The build route you choose is one of the biggest factors in what an annexe costs. Here's the Caravan Act vs Building Regulations comparison — on VAT, planning, speed and when each is worth it.
The short answer. For most annexes, the Caravan Act route costs less — its base cost is around 10% lower than the Building Regulations route. Importantly, both routes are zero-rated at 0% VAT, and Vita submits and manages a full planning application for both. The Building Regs route costs a little more but is a permanent structure with full building-control sign-off and the widest choice of sizes and finishes. Vita builds both and advises on which suits at a free survey.
When you build a self-contained annexe with its own kitchen and bathroom, there are two legal routes — and the one you choose is one of the biggest single factors in what it costs. This piece is about the cost difference; for the full definitional detail on the Caravan Act itself, see our Caravan Act knowledge-base guide.
| Caravan Act route | Building Regulations route | |
|---|---|---|
| What it is | Built to BS3632 under the Mobile Homes Act 1983 | Built to full Building Regulations as a permanent structure |
| VAT | 0% — zero-rated | 0% — also zero-rated |
| Base cost | Lower — the more cost-effective route | ~10% higher than the equivalent Caravan Act build |
| Planning | Full planning application, submitted & managed by Vita | Full planning application, submitted & managed by Vita |
| Build standard | BS3632 residential park-home standard, self-certified | Full UK Building Regulations, building-control signed off |
| Legal status | Distinct from the main dwelling under the Caravan Act | Permanent extension of the property |
| Mortgage / valuation | Treated separately | Fully integrated into the property |
| Best for | Cost, speed, tighter planning contexts | Long-term integration, valuation certainty |
Both routes are zero-rated for VAT, so — unlike a house extension — VAT isn't the deciding factor here. The saving on the Caravan Act route comes from its base cost, which is around 10% lower than the equivalent Building Regulations build. That's because a Caravan Act annexe is built and self-certified to the BS3632 residential park-home standard rather than going through full building control. It's why the headline prices you see quoted — £54,790 for a 1-bed, £85,990 for a 2-bed — are the Caravan Act figures; the Building Regulations equivalents are about 10% higher.
The Caravan Act route isn't always the right one. Where the annexe needs to be fully integrated into the property — for a mortgage, a future sale, or because the site or local planning history points that way — the Building Regulations route treats it as a permanent extension, which can give more certainty at valuation. The extra VAT and the planning process are the trade-off for that permanence.
The right route depends on your site, your intended use, your local authority's planning history, and whether mortgage/valuation integration matters to you. It's exactly the kind of judgement that benefits from someone who builds both — Vita advises on the route at every free site survey, and the recommendation feeds straight into your fixed price. For how the routes affect a specific size, see the 2-bedroom cost breakdown, and the full range on the annexes page.
Not sure which route fits your annexe? Book a free site survey — we'll advise on the route and give you a fixed price. Get your instant fixed price →
