Phone the planning department of your local council to ask about the planning situation.
When one does a house up (and moves out temporarily) it is usually possible to have temporary planning permission granted to enable this. It generally lasts for 2 years. They may or may not have done this at the time.
If the structure has then remained in place for more than 4 years without challenge, it has probably gained a permanent right to exist. Again the planning department will be interested to learn about this situation and can advise. The householder can then 'regularise' the situation by applying for a Certificate of Lawfulness, which cannot normally be refused by the planning department.
Creating a separate dwelling (for rental purposes) may be regarded as yet another step and it may be possible for the planners to stop him doing that, even if they now can't prevent the annexe. It is not a change of use because the whole of the site was and is still classified as dwelling house (Class C3), but there are issues such as access and parking for a separate dwelling.
If the planners decide it has simply gone on too long and can't be demolished, there may still be issues with Building Control (in that it may not be of a standard to be used for habitable accommodation).
Finally if he clears all of those hurdles, if he insists on using it as separate accommodation it needs to be rated for Council Tax.