What you need to know about ADUs and the new laws:
On October 11, 2023 Governor Newsom signs an extensive housing package consisting of 56 bills to help address California’s decades-in-the-making housing crisis by simplifying and expediting the construction of new housing, protecting tenants, and keeping housing affordable. Four of the bills signed will significantly affect the ADU landscape in California.
Accessory dwelling units (ADUs) are small, independent living spaces that can be added to existing homes or built as standalone structures. They are a great way to create more housing options, generate extra income, and accommodate multigenerational families.
If you want to learn more about Accessory Dwelling Units click here.
How will the new law benefit ADU owners and builders?
Governor Newsom has just signed four bills that will make it easier and more affordable to build and own ADUs in California. The new laws are:
- AB 1033 (Ting): This law will allow ADUs and primary homes to be converted to condos and sold separately where cities opt in. This will create new opportunities for homebuyers who are currently priced out of the market and for homeowners who want to cash out their equity. For example, if you own a single-family home with an ADU in the backyard, you can sell the ADU as a separate condo unit to another buyer, or vice versa. This will increase the value of your property and give you more flexibility in your housing choices.
- AB 976 (Ting): This law will remove the owner-occupancy requirement for ADUs that was imposed by some local jurisdictions. This will enable homeowners to access more financing options for ADUs and to rent out both their primary home and ADU if they wish. For example, if you want to build an ADU on your property, you can get a loan from a bank or a private lender without having to live in either the main house or the ADU. You can also move out of your property and rent out both units to tenants, generating passive income and increasing your return on investment.
- AB 434 (Grayson): This law will help state agencies ensure ADU opportunities protected in state ADU law are available to homeowners in every California city and county.
- AB1332 (Carillo): New statewide rules will streamline use of previously approved ADU plans, saving time, design costs and staff hours under AB 1332 (Carrillo)
These laws are part of an extensive housing package consisting of 56 bills that Governor Newsom signed on Wednesday. Read the complete list of bills signed by the Governor from CA.gov,
What is the impact of the new laws on the ADU market?
The new laws are expected to boost the construction of ADUs in California, which has already boomed over the past decade. The state’s housing department said that about 20% of the housing units built in the state today are ADUs.
Supporters of both AB 1033 and AB 976 have said ADUs are a critical affordable housing option. The Bay Area Council, which sponsored AB 1033, previously said the law offers residents an affordable for-sale option. Sen. Nancy Skinner, D-Berkeley, has said ADUs expand the state’s housing supply. California YIMBY, a pro-housing group, celebrated Newsom’s signature of AB 976 in a statement Wednesday. Brian Hanlon, the CEO of California YIMBY, said cities are now promoting ADUs as “one of the most desirable and affordable forms of housing”.
