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Accessory Dwelling Units: Benefits and Recent Changes

An accessory dwelling unit, or ADU, is a small, secondary home located on your property. It provides homeowners with supplementary income and communities with increased housing variety.

As of 2022, recent state laws have created the most favorable conditions for building an ADU. With new funding opportunities available, creating an ADU is a smart investment.

See how ADUs are changing communities and making them better places to live. Join us as we explore the fascinating world of ADUs today.

What Are Accessory Dwelling Units?

1. Definition and Purpose

Accessory dwelling units (ADUs) provide one of the most distinctive, durable, and deep-rooted housing solutions in existence. Their roots go back centuries to the era of alley apartments and carriage houses.

An ADU, or Accessory Dwelling Unit, is a subordinate, self-contained living space. It’s located on the same lot as a home and has a separate entrance, kitchen, bath, and living space. This adaptability also makes them incredibly flexible.

Whether you plan to use one for accommodating guests, housing aging family members, or generating some rental income, ADUs provide a myriad of options. They are also commonly known as granny flats or in-law units.

These terms emphasize their original intent to provide housing for larger family. They can enhance property value and offer flexible living arrangements, appealing to homeowners who seek to maximize their real estate investment.

2. Common Types of ADUs

Detached ADUs are standalone structures, usually built in backyards, and they offer the most complete physical and social separation from the main house. This provides both privacy and independence, which makes them great for rental income or as a guesthouse.

Attached ADUs are physical extensions of the main house, typically with their own entrances, providing a sweet mix of connectedness and independence.

Interior ADUs, however, are built inside of the primary dwelling, typically in basements or attics. These units make great use of existing space and are quickly becoming a popular choice as interest in micro housing and smaller living spaces continues to grow.

3. Popularity and Demand Trends

While ADUs have long enjoyed a boom-and-bust cycle of popularity, the last few years have experienced a strong uptick led by today’s housing demands. Rising real estate prices, combined with the fallout from the COVID-19 pandemic have contributed to a growing demand for ADUs.

These units also provide a flexible, affordable housing solution in dense urban and more moderately dense semi-urban cities. Data from the last decade indicate an incredible increase in ADU listings.

While today about 1 in 5 single-family homes in the U.S. Have an ADU, many of these remain undocumented. The increasing environmental awareness of homeowners is adding to the interest.

Many American homes are just too big for smaller households. ADUs provide a greener solution, following the growing desire to reduce the environmental impact of our homes.

Financing options for ADUs are varied and more permissive. Homeowners can qualify for a range of loans, including regular purchase, refinance and affordable lending products, making these additions available to millions.

Benefits of Accessory Dwelling Units

1. Advantages for Homeowners

Accessory Dwelling Units (ADUs) offer a slew of financial and lifestyle benefits to homeowners interested in adding an ADU to their property. These multifaceted spaces give homeowners the freedom to use their space however they need, making it the perfect solution to house older children or other family members.

Picture a charming little ADU that offers all the privacy and independence you can hope for. It’s an ideal location for grandparents to be close to their families, or for college-aged children to move into adulthood while still enjoying the comforts of home. This flexibility is not just for the owner, though, as ADUs can be rented for additional passive income.

For example, a homeowner might transform a backyard space into a charming one-bedroom unit, attracting tenants and generating rental income that can significantly offset mortgage costs.

ADUs provide a seldom-seized opportunity for older homeowners, or soon-to-be-retired empty-nesters, to downsize while staying in the neighborhoods they love. Think about relocating to a more compact, manageable environment.

You can rent your main home to remain plugged into the community and make ends meet financially. This setup works well for retirees looking to downsize. It also appeals to those who want to reduce the cost of living while staying in the communities they know.

2. Community and Environmental Benefits

Beyond the obvious benefits to individual homeowners, ADUs have an important role to play in addressing broader community needs. They address housing shortages in our growing urban areas by adding supply and diversifying the housing stock we have.

This strategy is particularly essential in cities with tight spaces and lots of competition for space. By enabling ADUs, communities can encourage more multi-generational living, creating stronger and more supportive networks among residents.

In neighborhoods with easy interaction between families, they pool resources and can share family duties. This, in turn, fosters deeper connections among community members.

Environmentally, ADUs provide major benefits by encouraging more sustainable land use practices and helping to curb destructive urban sprawl. Smaller living spaces require fewer resources to build and maintain, which means they have a smaller environmental footprint than larger homes.

ADUs make efficient use of our current properties and encourage the smart, sustainable growth of our communities. They limit the development of sprawling, large-scale housing that encroaches on more natural landscapes.

3. Economic Impact and Affordability

ADUs are having a huge impact on local housing markets. They increase housing affordability and offer financial relief to homeowners. Second, as ADUs increase in number, they add to the supply of rental housing, contributing to the stabilization of rental prices.

ADUs are an excellent source of naturally-occurring affordable housing. This opens the door for a more diverse group of residents to enjoy urban living and creates lively, walkable communities.

Homeowners can find themselves in a position of immense financial relief by renting out an ADU. This is particularly beneficial considering the increased cost of living.

This new stream of rental income is helping to power local economies by boosting the spending power of homeowners and new tenants. By weaving ADUs into the current housing fabric, communities can foster more equitable and robust economic environments.

Eligibility and Requirements for ADUs

Knowing the eligibility and requirements for building an ADU are key for any homeowner looking to embark on this journey. That requires a thoughtful look at zoning ordinances, property owner guidelines, and homeowner criteria. Let’s take a closer look at these elements to make sure you don’t miss a beat.

1. Criteria for Homeowners

Homeowners looking to build an ADU need to be qualified. Usually this starts with requirement to be the owner-occupant of the property. This is key for many ADU programs. It also keeps homeowners aligned with the long-term health of the property and the changing nature of the community around them.

The property can’t be more than a three-unit property. A 4-unit property that contains one or more ADUs is ineligible. Homeowners also need to follow the laws and regulations of their locality, which tend to differ greatly from one jurisdiction to another.

For example, some areas stipulate that an ADU cannot exceed 20% of the total square footage of the primary residence. Knowing these nuances helps make sure that homeowners do not run afoul of the law as they are well-equipped to approach the ADU permit application process.

2. Lot Size and Property Regulations

The size and configuration of the lot are key considerations for ADU eligibility. Minimum lot size requirements are a common barrier that determines if an ADU is even possible. Within GMA urban growth areas, any lot that meets the minimum lot size for the principal housing unit is entitled to two ADUs.

This creates additional housing opportunities for their residents. The size and shape of the lot may further affect what kind of design is feasible for an ADU. Setbacks are very important as they dictate how close an ADU can be to property lines.

Setbacks also provide enough distance between buildings for safety and privacy, and easements can prevent development in specific locations. When properties are within half a mile of any major transit stop, on-site parking minimums can be waived. This creates innovative possibilities for more creative design and placement.

3. Zoning and Planning Considerations

Zoning laws play a critical role in controlling ADU proliferation. This massive patchwork makes a huge difference in what, and even if, homeowners are able to build an ADU. Zoning approval is often required before applying for building permits, ensuring the ADU project aligns with local land use plans.

Freddie Mac defines an accessory dwelling unit (ADU) as a complete, independent living space. This unit must include its own kitchen, bathroom, and entrance, distinct from the primary residence.

Interestingly, Freddie Mac may purchase a mortgage for a 1-unit property with an ADU, even if it doesn’t comply with zoning requirements, provided comparable sales with illegal ADUs demonstrate marketability. This underscores the need to understand the nuance of zoning and work to obtain the appropriate approvals to prevent future legal challenges.

Design and Construction Guidelines

There are a number of important design and construction guidelines to follow when creating an accessory dwelling unit (ADU) to maximize its efficiency and beauty. A well-planned ADU should aesthetically match the neighboring community design, boosting curb appeal and property value without losing the character of the neighborhood. By integrating ADUs into the broader architectural style, that ADU can create a beautiful seamless blend.

Neighbors and city planners alike have a good feeling about this peaceful design. It’s even more important to be in line with local building codes. These regulations are more than red-tape bureaucratic hurdles; they protect the public’s safety, guarantee structural integrity, and ensure compliance with the community’s standards.

1. Universal Design Principles

Universal design is the idea that spaces should be equally usable by everyone, no matter their age or physical ability. When designing ADUs, prioritize features that improve accessibility. Include wider doorways, lever door handles, and step-free entries to create a place where everyone can thrive, including aging residents and their visitors.

These design decisions improve use and comfort for all ages and abilities. They also provide a welcoming environment for older adults, young children, and people with mobility disabilities. Designing flexible spaces is another key factor in future-proofing the ADU. For instance, a room with flexible layouts can easily transform from a home office to a guest bedroom, accommodating changing needs over time.

2. Building Standards and Codes

Following building codes and regulations are essential when building an ADU. These standards also help to ensure the unit is safe and livable. The most important aspects are ensuring compliance with fire safety and structural codes, which help protect the occupants and their property.

Inspections and approvals are critical at every step of the way through construction. They also verify that the work is completed in accordance with appropriate specifications at each stage of development. This may sound like a cumbersome process, but it is critical to confirm the safety and long-term durability of the structure.

Selecting the right HVAC system and water heater is crucial for energy efficiency and comfort, aligning with local regulations and standards.

3. Size and Space Limitations

ADUs need to adhere to certain size and height limitations. Detached units are usually limited to 1,200 square feet in size and 16 feet tall. These restrictions demand thoughtful consideration of space limitations, impacting both design and usability.

With smaller units, layout and storage solutions are even more important to optimize. Creative solutions such as built-in shelving, multi-use furniture, or hidden kitchen appliances can make the most of the space without compromising comfort or functionality.

Smartly integrating Mechanical, Electrical, and Plumbing (MEP) systems increases the efficiency of these multifunctional small spaces even more. Energy-efficient heat pumps and tankless water heaters are at the center of this improvement.

Recent Changes in ADU Laws

However, in recent years, changes passed in legislatures across the country have turned the tide in favor of Accessory Dwelling Unit (ADU) development. Now, local and state levels are beginning to recognize ADUs as an innovative solution to housing shortages across the country. These changes are indicative of an increasing willingness to tackle the challenges of urban density.

California’s new ADU laws are a perfect example of this trend. They want to make it easier and more accessible for homeowners to install these units on their properties. By removing barriers and simplifying the process, these amendments create exciting new opportunities for homeowners and developers to pursue.

1. Updates in Local Regulations

Recent changes to local regulations have been significant, as several jurisdictions have been particularly proactive in making it easier to build ADUs. In Contra Costa, homeowners now benefit from an expedited, streamlined process. The repeal of the mandatory requirement for a comprehensive, written list of reasons for denial has cleared the path significantly.

This recent change simplifies the application process. It also reduces bureaucratic barriers, making it easier to build and sell an ADU. Keeping up with these continual regulatory changes is key for homeowners looking to start new ADU projects. Local governments are coming to understand how essential ADUs are to meeting our urgent housing needs.

To do that, they’re attracting ADU-friendly policies and procedures.

2. State-Level Policy Changes

State-level policies have similarly developed, affecting the production of ADUs and how they are financed. California’s new laws have done an impressive amount to move the needle in this direction. The state has also eliminated the owner-occupancy requirement for ADUs.

Additionally, they raised the maximum size from 1,000 sq ft to 1,200 sq ft (in accordance with local code), simplifying the process by which property owners can build and rent out ADUs. The 60-day rule has made that permanent provision. This new provision lowers the hurdle for the construction of new ADUs on properties that currently host a rental, leading to more dynamic use of residential spaces.

State governments have a crucial role to play in ensuring local ADU initiatives thrive, creating an ecosystem ripe for innovative housing solutions.

3. Impact on Development Opportunities

The recent changes in ADU laws helped open up new opportunities for residential development, especially in more urbanized areas. Relaxing the rules and adding versatility to the process increases housing supply quickly. This is particularly true for ADU projects, however.

ADUs can help revitalize these properties. They also offer homeowners and developers a chance to increase property values while addressing community housing priorities. Condoization of ADUs creates incredible new development potential.

It also permits the principal dwelling unit and the ADU to be owned by different people. This added flexibility is a win-win for property owners and the greater affordable housing market.

Application and Permitting Process

1. Steps to Obtain Permits

First of all, the process to get a permit for an ADU is straightforward but there are some important steps involved. First, we advise potential homeowners to thoroughly educate themselves on what local regulations and permitting requirements will be, particularly when it comes to ADUs. This step is important because as you can imagine, each jurisdiction may have different zoning ordinances or building codes.

Once you have a handle on these regulations, the next step is creating a set of plans and specifications for the ADU. This means producing architectural drawings and packaging them in a way that all of the required technical details are provided. The plans are drawn and then the application– typically a few hundred dollars in fees with a few thousand dollars for larger applications– is due.

In Portland, for instance, you can file your ADU building and trades permit applications electronically through Development Hub PDX. Homeowners should be prepared to know that showing up for any required hearings or meetings is part of the process as well. These convenings also create space to respond to questions or issues identified by local decision-makers.

All property owners must initial each page of the Accessory Dwelling Unit Rules. They also need to file these rules with their building permit application. If you take these steps to the letter, you will be on your way to a strong submission and a much better chance of success for your application.

2. Navigating Local Government Procedures

Navigating the local government procedures takes a strategic touch. A good grasp on what each department’s role is in the ADU process is critical. In Portland, building new detached ADUs or converting existing structures is subject to the same fees.

The bureaus carrying the brunt of these charges are Portland Parks and Recreation, Environmental Services, Transportation and Water. These charges can have a major effect on project costs, so knowing early is helpful. Just as crucial is keeping those lines of communication open with the local officials on the other side of the table.

Clear and direct communication goes a long way to avoid running into issues later on and helps get projects done on time. This simple step allows homeowners to easily track the status of their permit review with the new permit search feature on Portland Maps. This simple tool also enables them to track progress and stay updated.

3. Tips for a Smooth Approval Process

Here are some tips to help ensure a smooth approval process. Being complete and consistent in your application and documentation is very important. Double check that each and every specification is in order and compliant with the local zoning and building codes.

Keeping in touch with these codes will save you time by preventing frivolous delays. It is better to engage with neighbors and address any concerns before they lead to conflicts that develop later during the approval process. Consistent and frequent check-ins with local decision makers about the status of the application can help ensure that the process continues to move along smoothly.

Under most circumstances, homeowners will get an approval or denial on their ADU project proposal within 60 days.

Conclusion

Accessory dwelling units (ADUs) offer a world of potential. They also provide an amazing opportunity to add long-term value to your property, and create more flexible living spaces. With these new laws in place, more people than ever will have the opportunity to consider these options. If you follow the guidelines, the design and construction is very simple. You could make that extra space a rental, a home office, or an in-law suite. Additionally, the application and permitting process is more streamlined with defined steps provided.

They also add a new dimension to homeownership. Visit your local regulations and explore how an ADU can work for you. Whether you want a source of income, family, or personal retreat, ADUs have unlimited advantages.

Frequently Asked Questions

What is an Accessory Dwelling Unit (ADU)?

An ADU is a second, smaller housing unit located on a single-family residential lot. They can be detached, attached or converted structures like garages, creating new living space.

What are the benefits of having an ADU?

ADUs can generate supplemental income from rental opportunities, add value to the property, and can house family members or friends. They further serve to optimize land use and address our nation’s need for increased affordable housing options.

Who is eligible to build an ADU?

Eligibility requirements depend on where you live, but usually include the ability to prove property ownership and compliance with local zoning laws. Be sure to check your local regulations for requirements and restrictions.

What are the design guidelines for ADUs?

Design guidelines can set size limits, height restrictions, and require a consistent architectural style with the primary dwelling. Local building code compliance is critical.

How have ADU laws changed recently?

Recent reforms typically have involved relaxing zoning laws, reducing permit fees, and a kind of fast-track process for approval to incentivize ADU creation.

What is the application process for an ADU permit?

While the exact steps may vary, the general process almost always requires submitting plans, paying fees, and passing inspections. Check with your local planning department for details on the process and requirements.

Are there financing options available for building an ADU?

Yes, there are home equity loans, personal loans, and specialized ADU financing programs. Check with your financial institution about their terms and eligibility.