Accessory Dwelling Unit (ADU)

What Is an Accessory Dwelling Unit?

An accessory dwelling unit (ADU) is a second, smaller home on the same lot as a main house. What makes it an ADU rather than a spare room is that it is complete on its own. California law, for example, defines an ADU as a unit providing “complete independent living facilities,” with permanent provisions for living, sleeping, eating, cooking and sanitation.

ADUs go by many names, including granny flat, in-law suite, accessory apartment, carriage house and garage apartment. They take one of three forms:

• Interior: carved out of existing space, such as a basement or attic
• Attached: an addition to the main house
• Detached: a separate structure, such as a backyard cottage or an apartment over a garage

A junior accessory dwelling unit is a smaller variant built within the walls of the main house.

How It Works

A homeowner builds or converts the ADU and then rents it out, houses a relative, or moves into it and rents the main house. ADUs use land the owner already has, so they add homes without buying land or putting up large buildings.

Local zoning usually decides whether ADUs are allowed and on what terms. Local rules have commonly included owner-occupancy requirements, extra off-street parking and minimum lot sizes. Some states now override parts of these rules:

• Oregon. House Bill 2001 (2019) said cities may not require owner occupancy or additional off-street parking for ADUs, with an exception for ADUs used as vacation rentals.
• California. State law caps the parking a city can require, bars minimum lot size requirements for ADUs, and does not allow an owner-occupancy requirement for an ADU on a single-family lot. Since 2024 these rules have sat in a dedicated ADU chapter of the Government Code.

Why It Matters for Workforce Housing

ADUs are usually small, so they tend to rent for less than a full house in the same neighborhood. They also add rental homes in single-family neighborhoods, where rentals are often scarce. A statewide survey of California ADU owners, released in April 2021 by UC Berkeley’s Center for Community Innovation and summarized by the Terner Center, found a median rent of $2,000 for a new ADU. It also found that a large share of units were available to households earning less than 80% of area median income, though affordability varied widely by county.

Criticisms and Limitations

ADUs add homes one at a time, and each depends on an individual homeowner’s money and willingness. The same survey reported a median construction cost of $150,000. It also found that ADU building had been slow to reach low-income homeowners of color. Most ADUs carry no rent or income restrictions, and some are used as short-term rentals rather than long-term homes. The survey put that share at 8% of new California ADUs.