How ADUs Are Making Housing More Affordable

Performance Property Real Estate Question

Q: My grandmother lives alone and needs more income. Can she move into the apartment over her garage and rent out her house? Elmo, South Orange, NJ

A: ADU stands for Accessory Dwelling Unit. Accessory dwelling units (ADUs) have been around for a very long time. An ADU is a secondary small dwelling on the same grounds or attached to a single-family house. ADUs are sometimes referred to as mother-in-law flats or granny flats.

Examples of ADUs include:

  • an apartment over the garage
  • a cottage or tiny house in a home’s backyard (Note: ADUs can be tiny houses, but tiny houses aren’t always ADUs)
  • a basement apartment

Regardless of its physical form, an ADU is legally part of the same property as the main home. The owner of the ADU is the owner of the main home. Although accessory dwellings are an old idea, they became less common in the middle of the 20th century. Now, thanks in part to the current housing shortage in much of the US, ADUs are coming back.

Many cities and counties permit ADUs with specific provisions that vary from place to place. One common local ADU provision is that an occupant must be an owner, family member or a domestic employee.

In some states like California and Vermont, localities must permit ADUs under certain conditions. Some communities that have an existing supply of illegally created ADUs offer some form of amnesty to owners of illegal ADUs within certain requirements.

Flexibility in housing that ADUs provide makes sense for financial reasons and to support extended families. Housing flexibility can help as our country’s population ages by helping seniors meet their needs without having to move prematurely. AARP has a model local ordinance that towns can use as a guide.

In some localities you can legally get rental income from a permitted ADU, or, if you want, you can live in the ADU and rent out the other dwelling. You need to check with the local municipality about the local zoning code in the town where your grandmother lives. Thanks for your question, Elmo.

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