In September 2020, a new California Department Of Housing handbook regarding laws, rules, and regulations of newly built ADU’s was released. This article regards the laws of only the state of California, other states may be different.
According to the state of California, an ADU is defined as, “An accessory dwelling unit with complete independent living facilities for one or more persons and has a few variations.” What exactly does that mean? It means that ADU’s are made for independent tenants that may vary in terms of size, design, bedrooms, bathrooms, and more. ADU’s can be custom built to any homeowner’s specifications while still following all regulations that the state of California hands down to builders. ADU’s go by a few different names. Some people call them granny flats, in-law units, backyard cottages, secondary units and more. No matter what you call them, ADUs are an innovative, affordable, effective option for adding much-needed housing in California.
In 2020, California Governor Gavin Newsom signed five bills into law regarding ADUs. These bills make ADUs more accessible for renters across the state. If you're looking to build an ADU or you're looking to rent one, you're going to want to know about the changes that went into effect in 2020 and in the California Department of Housing and Community Development Handbook.
There are not that many requirements for building a new ADU in CA, but the California Department of Housing And Community Development do require a few things for your newly built ADU to be up to code. The living room/bedroom needs to be at least 70 square feet.The kitchen (along with the hallways and closet) must measure in at 50 square feet.The bathroom must be at least 30 square feet and contain a toilet, sink, and a shower stall or tub. Your newly built ADU has to be less than 16 feet tall. And if your ADU is below that 16 foot height and is under 750 square feet, its building permits can’t be blocked. If you’re building an ADU within a home or existing building, the ADU can max out at the maximum height of the existing structure. The size of your ADU is important, but just as crucial are the materials you use to build it. There are critical standards to ensure that ADUs represent high quality housing options.
Builders can not use single piece composite, laminates, or interlocked metal sheathing. As for the roof, it can’t be made of wooden shingles. It must also have a minimum of a 2:12 pitch for greater than 50 percent of the roof area. Windows must be at least double-pane glass and labelled for building use, and they can’t have exterior trim. Newly constructed ADUs are subject to the Energy Code requirement to provide solar panels if the unit is a newly constructed, non-manufactured, detached ADU. The California Energy Commission states that the panels can be installed on the ADU or on the primary dwelling unit. ADUs that are constructed within existing space, or as an addition to existing homes, including detached additions where an existing detached building is converted from non-residential to residential space, are not subject to the Energy Code requirement to provide solar panels.
Roof installs will be the most common because it’s the area on your ADU that provides the greatest access to sunlight. If you own a piece of property that has a lot of land, you have another option. You can install your photovoltaic cells somewhere else as long as nothing is in the way of the solar panels. You can also choose to hire an alternative solar energy provider. In that case, you essentially rent out your roof to a solar company. Completely free of charge, they come and install solar panels on your roof. You then pay them for your monthly power bill, just as you pay your current energy provider. Instead of paying money to the power company, you pay the solar company.
Setbacks are also new necessary parts of building an ADU. Setbacks are the required space between a structure and your property line. These zoning rules are in place for your safety and to allow for proper light and air access between you and your neighbors. Setbacks are made for things like fire safety.The housing authority can impose development standards, such as setbacks, for the creation of ADUs. Setbacks may include front, corner, street, and alley setbacks. Additional setback requirements may be required in the coastal zone if required by a local coastal program. Setbacks may also account for utility easements or recorded setbacks. The housing authority also allows the expansion of a detached structure being converted into an ADU when the existing structure does not have four-foot rear and side setbacks. It is also legal for the expansion area of a detached structure being converted into an ADU to have no setbacks, or setbacks of less than four feet, if the existing structure has no setbacks, or has setbacks of less than four feet. In the typical single family home in California, the setbacks that matter most for an ADU are your side and rear yard setbacks. The rule in California according to the handbook is that the ADU must be 5 feet from the side and rear property lines.
Your new ADU does not require parking if they are created within an existing space in your house or an accessory structure, like a garage or carport. Also, no replacement parking is required for the main residence when a garage or carport is demolished or converted to create an ADU. Parking should be the least of your worries when building your new ADU. There are so many solutions and the state of California is only making it easier for people who would like to build their new ADU. Parking requirements for ADUs shall not exceed one parking space per unit or bedroom, whichever is less. These spaces may be provided as tandem parking on a driveway. Guest parking spaces are not required for ADUs under any circumstances.
There is not a minimum lot size requirement for an ADU. While state governments can have standards for ADUs, these standards can’t include minimum lot size requirements. But, building and safety standards are still in play and ADUs must adhere to those laws.the government can establish minimum and maximum size requirements for ADUs. However, maximum unit size requirements must be at least 850 square feet and 1,000 square feet for ADUs with more than one bedroom. For cities without an ordinance, maximum unit sizes are 1,200 square feet for a new detached ADU and up to 50 percent of the floor area of the existing primary dwelling for an attached ADU (at least 800 square feet). The conversion of an existing ADU or primary residence to a new ADU is not subject to size requirements. For example, an existing 3,000 square foot barn converted to an ADU would not be subject to the size requirements. If you want to expand your ADU in any way, then you may be subject to the size requirements.
With the new CA Department of Housing Handbook, we now know more about what we can and can not do when building a new ADU. For example, one new rule is that you can now add 2 ADU’s to your property. This means you can add one full ADU and one junior ADU which is a maximum of 500 square feet. You can also now build a detached ADU up to 800 sq. ft. and 16' tall without any local discretionary approvals. ADUs created by conversions are also granted automatic approval.
You can now convert portions of existing multi-family buildings that are not used as livable space, such as storage rooms, garages, carports, mechanical rooms, attics or basements into ADUs. At least one ADU can be created though this method and up to 25% of the existing unit count. For example, if you have an 8-unit apartment building you may be able to add up to two new ADUs by converting existing non-livable space.
There is a multistep process in order to acquire permits for your new ADU. The first step is preparing your plans for your new ADU. These plans could be blueprints that lay out your plan for how you would like your ADU to be built. Next, you must schedule an appointment to submit your plans to the housing department and then submit your plans. Once your plans are approved, you can begin building as well as going through the inspection process for your new ADU. The new ADU handbook is also pointing out that approval times for permits is now shorter due to the housing authority encouraging people to build ADUs. They are encouraging people in order to create more affordable housing in California. It is also now possible to legalize an unpermitted ADU. If your ADU was built in an unpermitted manner you have up to 5 years to get it up to code. Once it is up to code it is now a totally legal ADU which can start bringing you cash flow as soon as it is rented out. The rate in which people were approved for permits in California grew nearly 50 percent between 2017 and 2018. More than 7,000 ADUs were permitted across the state in 2019. These numbers still have room to grow.
An ADU is an accessory use for the purposes of calculating allowable density under the general plan and zoning that does not count toward the allowable density. For example, if a zoning district allows one unit per 7,500 square feet, then an ADU would not be counted as an additional unit. Further, local governments could elect to allow more than one ADU on a lot, and ADUs are automatically a residential use deemed consistent with the general plan and zoning
Old laws on ADU ownership in California designated that ADU rights were tied to the primary residence. The ADU was not considered a property in its own right, but rather a unit that was part of the primary residence on the lot. It could not be sold separately from the primary residence, and if the primary residence transferred hands, so did the ADU. Under the bill AB 587l, ADUs may be bought or sold separately from the primary residence if certain conditions are met. Affordability restrictions are also placed on the sale and deed of the ADU ensuring that it remains preserved as affordable housing for low-income families for 45 years.
In addition, under an already existing tax law, property owned and operated by a nonprofit organization can qualify for a welfare exemption from property taxes.The idea is to increase the ability of affordable housing organizations to sell deed-restricted ADUs to low-income homeowners, allowing for shared ownership models that would increase the availability of affordable housing in California. Many HOAs have conditions, covenants and restrictions that prevent people from building ADUs. HOAs may worry about the design of the properties if one has an ADU on it, or they might be concerned that they don't know who is and who isn't renting from an ADU. Regardless, HOAs now need to have a way for people to construct ADUs if they so choose. AB670 is fixing this by restricting an HOA’s right to deny a homeowner wanting to build an ADU in California.
The California Department of Housing is prohibited from creating development standards for ADUs requirements on minimum lot size. Your ADU has more freedom and a custom build is more possible due to the new laws. Clarified areas designated by the department of housing for ADUs may be based on the adequacy of water and sewer services as well as impacts on traffic flow and public safety. This means that if there is enough sewer and water services in the area, your ADU will be much more likely to be approved. All owner and occupancy requirements for newly built ADU’s will be eliminated by the department of housing between January 1, 2020 and January 1, 2025. The housing authority also prohibits a local agency from establishing a maximum size of an ADU of less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom and requires approval of a permit to build an ADU of up to 800 square feet.Before the 2020 rule changes, the approval period for ADUs was 120 days. Now, cities in California must provide approval or denial of the request within 60 days of receiving the application. Also, due to the 2020 ADU rule changes, HOA’s can not reasonably prohibit the development of ADUs or JADUs.
In the past, many state and local laws prevented California homeowners from being able to build ADUs, even in cases where the property itself would qualify. There were also several cost barriers for many homeowners, as well as time delays that made the project very expensive. This is why California passed the new laws intended to take effect in 2020. These laws are designed to remove many of the roadblocks that would have previously prevented families from being able to build an ADU, whether that was property restrictions, fees, or a neighborhood group that simply did not want ADUs to be built in the neighborhood.
An existing space can even be converted into an ADU. An ADU can be a remodel of an existing interior space, an attic dwelling, a basement apartment, an addition attached to the house or garage, or a separate dwelling located on the property. For example, if you were to buy a home with a garage, and have no need for the garage itself, you can convert it into an ADU that will generate a new income for yourself.
California has an affordable housing problem. As rent prices skyrocket through the city, people are having trouble finding affordable places to live. By building an ADU,you are giving your future tenant a chance to have their own independent dwelling without paying the price of their own full sized home. ADU’s come in 1-3 bedrooms so even a whole family could rent one out. ADUs provide benefits for both society and individuals. ADU’s provide livable spaces but with lower costs and quicker permitting processes than for larger, multi-family buildings. Because ADUs tend to be smaller than full size homes, and their amenities are more inexpensive. They provide more affordable housing options. Oftentimes, these units are the only rental housing available in older, predominantly single-family neighborhoods, making it possible for people from all walks of life to live in the area.
Not only do ADU’s increase the value of your current home from $150,000 and up, they are an asset that will only rise in value over time. ADU’s also create a way to collect monthly rent in which you can put toward your current home mortgage (if applicable.) The Housing Department of California states, “ADUs tend to be significantly less expensive to build and offer benefits that address common development barriers such as affordability and environmental quality. Because ADUs must be built on lots with existing or proposed housing, they do not require paying for new land, dedicated parking or other costly infrastructure required to build a new single-family home.
When making an investment, the first and most important thought is maximizing your returns. With an ADU, you have a tangible investment that will not only forever hold its value while bringing in monthly rent, you also can depend on the value of that new unit increasing. Another great part of building an ADU is that the monthly expenses are low.
Not only can you rent out your ADU to a tenant immediately after it passes all inspections, but you can also convert it into an office. An ADU is a perfect solution for those in need of a home office or a studio in which to work. There are many working citizens in Los Angeles who work from home, but don’t want to pay for a separate office. I Additionally, you can find tenants who would split the space, that might be willing to pay rent on the unit. For example, if one person only needs the ADU part-time, it could be rented out for the unused hours. Square footage in your ADU that is dedicated solely for work can be an income tax deduction come tax time. Be sure to consult with your tax advisor for details on how and when this deduction can be taken.
The typical amount a landlord charges for rent in California is roughly 0.8-1.1% of their ADUs value. This value is determined by the market value of the ADU and subject to some degree of personal preference. For example, charging a high 1% for renting an ADU worth $100,000 is not unreasonable. On the other hand, charging 1% for an ADU valued above $350,000 might turn most renters off. Los Angeles ADU permit requests have increased dramatically since 2016. This increase reflects the need for more affordable housing in the state as well as the recognition of ADUs as financial assets. This increase in ADU permit application is due largely to the passage of new state laws effective since January 1, 2020. Also, the addition of the California Department Of Housing and Community Development ADU Handbook is making it easier to construct an ADU.
In order to collect the full rewards of constructing your ADU, you must take all the factors of renting into account. This includes tenant screening, placing ads, and considering utility cost-sharing. You can post an ad to rent the ADU on a real estate website such as Zillow or contact a realtor/property manager for help finding a tenant. ADU’s can be rented tentatively month to month or signed to a long term lease that could be 1 or even 2 years.Under California law, the tenant contract cannot be ended in the middle of any month unless you agree to end it. If you (as the landlord) want to end the tenant lease, you must do so only at the end of the month and only after giving 20 days written notice. Though this type of agreement can be oral, a written contract is recommended to avoid any kind of misunderstanding.
The California Department Of Housing and Community Development now encourages the building and Use of ADU’s. ADUs as an important source of housing to help combat the housing crisis our communities are facing in California.California’s housing production is not keeping pace with demand. In the last decade, less than half of the homes needed to keep up with the population growth were built. ADU’s make it possible for more homes to be built without creating new land. ADU’s are an affordable alternative to apartments and they put money in the hands of homeowners which stimulates the economy. More homeowners collecting rent from a newly built ADU means less defaults on mortgages. This creates a ripple effect that helps the economy in California stay stable. ADU’s increase values of homes. With more ADU’s being built, the value of homes in California is increasing which creates a supply and demand chain for property in California.
Most of the new laws are just regulations on building your new ADU, but the California governor is also making it much easier to create an ADU. There are thousands of new permits for ADUs being filed in California for a new ADU every year. This will make housing more affordable for all people in this great state. The rate in which people were approved for permits in California grew nearly 50 percent between 2017 and 2018. More than 7,000 ADUs were permitted across the state in 2019. These numbers still have room to grow. This means that obtaining a permit is becoming easier as time goes on and right now is a great time to begin building your new ADU!
Neo Builders Inc. is an experienced construction company with a specialty in building ADU’s. Building an ADU with Neo Builders will increase your monthly cash flow in a stress free and organized process. Check out our Los Angeles rules and regulation page for more details.
Don’t wait, make the call today for a step towards financial freedom. An initial consultation and quote are FREE of charge.
For All Your ADU Needs
NEO Builders Inc.
3940 Laurel Canyon, Studio City #394, 91604
License #: 1061134