Plan to remove 'granny flat' council tax

Up to 300,000 families in England could benefit from plans to scrap council tax for so-called granny flats.

Communities Secretary Eric Pickles says it is "fundamentally unfair" to charge people twice for their own home and the annexe for a live-in elderly relative.

He also believes the move could ease the pressure on the supply of housing.

Currently, annexes are usually treated as distinct dwellings if they have a separate kitchen, bathroom and place to sleep. They do not need a front door.

Local authorities typically charge more than £1,000 a year for full rates of council tax.

But some discounts are available if only one person lives in the annexe.

Mr Pickles told the Daily Telegraph: "We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations.

"We should support homeowners who want to improve their properties and standard of living.

"These reforms should also play a role in increasing the housing supply."

Ministers are also considering changing planning laws to make it easier to convert garages into living spaces for the elderly.

Officials are concerned that too many garage conversions are refused planning approval by local councils.

The changes are likely to require legislation, but government sources are unable to say how quickly they could be brought it.

BBC political correspondent Gary O'Donoghue said the "substantial loss" in revenue for local authorities was a "thorny issue" and Whitehall sources would not commit central government to making up the difference.

"This is likely to be a popular idea, aimed at demonstrating the government's claim that it's on the side of hard working families," our correspondent said.

Earlier this month, MPs said it should be easier for people to build their own homes in England to help the housing crisis.

A Commons communities select committee report suggested local authorities must get a greater say on housing projects, while pension funds and other investment funds should be encouraged to invest in building new homes.

The report said 230,000 households were forming each year, but in 2011 only 110,000 new homes were built.