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3 things you need to know if you’re considering an ADU

Popularity of "granny flats" soars during COVID period

Accessory dwelling units (ADUs) have increased in popularity exponentially since the 1950s and are considered by some industry experts to be one solution to the affordable housing crisis. Now, as remote working and virtual classrooms have become the “new normal” for 1 in 4 American workers and roughly 93% of households with school-aged children in light of the COVID-19 pandemic, such units are being eyed as a solution to the problems those scenarios can bring as well.

For some, ADUs are serving as detached office spaces, allowing remote workers to maintain a sense of balance between their work and home lives. For others, ADUs have provided a way for grandparents to live closer to their grandchildren so that they can assist with childcare and schoolwork, all while maintaining their independence and personal space. Still others find ADUs to be a safer and more affordable alternative to assisted living facilities for their aging parents.

As a result of these trends, many homeowners and small business owners are considering adding ADUs to their properties. Even before COVID hit, first-time home listings with ADUs grew on average 8.6% per year, according to Freddie Mac. However, few do so without having a thorough understanding of the regulations involved.

Here are several considerations a homeowner should evaluate before installing an ADU on their property.

What are the benefits of an ADU?

ADUs provide both financial and environmental benefits. For example:

  • Because they add square footage to the property, ADUs can increase property values – and in situations where a tenant is living on the property, provide a source of rental income as well.
  • Since they don’t require additional land, use fewer resources to build and maintain, often make use of existing infrastructure, and use less energy for heating and cooling, ADUs are considered environmentally friendly.
  • As ADUs become more widely recognized as a solution to the affordable housing shortage in many areas of the country, regulations are being introduced in many localities to legalize and encourage their creation.

What are the zoning laws in my locality?

Before investing in an ADU, homeowners should first check with their zoning authority or municipality to find out their guidelines for ADUs. Regulations regarding ADUs vary depending on the jurisdiction and change regularly. In the United States, there are more than 19,000 cities, 16,000 towns, and 3,000 counties, each with its own set of zoning regulations.

Here are some examples of common zoning regulations related to ADUs:

  • Some communities limit ADUs to “residentially zoned, single-family lots,” and some restrict them to single-family homes with a minimum lot size. Others allow duplexes or townhomes to have ADUs on a ground floor or in a backyard.
  • Most jurisdictions will not allow homeowners to install more than one ADU, although some allow for one ADU and one JADU (Junior Accessory Dwelling Unit).
  • Some jurisdictions consider a park model to be an ADU, while others classify them as Recreational Vehicles.
  • Zoning regulations also indicate how tall and large the ADU is permitted to be.
  • Many municipalities require certain setbacks from the street and/or property line.
  • Separate parking is often required.

ADU zoning regulations can be found on local government websites.

How will I hook up water, sewer, electricity and handle billing for utilities?

The zoning authority will often have guidelines for how to manage utilities. Often, these will be connected and billed separately from the main residence. Some municipalities have mandates in place to ensure that connection and utility fees remain reasonable, so as not to discourage the development of ADUs. California, for example, has a statewide mandate requiring that connection and utility fees “shall not be disproportionately higher than those to develop primary dwellings.” 

Even if the homeowner intends the ADU to be occupied by a relative, it is advisable to install submeters for utilities at the time the dwelling is built, as this is less expensive than installing a submeter after the fact and desirable for resale purposes. Furthermore, separate meters can encourage energy and water conservation by the occupants of the ADU by making them financially responsible for the energy and water they use. Separate metering simplifies billing as well.

JADUs repurpose existing space within the residence and therefore do not present any additional stress on utility services or infrastructure.

What will happen to the ADU if and when I sell my primary residence?

Most governments disallow the sale of ADUs separate from that of the primary residence. Therefore, with the exception of tiny homes on wheels, the ADU would be sold as part of the property. 

As home improvements go, ADUs can be a profitable investment. With COVID driving more and more people to stay closer to home for work and school, the appeal of these separate living spaces is predicted to rise. Being aware of and complying with local zoning regulations is key to ensuring that the ADU will remain a viable solution for families that is both affordable and good for the environment.

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