adapt properties. Granny flats are self-contained annexes, built as extensions an existing residential property . They derive their name from the fact that many of these annexes are occupied by pensioners who downsize in their retirement to be closer to their children or other relatives . At present, a granny flat is not required to have a front door to be treated as a separate dwelling, although they would need to have their own bathroom and kitchen . Currently, these annexes are liable to council tax, typically around £1,000 a year . This means that, at present, householders who own a granny flat are required to pay council tax on both their main property and the annex . At the moment, garage conversions need planning permission and Whitehall officials believe too many councils refuse to approve such schemes. The housing review will also consider axing the need for residents to pay for planning agreements on how the annexes would be used, which can cost more than £1,000. “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,” a Whitehall source said. Ros Altmann, the director-general of the over-50s group Saga, told the Daily Telegraph that the reforms could be a 'benefit' for families that would otherwise find it difficult to afford the cost of care for relations. She did, however, warn that the elderly should not be forced to move out of their own homes. Labour said it was unclear who would benefit from any further relaxation of the tax rules as annexes occupied by dependants aged over 65 are already exempt. Such a move would also reduce the income of local councils at a time when town halls are already being forced to implement severe spending cuts. Shadow communities secretary Hilary Benn said: "This is a decidedly peculiar claim by Eric Pickles as occupied 'granny flats' have been exempt from council tax since 1997. 'It is therefore extremely unclear exactly which pensioners the Government expects to benefit from these changes, and the granny tax fiasco doesn't give us confidence that they will get this right. 'This cynical spinning shows that once again the Tory-led Government are over-claiming and under-delivering for our nation's pensioners. 'This seems to be nothing more than an attempt to deflect attention from their housing crisis. 'What we need is to get building and get the economy moving again. 'That's why Labour is proposing to build 25,000 new affordable homes and a temporary cut to the rate of VAT.' Under the 1997 regulations, council tax is not paid on annexes occupied by relatives who are over 65, mentally impaired, or substantially and permanently disabled. A spokesman for Mr Pickles said the proposal was to extend the exemption to allow annexes inhabited by any family member, not just pensioners, to be free from council tax. No decision had been taken on whether town halls would be compensated by central government for the lost revenue, he said. Housing minister Grant Shapps added: 'We should support homeowners who want to improve their properties and standard of living. 'At every opportunity Labour want to find a way of raiding the pockets of the public.'
Ministers believe the move could help to increase housing supply .
Labour says occupied 'granny flats' are already council tax exempt .
By . Chris Richards . PUBLISHED: . 03:53 EST, 2 June 2012 . | . UPDATED: . 06:40 EST, 2 June 2012 . Hundreds of thousands of families are set to be offered tax breaks on so-called 'granny flats' under plans to ease the housing crisis. The Government is expected to abolish council tax on these annexes, typically used by householders to home older members of their family. Ministers are also considering overhauling planning regulations and fees to make it easier for people to convert garages and other outbuildings into 'granny flats'. At present, residents are required to pay council tax on both their main home and any annex they own. Tax break: The Government is looking to abolish council tax on annexes dubbed granny flats . Communities Secretary Eric Pickles said the existing taxation regime was 'fundamentally unfair'. 'We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations,' he told the Daily Telegraph. More... Record high of 4m homes where no one goes to work blamed on recession and benefits . House prices 'stable' but market still suffering from lack of supply, says Nationwide . 'We should support home owners who want to improve their properties and standard of living. 'These reforms should also play a role in increasing the housing supply.” At present, granny flats are treated as separate dwellings and, as such, can be charged full rates of council tax by local authorities, which often exceed £1,000 a year. Government officials believe the change could benefit as many as 300,000 households in England. Reforms: Communities Secretary Eric Pickles says cutting council tax on annexes could help increase housing supply.  However, shadow communities secretary Hilary Benn says the move is 'cynical spinning' The reforms, which would likely require legislation, are expected to form part of a raft of policies to address the nationwide shortage of affordable homes over the next two years. Ministers have already supported plans to encourage pensioners to downsize and allow local authorities to rent out their homes. It is believed that as many as 25 million bedrooms in England may currently be empty. Annexes do not presently need to have a front door to be counted as a separate dwelling, although they are required to have distinct living and sleeping quarters, plus a bathroom and a kitchen. The Government is also planning to review existing legislation to make it easier for home owners to adapt properties. Granny flats are self-contained annexes, built as extensions an existing residential property . They derive their name from the fact that many of these annexes are occupied by pensioners who downsize in their retirement to be closer to their children or other relatives . At present, a granny flat is not required to have a front door to be treated as a separate dwelling, although they would need to have their own bathroom and kitchen . Currently, these annexes are liable to council tax, typically around £1,000 a year . This means that, at present, householders who own a granny flat are required to pay council tax on both their main property and the annex . At the moment, garage conversions need planning permission and Whitehall officials believe too many councils refuse to approve such schemes. The housing review will also consider axing the need for residents to pay for planning agreements on how the annexes would be used, which can cost more than £1,000. “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,” a Whitehall source said. Ros Altmann, the director-general of the over-50s group Saga, told the Daily Telegraph that the reforms could be a 'benefit' for families that would otherwise find it difficult to afford the cost of care for relations. She did, however, warn that the elderly should not be forced to move out of their own homes. Labour said it was unclear who would benefit from any further relaxation of the tax rules as annexes occupied by dependants aged over 65 are already exempt. Such a move would also reduce the income of local councils at a time when town halls are already being forced to implement severe spending cuts. Shadow communities secretary Hilary Benn said: "This is a decidedly peculiar claim by Eric Pickles as occupied 'granny flats' have been exempt from council tax since 1997. 'It is therefore extremely unclear exactly which pensioners the Government expects to benefit from these changes, and the granny tax fiasco doesn't give us confidence that they will get this right. 'This cynical spinning shows that once again the Tory-led Government are over-claiming and under-delivering for our nation's pensioners. 'This seems to be nothing more than an attempt to deflect attention from their housing crisis. 'What we need is to get building and get the economy moving again. 'That's why Labour is proposing to build 25,000 new affordable homes and a temporary cut to the rate of VAT.' Under the 1997 regulations, council tax is not paid on annexes occupied by relatives who are over 65, mentally impaired, or substantially and permanently disabled. A spokesman for Mr Pickles said the proposal was to extend the exemption to allow annexes inhabited by any family member, not just pensioners, to be free from council tax. No decision had been taken on whether town halls would be compensated by central government for the lost revenue, he said. Housing minister Grant Shapps added: 'We should support homeowners who want to improve their properties and standard of living. 'At every opportunity Labour want to find a way of raiding the pockets of the public.'
increasing the housing supply.” At present, council tax on annexes could help increase Ministers have already supported plans to Pickles as occupied 'granny flats' have been