Accent dwelling models, additionally known as ADUs and “granny flats,” have been obtainable in California solely as leases. However a brand new regulation, Meeting Invoice 1033, is giving Californians the chance to purchase and promote them as condominiums.
ADUs are available in all styles and sizes — for instance, a transformed storage, a small dwelling within the yard, or, as typically seen in San Francisco, an unused portion of the principle home, mentioned Assemblyman Phil Ting (D-San Francisco), who drafted the laws.
Below AB 1033, which was signed into regulation this week, property house owners in collaborating cities will have the ability to assemble an ADU on their land and promote it individually, following the identical guidelines that apply to condominiums. It provides owners extra choices for constructing on their property, and “the hope is, it might create extra homeownership,” mentioned Ting.
Below the brand new regulation, native governments have to choose in to the ADU-as-condominium strategy for it to be an choice of their cities.
Right here’s how the brand new guidelines will work in collaborating cities:
As with new condominiums, owners constructing ADUs should notify the native utilities, together with water, sewer, fuel and electrical, of the creation and separate conveyance of the unit. Every property may also must kind a owners affiliation to evaluate dues to cowl the price of caring for the property’s exterior and shared areas, such because the driveway, a pool or a standard roof.
Just like condominiums on one property, the house and the ADU could have two completely different property taxes, Ting mentioned.
He says he believes that lots of the preliminary ADUs going via this course of can be offered to the members of the family or shut pals of the house owner.
“After which as persons are extra comfy with this and also you see extra ADUs being offered, and it’s extra prevalent, then I might see this being extra of a standard actual property transaction,” he mentioned.
Meredith Stowers, a mortgage officer at CrossCountry Mortgage in San Diego who makes a speciality of ADUs, mentioned AB 1033 advantages each owners and new patrons.
“The standard owners we see are retirees who’ve lengthy since paid off their mortgage, however are perhaps residing on a pittance of Social Safety and meager retirement funds,” she mentioned.
Below this regulation, the retirees can earn supplemental earnings and younger households can purchase an reasonably priced starter dwelling.
Stowers mentioned the issue that retirees are dealing with is that, “after so a few years of mortgage modifications in excessive charges, it doesn’t make monetary sense for the retiree to maneuver out of their dwelling.”
She argues it’s costlier for them to downsize to a smaller home, and this new piece of laws opens alternatives for retirees to leverage the fairness they’ve constructed up of their properties whereas additionally creating reasonably priced housing.
“We’re even seeing some retirees add ADUs of their yard that they then transfer into and doubtlessly promoting off their dwelling,” she mentioned.
Promoting ADUs as condominiums is having success in locations resembling Oregon, Texas and Seattle.
When Seattle eliminated regulatory boundaries that discouraged property house owners from setting up ADUs in 2019, the town issued practically 1,000 ADU permits, greater than 4 occasions the quantity permitted in 2018, in line with a report launched in March.
The report additionally discovered that in 2022, the town permitted 437 connected ADUs and 551 indifferent ADUs, which it known as yard cottages. Slightly below half have been on websites with a number of ADUs and one-third have been a part of a improvement that included a brand new single-family residence.
Included within the report have been pattern gross sales for neighbor residential parcels with indifferent ADUs, reporting {that a} unit of greater than 1,000 sq. ft offered for a mean of wherever between $500,000 to $800,000.