First of all, let us talk about ADUs, essentially,Accessory Dwelling Units are an extension of your primary house. Think of a separate house that is still in your property that is subject to different laws and regulations. These units have gained popularity lately because they offer many benefits, including additional living space and potential rental income. But how did ADUs become so popular?
Amid the escalating national housing crisis, accessory dwelling units were proposed as a viable solution to address the shortage of affordable housing. ADUs present a critical opportunity to alleviate this crisis by creating more housing options and promoting inclusivity. They can serve as affordable options for first-time homebuyers, aging adults seeking to downsize, multigenerational families, and individuals with disabilities.
However, legal and regulatory challenges have hindered the widespread adoption of ADUs. Zoning restrictions, permitting processes, and homeowners’ associations often pose obstacles to ADU permitting and construction. Policymakers and local governments needed to recognize the urgent need for ADUs and enact supportive policies that encourage their development. In response, several ADU laws have been passed, and more middle-housing initiatives are underway.
In California, especially in Los Angeles where the average rent for a 1-bedroom apartment is $2,375, ADUs have become increasingly popular. The number of permits issued for ADU construction in California surged by an astonishing 334% between 2016 and 2022, resulting in a total of 83,865 permitted ADUs. This growth reflects California’s proactive approach to addressing the housing crisis through zoning reforms that encourage smaller housing types in low-density neighborhoods. California has taken an exemplary approach, streamlining regulations and incentivizing ADU. Recognizing the potential of ADUs to alleviate the housing shortage, YDS Architects has embraced the ADU movement..
Now, ADUs are more accessible to the general public thanks to these combined efforts. Let’s discuss the many changes in the laws and regulations surrounding ADUs.
Existing ADU Laws
The legalization of ADUs began as early as 1982 with the passing of SB 1160 which allowed for homeowners to build an ADU on all single family lots. This was followed by AB 1866 in 2002 which allowed local jurisdictions to set whatever standards for ADUs they liked, making the creation of ADUs more accessible to the general public.
In the following years, a bunch more laws were passed to streamline the entire process and make it all the more easier for people to create their ADU. Some of these include SB 1069 and AB 2299 passed in 2016 which made the permit acquisition process easier. The following year, in 2017, SB 229 and AB 494 was passed which clarified various ambiguities in the law and gave the California Department of Housing and Community Development (HCD) greater oversight over how local jurisdictions administered ADU permitting.
In 2019, a great step forward was made that exempted a specific type of ADU, particularly Junior Accessory Dwelling Units, from restrictions set by Homeowners Associations and Covenants, Conditions, and Restrictions– AB 670. This is because JADUs are a unique category of ADU in California that must be carved out of an existing structure and are subject to owner-occupancy requirements.
Additionally, in the next few years the state laws AB 3182 and AB 2221 which made things even easier with streamlined permitting.
The Role Of Local Organizations
The passing of these laws would certainly not be possible without the help and fervent support of various local organizations which paved the way for the so-called “ADU Boom” happening in the state. The following are some notable mentions:
- California YIMBY and the Casita Coalition have led efforts by advocating for housing-friendly policies, lobbying lawmakers, engaging communities, and raising public awareness. California YIMBY actively lobbies state legislators, provides research and data, and builds coalitions to support housing reforms. The Casita Coalition focuses on promoting ADUs by pushing for policies that reduce barriers, offering technical assistance, and running public awareness campaigns.
- AARP promotes ADUs to provide affordable and accessible housing for seniors, supporting policies that enable older adults to live independently. They advocate for ADU-friendly laws to help seniors age in place and provide resources to guide homeowners through the building process.
- The Terner Center for Housing Innovation at UC Berkeley provides research and data on the benefits of ADUs, informing legislative efforts. Their studies have highlighted the potential of ADUs to increase housing supply and affordability, providing evidence to support the need for streamlined permitting processes and reduced regulatory barriers.
- California Building Industry Association (CBIA) supports reducing regulatory barriers to facilitate ADU construction and increase housing supply. Representing home builders and developers, CBIA advocates for policies that streamline the permitting process, reduce fees, and eliminate unnecessary regulations to make ADU construction more feasible and cost-effective.
Of course, there are still other local organizations that have helped the cause– this short list is not at all exhaustive. Nevertheless, it is through their sheer passion and drive to help alleviate the housing that we have the laws and regulations that we have today. Our greatest thanks to these people
New ADU Laws (2024)
AB 1033 – The ADU Condo Law
AB 1033 introduces some exciting changes for Accessory Dwelling Units (ADUs). One of the most significant changes is that ADUs can now be sold separately from the main home. This means that if you own a property with an ADU, you can sell the ADU to a different buyer than the one buying the main house. This could open up more affordable housing options for people who might not need or want a full-sized house.
Another key detail of AB 1033 is that it aims to streamline the process for getting ADUs approved. This includes reducing the amount of red tape and paperwork needed, making it faster and easier for homeowners to build and sell ADUs.
AB 976 – Removes Owner-Occupancy Requirement
AB 976 introduces significant changes to encourage the construction of ADUs in California by removing barriers and providing incentives. It eliminates the owner-occupancy requirement, allowing property owners to build ADUs on rental properties without having to live on the same lot. This change increases the supply of rental housing and creates more income opportunities for property owners. The new law also exempts ADUs less than 750 square feet from impact fees, reducing the cost and complexity of building them and making ADUs more affordable and accessible.
Additionally, AB 976 streamlines the approval process for ADUs, requiring local governments to approve or deny applications within 60 days instead of 120. The law also prohibits subjective design standards, speeding up the permitting process and reducing arbitrary delays. Furthermore, AB 976 protects against restrictive local ordinances that limit ADU development, ensuring that local governments cannot impose unnecessary restrictions without proving a specific negative impact on public health or safety. You can read more about this law here.
AB 434 – Pre Approved ADU Plans
AB 434 is all about making it easier to get started with building an ADU. This law introduces a scheme where homeowners can choose from a set of pre-approved ADU plans. These plans have already been vetted by local authorities, which means you can skip some of the lengthy approval processes.
Using a pre-approved plan can save you time and money since you won’t need to hire architects or wait for custom designs to be approved. Although it helps ensure that your ADU meets all local building codes and regulations, you may still require an architect to scale and meet zoning, setback, parking, easements, and other requirements.
New ADU Laws (2023)
Changes to the 60-Day Rule
The new ADU laws for 2023 bring several significant changes aimed at streamlining the process of building accessory dwelling units in California. One key update is the AB 2221 which modified the 60-Day Rule, which now mandates that all agencies involved in reviewing ADU plans must respond within 60 days of submission. This is intended to expedite the approval process and reduce waiting times for homeowners.
Say for example, you are, for some reason, in a rush to finish all the paperworks required to build your ADU. With these changes, you can make sure that the paperworks will be accomplished within 60 days of submission. It definitely makes the wait time for your paperwork a whole lot less!
Revised ADU Height Restrictions
Height restrictions for ADUs have also been revised. ADUs up to 16 feet in height are allowed under any circumstances, while those up to 18 feet are permitted if the property is within ½ mile of public transit or already has a multi-family dwelling that is two stories high. ADUs can be up to 25 feet tall if attached to the primary dwelling, though this depends on the underlying zoning code, with the strictest rule applying.
Redefined Setbacks
Setback requirements have been adjusted to encourage more ADU construction. If the proposed ADU is less than 800 square feet, front setback requirements can no longer be used to prevent its construction. This change addresses one of the common barriers to building smaller ADUs.
This is great especially for families with smaller properties to be able to build ADUs and possibly gain more income. One particular example of this would Donna Saffell who is a member of a facebook group. She has an 800 square feet home and she managed to build a 349 square feet ADU on top of that. This law that redefined the setbacks definitely made way for people like Donna to build what they want! You can see Donna and the post she commented through here.
Unpermitted Conditions and Fire Sprinkler Requirement
SB 897 eliminates restrictions related to non-conforming zoning conditions, building code violations, or unpermitted structures, unless these issues pose a health or safety concern.
This allows more flexibility for homeowners who might have otherwise been prevented from building an ADU due to minor non-compliance issues. You can read more about this through this website.
Additionally, the requirement for fire sprinklers has been relaxed. Fire sprinklers are no longer necessary for the main dwelling when permitting an ADU, reducing the overall cost and complexity of construction.
Other Changes Worth Mentioning
Other noteworthy changes include the removal of the requirement for attached Junior ADUs (JADUs) to have their own bathroom, provided there is an accessible bathroom in the primary dwelling. Demolition permits can no longer be withheld if an ADU permit has been issued, ensuring that necessary renovations or rebuilds can proceed without unnecessary delays.
Lastly, the creation of the California ADU Fund aims to provide financial assistance to eligible recipients, further supporting the development of ADUs. We also have another article that you can refer to about the new laws that were passed which you can find here.
New ADU Laws (2022)
This law is a big deal because it makes it easier for homeowners to add more housing units to their property. SB 9 allows homeowners to build up to two units on a single-family lot, meaning you can now convert your home into a duplex or even split your lot to build an additional home. The process for getting approval to build these units has been simplified, reducing red tape and speeding up approvals, which makes it easier to add that extra unit. Additionally, for units under 750 square feet, you won’t have to pay impact fees, potentially saving you a lot of money.
One of the key benefits of SB 9 is the reduced parking requirements. If your property is near public transportation, you might not need to add any new parking at all. The law also brings zoning flexibility, allowing you to build up to two units even if your property is in a single-family zone, providing more options for how you can use your property. Plus, SB 9 removes some of the subjective reviews by city planners, so as long as you meet the basic requirements, you’re good to go. Importantly, you don’t have to live on the property to build these additional units, at least for now, which opens the door for more investment opportunities.
However, there are some exceptions and restrictions to SB 9. If your property is in a historic district, SB 9 might not apply due to stricter rules aimed at preserving the character of these areas. Properties in areas prone to environmental hazards like flooding or wildfire risk may also face additional restrictions. Additionally, some areas may have rules that limit how these new units can be rented out, so it’s essential to check your local regulations. Finally, while SB 9 allows for additional units, there are still limits on the size of the new structures, so you’ll need to plan accordingly. You can read up on this Senate Bill through the California Department of Housing and Community Development.
Other Highlights
Assembly Bill 68
Assembly Bill 68 allows landlords and homeowners to add up to two more units—an Accessory Dwelling Unit (ADU) and a Junior Accessory Dwelling Unit (JADU)—on any residential lot in California. This means that if your lot meets the size and setback requirements, you can legally create a triplex on a single lot according to the 2024 ADU laws. The bill also permits building owners to convert non-habitable rooms, such as attics, basements, and garages, into legal additional units, significantly increasing housing flexibility.
Under AB 68, municipalities must approve specific additions for both single-family homes and multi-family dwellings. For single-family homes, this includes one ADU (up to 1,200 sq. ft.) and one JADU (not more than 500 sq. ft. and within the existing structure) per lot, or one detached ADU (up to 1,200 sq. ft.) and one JADU. For multi-family dwellings, the bill allows for the addition of multiple ADUs within existing structures and up to two detached ADUs on a multi-family lot. This legislation aims to expand housing options and ease the creation of additional units across various property types.
Other Restrictions that are Prohibited by Local ADU Laws
Local ADU laws ensure that homeowners face minimal obstacles when building accessory dwelling units (ADUs). Here are some key restrictions that local laws are not allowed to impose:
- Lot Coverage and Minimum Lot Size: Local jurisdictions cannot enforce rules regarding lot coverage or minimum lot size specifically for ADUs. This means you won’t have to worry about your ADU plans being derailed by these types of restrictions.
- Parking Requirements: If you demolish a garage, carport, or covered parking structure to create an ADU or convert it into an ADU, local laws cannot require you to replace the parking that was lost. This provision helps streamline the process and reduce costs associated with creating an ADU.
- HOA Restrictions: Homeowners Associations (HOAs) are not allowed to “prohibit or unreasonably restrict” the construction of ADUs on single-family residential lots. This ensures that HOA rules don’t stand in the way of your ADU project.
- Impact Fees: For ADUs under 750 square feet, local agencies are prohibited from imposing impact fees. This helps keep the cost of smaller ADUs more manageable, making it easier for homeowners to pursue these projects.
These protections make it simpler and more affordable to add an ADU to your property, supporting housing flexibility and increasing living space options.
Interpreting the Law
These laws exist for a reason, and it lies in our responsibility to uphold them the best that we can. That said, while there are slight differences from county to county regarding the laws the have in place. They generally stay the same. However, there is still a need for you to be familiar with as this will help you immensely especially in the planning phase. Think of it as guidelines for what to do to make sure that the entire building process will be as smooth as possible.
Being well-versed in your local regulations can also help you avoid legal issues down the line. Non-compliance can result in fines, delays, or even orders to dismantle non-conforming structures. By understanding and adhering to the rules, you ensure that your ADU project proceeds smoothly and remains within legal boundaries.
Potential Variations and Challenges
As we have mentioned before, one of the biggest challenges in dealing with ADU regulations is the variation from one locality to another. While state laws provide a general framework, cities and counties have the authority to implement additional requirements that reflect local priorities and conditions. This means that what works in one city might not be permissible in another.
For instance, urban areas may have different density and parking requirements compared to rural areas. Coastal regions might have additional regulations to protect environmental resources. Historic districts could impose architectural guidelines to maintain the area’s character. All these factors contribute to the complexity of ADU projects.
Another challenge is keeping up with changes in regulations. As housing needs evolve, so do the laws governing ADUs. Staying informed about the latest updates and amendments to local ordinances is essential for ensuring compliance and making informed decisions about your ADU project.
In summary, interpreting the law regarding ADUs in California requires a thorough understanding of city and county-specific regulations. The variations and potential challenges demand careful attention to detail and a proactive approach to staying informed. By doing so, you can successfully navigate the regulatory landscape and bring your ADU vision to life.
Financing Your Dream ADU
- Overview of financing options (loans, grants, etc.)
- Tips for securing financing
- FHA Updates ADU Financing Policy
- New FHA policy allows lenders to consider ADU rental income for mortgages, including 203(k) loans.
- This could increase homeownership opportunities, provide more affordable housing, and encourage ADU construction.
- Implementation details, resources, and support are available.
Financing Options
ADUs definitely do not come cheap, a single ADU could set you back about $100,00, on average. Now, we do understand that it is quite a huge amount however, there are ways that you can add on to your capital– and that is by considering financing options sucg as the following:
- Home equity loans and lines of credit (HELOCs) use your home as collateral and typically offer lower interest rates, but there is a risk of foreclosure if you default.
- Cash-out refinancing provides a lump sum of cash by refinancing your mortgage, though this could result in a higher interest rate and resetting the terms of your mortgage.
- Personal loans offer another option without requiring collateral, but they usually come with higher interest rates. Additionally, many local governments offer grants and low-interest loans to incentivize ADU construction, though availability and requirements vary by location.
Tips for Securing Financing
To secure financing for your ADU, start by improving your credit score—pay down debts, avoid new credit inquiries, and ensure your credit report is accurate. Having a detailed plan that includes a budget and timelines can make lenders more confident in your project. It’s also wise to explore multiple lenders to compare rates and terms, rather than settling for the first offer. Professional help from financial advisors or mortgage brokers can provide valuable insights and access to better deals.
FHA Updates ADU Financing Policy
The FHA’s updated policies aims to make homeownership more accessible by allowing income from Accessory Dwelling Units (ADUs) to be considered during mortgage underwriting. This change is particularly beneficial for Californians, especially those with limited incomes, as it expands financing options and supports the development of ADUs. Here are some of the changes that you need to know about:
- Income Inclusion: Lenders can now consider 75% of the estimated rental income from existing ADUs for some borrowers. This flexibility helps homebuyers with limited incomes to qualify for FHA-insured mortgages and take advantage of the wealth-building potential of properties with ADUs.
- Rehabilitation Mortgage Insurance Program: Allows 50% of the estimated rental income from a new ADU (e.g., garage or basement conversion) to be used for mortgage qualification under the FHA’s Standard 203(k) Rehabilitation Mortgage Insurance Program. This facilitates the construction of ADUs for homeowners with limited incomes, supporting sustained homeownership and increasing rental housing stock.
- Appraisal Requirements: Introduces ADU-specific appraisal requirements to ensure accurate valuation of properties with ADUs, including estimated rental income. This change aids appraisers in determining the market value of such properties and advances the ADU valuation process, promoting broader access to ADU financing.
- New Construction: Permits the inclusion of ADUs in the types of improvements eligible for financing under FHA mortgages for new construction. This allows for the construction of new homes with ADUs from the outset, enhancing ADU production.
With that said, it is now easier for people, especially those without enough funds, to build the ADU that they want! If you want to read up on the fill press release you can access that through here.
Conclusion
California’s journey with Accessory Dwelling Units (ADUs) has come a long way since they were first legalized in the 1980s. Over the years, numerous laws have made it easier for homeowners to build these units. From SB 1160 in 1982 to the recent laws like AB 1033, AB 976, and AB 434 in 2024, the state has continually improved regulations to promote ADU construction. These new laws allow for separate sales of ADUs, remove owner-occupancy requirements, and introduce pre-approved ADU plans to simplify the building process.
ADUs offer many benefits, including extra living space, rental income, and increased property value. With the latest legislative changes, it’s now simpler than ever to plan and build an ADU. Whether you’re looking to create space for family, generate rental income, or just add value to your property, ADUs are a flexible and efficient solution.
To make the most of these opportunities, consult with professionals like us over at YDS Architects who specialize in ADU planning and permit acquisition. You are in safe and capable hands with these professionals by your side!
Additionally it might be in your best interest to stay informed about future legislative changes and local regulations to ensure compliance and take advantage of new benefits.
Join us as we strive to forward our goal in making housing accessible and easier in California! If you are interested, don’t hesitate to reach out to us via our website or email at [email protected]. See you then!
