A self-contained garden annexe cost in the UK typically ranges from around £52,000 for a compact studio up to £220,000+ for a large two-bedroom annexe. “Self-contained” — meaning it has its own kitchen, bathroom and independent utilities rather than sharing them with the main house — is itself one of the biggest cost drivers, commonly adding £15,000–£30,000 over a simpler, non-self-contained annexe. Advertised “from” prices are usually lower than the final installed cost too — most suppliers exclude foundations and mains connections, which add further on top. The exact figure depends on size, build type, site conditions, and which planning route you use.

Granny annexe cost by size

You’ll see this type of building called a granny annexe, garden annexe, self-contained annexe, or simply an annexe — they’re different names for the same thing: an independent living space built in the garden, most often for a relative, an adult child, or as a rental. This guide uses all four terms interchangeably, since that’s how they’re used across the UK.

The table below shows both the advertised starting price you’ll typically see quoted, and a more realistic fully-installed figure once groundworks and connections are added — the gap between the two is one of the most common sources of confusion when comparing quotes.

Size	Advertised starting price	Realistic fully-installed cost
Studio (18–25 sqm)	from £52,000	£70,000–£100,000
One-bedroom (35–50 sqm)	£70,000–£115,000	£90,000–£140,000
Two-bedroom (65–80 sqm)	£120,000–£155,000+	£140,000–£220,000+

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Self-contained vs non-self-contained: what independence really costs

“Self-contained” is doing a lot of work in that price. It means the annexe has its own kitchen, its own full bathroom, and its own drainage and hot water — fully independent of the main house, rather than a bedroom with shared facilities. That independence is one of the single biggest line items in the whole build, and it’s rarely broken out separately in competitor cost guides, so it’s worth pricing on its own terms using published UK trade data:

What full self-containment adds	Typical UK cost	Source
Full kitchen (units, worktops, appliances, fitting)	£8,000–£25,000	Checkatrade
Full bathroom (bath/shower, WC, basin, tiling)	£5,500–£8,000	Checkatrade
Drainage/wastewater connection (mains or soakaway)	£1,500–£5,500	Checkatrade / Homebuilding
Off-mains sewage treatment (if no nearby connection)	£3,000–£15,000+	Checkatrade

Add it up and full self-containment typically adds somewhere between £15,000 and £30,000+ over a non-self-contained annexe — a bedroom-and-en-suite arrangement that still uses the main house’s kitchen, for example. That’s before you factor in a second heating/hot water circuit, which most non-self-contained layouts can skip entirely by tapping into the main house’s system.

This is why two annexes advertised at a similar headline size can carry very different price tags: one is genuinely self-contained and independently liveable, the other isn’t. If independent living — for rental, a self-contained annexe for an elderly relative, or simply not sharing a kitchen — is the whole point, budget for the self-contained figure from the outset rather than the cheaper non-self-contained one.

Garden annexe cost by build type

“Granny annexe” (or garden annexe, or just annexe) covers several genuinely different build methods, and the route you choose affects the price as much as the size does.

Purpose-built or modular annexe

The standard route, and the one most people picture: a fully self-contained, factory- or site-built structure in the garden, typically £70,000–£220,000+ depending on size. This is the route specialists like Summerhouse24 build to — fixed-price, timber-framed buildings designed specifically for full-time living rather than occasional use.

Garage or outhouse conversion

Converting an existing garage or outbuilding is usually the cheapest way to add a self-contained annexe, typically £30,000–£70,000 depending on finish. It comes with real constraints, though: floor levels and damp-proofing often need addressing, roof pitch can limit insulation depth, and layout is fixed by the existing structure. A converted garage also won’t qualify for the Caravan Act/VAT route covered below, since it isn’t a standalone manufactured unit.

Granny flat within the main house

Converting existing internal space — part of a ground floor, a loft, or occasionally a basement — into self-contained accommodation. Cost varies hugely by which part of the house is involved, roughly £40,000–£160,000+, with loft and basement conversions at the more expensive end due to structural work, headroom, and (for basements) waterproofing and excavation.

DIY or self-build kit

The lowest headline price — kits are typically advertised from around £30,000–£52,000 — but this figure doesn’t include groundworks, utility connections, or a full professional fit-out. It can still work out cheaper overall, but budget for the full picture, not just the kit.

What affects the cost of an annexe

Size and layout

Cost doesn’t scale proportionally with size. Most of the cost in any annexe is fixed — kitchen, bathroom, utility connections, delivery and installation — regardless of floor area. A 20sqm studio typically costs around 60–70% of the price of a 40sqm one-bedroom annexe, not 50%. If you’re working to a tight budget, it’s often worth pricing the next size up before ruling it out.

Site conditions and foundation type

Groundworks are one of the biggest wildcards in annexe pricing, and they’re highly site-specific. Sloping gardens need either a retaining wall or a raised deck on padstones. Clay soil or protected trees (a Tree Preservation Order nearby) often call for screw-pile foundations, which avoid disturbing root systems and can also keep a building technically “moveable” for Caravan Act purposes. Flood-risk sites may need the annexe raised above ground level, and building over or near an existing drain typically requires a formal build-over agreement with the water company before work can start. All of this is usually assessed at the site-survey stage, and none of it is optional once identified.

Utilities and distance from the main house

The further the annexe sits from existing electricity, water and drainage connections, the more the utilities bill rises. Beyond roughly 10 metres, costs increase noticeably, and very remote annexes sometimes need their own drainage solution — a pumping chamber, or occasionally a small dedicated treatment plant — rather than a simple gravity connection to the mains.

Specification and finish

Base prices cover a standard kitchen, bathroom and finish. Upgraded fittings, additional glazing, bespoke layouts, and premium cladding all add to the final figure. Treat any advertised price as a starting point rather than a ceiling — it’s the single biggest reason two “identical size” quotes can look very different.

Why timber quality changes the real cost of a self-contained annexe

Two annexes can be quoted at almost identical prices and still not be comparable, because the biggest variable in that price is often invisible in a spec sheet: the grade of timber used for the frame and cladding.

Left: Summerhouse24 timber with narrow, uniform rings, a sign of slow growth, high density and long-term stability.

Right: a competitor’s timber with wider rings, showing faster growth and lower density.

Slow-grown, kiln-dried timber with thicker cladding costs more to buy than fast-grown, air-dried softwood — but it moves less, holds paint and stain longer, insulates better, and needs re-treating far less often. Thinner, lower-grade cladding is cheaper to quote up front, but it typically needs re-treating within 2–3 years, is more prone to warping and gaps opening at joints, and performs worse against Part L insulation requirements, pushing up heating costs for the life of the building.

The practical upshot: a cheaper headline price on similarly sized annexes is often a materials decision, not just a margin decision — and it’s one that shows up again in five to ten years as a maintenance or replacement bill, not in the price you’re comparing today.

Quality doesn’t stop at the raw material. Each cabin is made on high-precision German machinery and finished with premium hardware, double-glazed windows and a 5-point locking system. And because you’re buying direct from the manufacturer, you get excellent value without cutting corners.

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Granny annexe cost by region

Build costs vary noticeably across the UK, largely reflecting local labour and land costs. As a rough guide, based on published regional estimates from UK trade platform MyBuilder:

Region	Typical cost range
London	£120,000–£150,000
South East	£100,000–£130,000
North West	£70,000–£90,000
Scotland	£80,000–£100,000
Wales	£75,000–£95,000

These are estimates rather than official figures, so treat them as directional — always get local quotes to confirm. This is also build cost, not to be confused with the value an annexe adds to your property afterwards — that varies by region too, but in the opposite direction in places (see the value section below).

VAT and the Caravan Act: why identical-looking quotes differ by thousands

This is the part of annexe pricing that causes the most confusion, largely because it’s actually two separate legal questions, each with its own test.

The first question is whether your annexe counts as a “caravan” for planning purposes. This comes from the Caravan Sites and Control of Development Act 1960, extended by Section 13 of the Caravan Sites Act 1968 to cover twin-unit (two-section, bolted-together) structures. To qualify, a building generally can’t exceed 20 metres in length, 6.8 metres in width, or 3.05 metres in internal height. If it meets this test, it can typically be sited under a Lawful Development Certificate instead of full planning permission — the route covered in full detail in our Caravan Act guide.

The second question is entirely separate: does it qualify for 0% VAT? This is governed by HMRC’s VAT Notice 701/20 and the VAT (Caravans) Order 2024, and the test is different — the caravan must be manufactured to the BS3632 residential standard (any version from 2005 onward, including the current 2023 edition) and exceed 7 metres in length or 2.55 metres in width. Meeting the planning definition doesn’t automatically mean the VAT test is met, or vice versa; they’re assessed separately, so always confirm both with your supplier and an accountant before assuming a price includes VAT or is eligible for zero-rating.

Even where the main structure is zero-rated, items like kitchen appliances, carpets and landscaping are typically still charged at the standard rate — so a “VAT-free annexe” rarely means every part of the invoice is VAT-free.

Running costs — what to budget for

Beyond the build itself, a garden annexe adds ongoing running costs, separate from council tax:

Altogether, budget somewhere between £65–£130 a month, or £800–£1,500 a year, on top of any council tax charge — see our full council tax guide for how that’s calculated and what discounts may apply.

• Electricity: roughly £40–£80 a month, depending on size and heating type
• Water: roughly £15–£30 a month
• Contents insurance: roughly £10–£20 a month

Hidden costs and what’s usually excluded from a quote

Advertised prices are almost always a starting point, not a final figure. The items most commonly left out include:

On the planning fee specifically: as of 1 April 2026, the standard householder planning application fee in England is £548 (up from £528) — worth knowing, since several older cost guides still quote figures from before this increase. Full details of the process and current fees are in our planning permission guide.

• Groundworks and foundations
• Connections to mains electricity, water and drainage
• Planning application or Lawful Development Certificate fees
• Furniture, white goods and internal decoration

Council tax after your annexe is built

Most annexes get their own council tax band once complete, though meaningful discounts and exemptions are available depending on who lives there — a 50% discount for a family member is common, with a full exemption possible for a dependent relative. See our full council tax guide for exactly how this is assessed and how to apply.

Gift with Reservation of Benefit: the tax trap families miss

This is worth knowing before you build, not after — and it’s a cost most annexe guides don’t mention at all.

HMRC treats a gift as a “Gift with Reservation of Benefit” (GROB) if the person giving it away continues to benefit from it. The scenario that catches families out with annexes is a familiar one: a parent sells their own home, gifts the proceeds to an adult child, the child uses that money to buy or extend a property with an annexe, and the parent then moves into it. Because the parent still benefits from money they’ve technically given away, this can trigger the reservation-of-benefit rules — or, where the gift was of cash rather than a property interest, a related charge called the Pre-Owned Assets Tax (POAT). Either way, the effect is similar: the gifted value can remain inside the parent’s estate for Inheritance Tax purposes, and the usual rule that gifts fall outside your estate after seven years doesn’t apply.

The way most families avoid this is by having the parent pay a full, commercial market rent for their part of the property, reviewed periodically to stay in line with market rates. Partial contributions or a token, below-market rent are unlikely to be enough to avoid the rules.

This is a genuinely complex, fact-specific area of inheritance tax law, and the right approach depends entirely on individual circumstances. If this scenario applies to your family, speak to a solicitor or tax adviser before making decisions — this section is general information, not advice.

Does an annexe add value to your property?

Generally yes, and the uplift can be substantial — recent regional research puts it anywhere from around 10% to over 24% depending on where you live, translating into six-figure premiums in some regions. We’ve covered the full regional breakdown, including the specific figures by area, in our guide on what an annex building is and the value it adds — well worth reading alongside this one if value is a factor in your decision.

FAQs

How much does a self-contained garden annexe cost in the UK?

Typically £52,000 for a compact studio up to £220,000+ for a large two-bedroom annexe. Full self-containment — its own kitchen, bathroom and utilities — is a major part of that figure, commonly adding £15,000–£30,000 over a non-self-contained annexe that shares facilities with the main house.

How much does a granny annexe cost in the UK?

Typically £52,000 for a compact studio up to £220,000+ for a large two-bedroom annexe, once groundworks and connections are included. Most standard one-bedroom annexes fall between £90,000 and £140,000 fully installed.

What’s the cheapest way to build a granny annexe?

Converting an existing garage or outbuilding is usually the cheapest route, typically £30,000–£70,000, though it comes with layout and insulation constraints. DIY kits have the lowest headline price but rarely include groundworks or connections, so the true all-in cost is often higher than the kit price alone suggests.

Do I pay VAT on a granny annexe?

It depends on two separate tests: whether the building meets the legal size limits to count as a caravan (for planning purposes), and separately, whether it’s built to the BS3632 standard and exceeds the size threshold for VAT zero-rating under HMRC’s rules. The two tests use different measurements, so always confirm both with your supplier and an accountant.

How much does it cost to convert a garage into a granny annexe?

Typically £30,000–£70,000 depending on finish level, though existing floor levels, damp-proofing and roof pitch can add cost or limit what’s possible compared with a purpose-built annexe.

What’s included in a garden annexe price, and what’s usually extra?

Advertised prices usually cover the structure, standard kitchen and bathroom, and delivery. Groundworks, mains connections, planning or Lawful Development Certificate fees, and furniture are typically extra, commonly adding £15,000–£20,000 to the advertised price.

How much does a granny annexe cost to run each month?

Budget roughly £65–£130 a month for electricity, water and contents insurance combined, on top of any separate council tax charge.

Does gifting an annexe to a family member trigger inheritance tax?

It can, under the Gift with Reservation of Benefit rules, if the person who gave away the money or property continues to benefit from it — for example, a parent who gifts funds towards an annexe and then lives in it rent-free. Speak to a solicitor or tax adviser, as this depends heavily on individual circumstances.

Explore Annexe Options

Ready to get a fixed, all-in quote for a self-contained garden annexe? Explore Summerhouse24’s range of annexe buildings, or read our full Granny Annexe Guide for planning permission, council tax and everything else you need to know.

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Sources:

• Caravan Sites and Control of Development Act 1960 (legislation.gov.uk)

• Caravan Sites Act 1968, Section 13 (legislation.gov.uk)

• Caravans and houseboats — VAT Notice 701/20 (GOV.UK)

• Zero VAT rating for residential caravans (GOV.UK)

• Work out Inheritance Tax due on gifts (GOV.UK)

• Planning Portal — Application Fees England, effective 1 April 2026

• Kitchen Fitting Cost 2026 (Checkatrade)

• New Bathroom Cost 2026 (Checkatrade)

• Garden Drainage System Cost 2026 (Checkatrade)

• Drainage Cost Guide (Homebuilding)

• Granny Annexe Building Costs Explained — regional cost table (MyBuilder)