It used to be called an “in-law” so a couple’s in-laws can live close by, but not too close by. There’s a more formal name for it, called “Accessory Dwelling Unit” (ADU). An ADU is a unit of living space complete with its kitchen and bathroom. In California where land and housing are expensive, more and more people opt to build such an ADU. Instead of spending $500-1000 per square feet buying or building a new house, an ADU can be built for $200-300 per square feet. It allows people with enough space in their existing lot to create more living space that can be rented out. It allows renters more choices. It allows cities with housing shortage to create housing without large development projects. In many ways, it provides benefits all around.
If you are a single family home owner, or a would-be home buyer, here are some why, when, what, how, and how much of an ADU.
The why is really very simple. It can be for the real “in-law” reason. It can be for extra income. It can also be a way for your adult children to live close by and pay you the rent that they would have to pay someone else otherwise. It can, of course, simply be because you need extra space and don’t want to buy a bigger house.
Another reason is just to protect the value of your house. It is projected that in the coming years, 350,000 ADUs would be built within the California state. If the houses near yours are all adding their ADUs, and yours doesn’t have one, in time when you sell your house, you will be at a disadvantage.
There is perhaps no better time to do it than now. Housing prices in California, esp. the bay area, are at their all time high. In 2017, California state law changed to make ADUs easier to be built. Or put another way, it made it harder for cities to block or slow down ADU development. If you are going to just build an ADU, there is no no need to go through city planning review or neighbor consent / review. Parking restrictions for an ADU have also been relaxed. Previously, a unit of ADU would have required you to add another space for off-street parking. But with the state law change, if your house is within 0.5 miles of public transit (including a simple bus stop), this off-street parking requirement is waived. Some cities are starting to be more open towards ADUs as well by relaxing the previously stricter rear setback requirement.
An ADU is a unit of living space that:
You must comply with the city and state law and regulations on ADU. And it’s best to hire an architect who is very familiar with them. We cannot possibly describe all the cities’ variations here. But in the state of California, esp. here in the bay area, here are some general tips and tricks that apply to most cities:
Just like any new building development, you do need to the city to approve. The good news is, by law, a city has to approve it within 120 days. In general, this will take a little less time than that. From the time your architect draws out the plan to the time it gets approved, it can take 55-65 days on average.
Although this varies city by city, there are quite likely some minimum and maximum requirements in size. A minimum of 150 square feet and a maximum of 950-1200 square feet are common requirements in most cities. In general, an ADU will also need to be within 50% of the total square footage of the main house.
Pre-fab houses are usually made outside of the state of California and as a result, may not comply with the regulations of a local city. For example, if you have side setback requirements, commonly 3-5 feet, and your pre-fab house is too wide, you will violate the setback requirements.
The city planning department will generally ask that the style of your ADU be very similar to the main house. In the interior, “efficiency kitchens” are allowed as ADUs can be quite small. An ADU can be up to 2 stories high or 24 feet tall.
This is a bit of a grey area that you’d better check with the city planning department on. It’s probably easiest not to separate out water, electricity and gas utilities meters and work out some other way for your tenant to share the bills.
Costs obviously vary depending on where you are and how high in demand the contractors are. Nevertheless, the costs to build an ADU should still be a percentage of what it takes to build (or buy) a brand new house.
One not-so-obvious cost of an ADU is the property tax impact. As adding an ADU does add to the living space square footage of your property, it will increase the property value and as a result, the tax assessment for it as well. This is something to bear in mind and something you need to balance the costs and benefits of an ADU on.
For your reference, here’s a nice article about ADUs: https://www.zillow.com/blog/accessory-dwelling-units-legal-159005/