Sell your large home and downsize to a garden lodge. View prices

Selling a larger property and moving into a garden lodge or annexe can simplify life, lower bills, and release capital for the future. In the UK, options range from a self-contained annexe in a relative’s garden to a residential park lodge. Below, we cover how much equity you might unlock, how warm and efficient modern lodges are, key tax considerations, the real extras to budget for, and representative prices from recognisable providers in your area.

How much equity can I release from my home to build a lodge?

If you sell and downsize, your usable equity is the sale price minus your outstanding mortgage, selling costs (estate agency, legal work, moving), and the new accommodation cost. For example, sell at £500,000, clear a £80,000 mortgage, allow ~1.5% for selling fees and legal costs, then budget for the lodge and site works; the remainder is your released capital.

If you wish to fund a lodge without immediately selling, some homeowners consider later-life borrowing. Lifetime mortgages typically allow a proportion of your home’s value based on age and circumstances; broadly, that can range from about 20% to over 50% of value, subject to lender criteria. Independent advice is essential, as interest rolls up and terms vary widely. Whether you sell or borrow, confirm affordability, ownership arrangements, and planning before committing.

Is a garden lodge as warm as a traditional brick bungalow?

A modern annexe can be very warm—often warmer than many older bungalows—when built to current standards. Timber-frame or SIPs walls with high-grade insulation, airtight construction, and double or triple glazing can reach low U-values comparable to new-build homes. Heating can be via electric underfloor, high-efficiency panel heaters, or compact air‑source heat pumps, paired with mechanical ventilation for fresh air.

If constructed as a “park home” or lodge to the residential BS 3632 standard, year‑round habitation comfort is a design requirement. If built as a permanent annexe under Building Regulations, performance targets are also tight. The result is quick heat-up times, low heat loss, and the ability to achieve good comfort using modest energy.

Does moving into a garden annexe reduce my inheritance tax?

Relocating to an annexe does not, by itself, reduce inheritance tax (IHT). However, downsizing can change how your estate qualifies for the residence nil‑rate band (RNRB). If you sell a main residence and leave equivalent assets to direct descendants, the downsizing addition may protect some RNRB even after selling. Rules are nuanced, so professional estate-planning advice is advisable.

Gifting sale proceeds to family may be a Potentially Exempt Transfer; surviving seven years typically removes IHT on the gift. But gifts where you continue to benefit (for example, gifting cash for an annexe and then living rent‑free in a way that falls foul of “gifts with reservation” rules) can be ineffective. Keep clear records, consider market‑value contributions, and seek tax guidance to avoid unintended outcomes.

What are the hidden costs of downsizing to a garden home?

Beyond the headline unit price, account for: - Site surveys, design, and planning applications or lawful development certificates. - Groundworks: foundations, drainage, utility connections, and trenching. - Access logistics: craning modules over buildings, temporary road plates, or traffic management. - Services and upgrades: consumer unit changes, heat pump installation, water pressure boosting, and wastewater solutions if no nearby sewer. - Professional fees: planning consultants where needed, structural calculations, and legal advice on ownership/occupancy. - Ongoing costs: council tax (some annexes used by dependent relatives may qualify for exemptions or discounts), insurance, and maintenance. - Park homes: pitch fees and site rules if you opt for a residential park. Stamp Duty Land Tax generally doesn’t apply to park homes, but pitch fees and service charges do. - VAT treatment: can vary depending on whether the annexe qualifies as a separate dwelling, whether it’s supplied and installed, and its legal status. Confirm with the provider and a tax adviser.

Can I keep my independence in a self-contained garden suite?

Yes—most annexes are designed for independent living with a private entrance, kitchen, bathroom, and bedroom-living areas. Thoughtful layouts, sound insulation, and screened landscaping preserve privacy for both households. Accessibility options—level thresholds, wider doors, wet rooms, and smart controls—support safer, longer independent living.

From a legal standpoint, planning permissions often restrict separate letting or sale and tie the annexe’s use to the main home. Clarify occupancy conditions, utilities metering, postal addresses, and insurance so that independence in daily life sits comfortably within local planning rules.

Garden lodge pricing and provider examples

Real-world budgets depend on size, specification, site complexity, and whether you choose a turnkey annexe or a park/lodge model. Typical turnkey annexes (30–60 m²) often fall in the £85,000–£180,000 range including standard groundwork, while bespoke or larger builds can exceed £200,000. Park homes/lodges are usually priced for the unit, with siting and pitch fees separate. Utility connections, cranage, and complex groundwork can add £5,000–£25,000+.

Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.

Conclusion: Downsizing to a well-specified garden lodge can release capital, improve comfort, and preserve independence. With careful planning, realistic allowances for groundworks and fees, and clear ownership and tax planning, the move can be both practical and financially coherent for UK households exploring local services and solutions in their area.