Supporting Development of Accessory Dwelling Units

ADUs provide potential income streams and space for family members via smaller-than-average footprints that require fewer materials to build and lower utilities to maintain.

Carriage houses, in-law suites, granny flats, backyard cottages, sidekicks and laneway houses are among the dozens of names for Accessory Dwelling Units, or ADUs. ADUs are a simple, time-tested housing option that allows secondary housing units on the same property as a single-family home. Units can be attached (AADU) or detached (DADU) but are always part of the property and cannot be sold separately, as condominiums or homes on wheels may be.

Homeowners may have a variety of reasons for building ADUs, including housing a family member or creating an income stream from ADU rentals. ADUs also allow homeowners to age in place as their needs change over a lifetime. With more people choosing to live alone or not have children, ADUs offer the option of smaller homes for single people or smaller families, responding to changing household demographics in North America. And for cities looking to increase density and property values without sacrificing neighborhood character, ADUs offer a solution that accommodates more residents while views from the street remain largely unchanged.

This video from the Oregon Department of Environmental Quality gives an overview of ADUs, how they work for homeowners, and how the City of Portland is helping residents accommodate ADUs.


Value Proposition for Sustainable Consumption

According to research[1] commissioned by the Oregon Department of Environmental Quality, the greenest buildings are also typically the smallest buildings. Accessory Dwelling Units specifically promote sustainable consumption in several ways:

  • Smaller-sized units require fewer materials to build and lower consumption of utilities like water, gas, and electricity than traditional single-family homes or condominiums;
  • Similarly, “very small homes” (<1,150 sq.ft.) produce 36% less lifecycle greenhouse gas (GHG) emissions than “standard homes” (2,262 sq. ft.); and
  • Smaller-sized units create a cap on the amount of material goods that residents can fit into their homes, encouraging them to acquire fewer possessions and share tools, equipment and other material goods.

Potential City Roles

  • Inventory—Map core areas that lack affordable, flexible housing options and consider those as pilot areas for ADU incentive areas and zoning changes to allow for more ADUs.
  • Support & Educate—Provide information and technical assistance to homeowners and others interested in building ADUs.
  • Make Policy and Code Adjustments—Waive burdensome development and zoning regulations such as minimum parking requirements, maximum occupancy, and square footage requirements. See below for other potential policy hurdles to mitigate.
  • Incentivize—Offer subsidies and accessible financing, density bonuses, and fee waivers for ADU development.

Implementation Challenges and Potential Solutions

Fees for building—ADU development can be hindered by high fees for zoning permits and utility connections. Some fee structures may present barriers to construction of ADUs because of their status as a secondary dwelling while the same square footage, if added as part of the primary dwelling, would not incur those same fees. Cities can mitigate these challenges by amending traditional fee structures, streamlining the permitting process, and ensuring that zoning regulations are easy to follow.

Building code requirements—Several common code requirements related to square footage, parking, and exterior design requirements can create barriers to building ADUs.

  • Arbitrary minimums or maximum square footage restrictions on ADUs can make building the units less financially feasible. Minimums may be set based on a “square footage per resident basis” that conforms to middle class suburban expectations for housing needs while maximums may be set based as a percentage of original home’s size. In either case, the freedom to choose an ADU’s size is taken out of the hands of the homeowner and building size may be the deciding factor in whether or not an ADU is built.
  • Parking requirements may similarly restrict homeowners from building if their site lacks the square footage needed to accommodate a parking pad for a car that they or their renters may choose not to own.
  • Exterior design standards for DADUs may require that new units match the finish, roof pitch and materials, window proportions, color, trim and siding of the original unit. These well-intentioned requirements are meant to prevent DADUs that degrade neighborhood character but they may cause “ugly” homes to be mimicked. These requirements also prevent the use of prefabricated units and components, essentially creating a cost-prohibitive custom-build requirement.

One solution is to perform a code scan and update the City’s code to prevent these building requirements from making ADU construction infeasible.

Occupancy Limits & Zoning Restrictions—Many cities’ municipal codes include occupancy and zoning restrictions that make it nearly impossible to develop ADUs.

  • One common restriction is the limit on the number of unrelated occupants allowed to reside on a property. The limit is often set at 3–5 unrelated residents.
  • Many cities require that property owners live on-site at properties that contain ADUs. These requirements are unattractive to bank loan officers and may prevent property owners from securing financing to build ADUs.
  • Some communities outright ban development of DADUs, all ADUs, or restrict the neighborhoods where they may exist. Neighborhood restrictions are often set using minimum lot size requirements for properties to accommodate ADUs or by requiring difficult-to-obtain “conditional use permits.”

A good starting point is to perform a code scan and propose code changes or amendments that eliminate rules limiting the number of unrelated residents allowed on a property, property owner residency requirements, and lot size or other zoning restrictions. Another step could be to include a strategic priority for ADU development in your community’s comprehensive plan update.


Oregon’s Department of Environmental Quality’s Green Building Program has performed research that shows small residential buildings have 36% lower lifecycle greenhouse gas emissions than standard sized homes. See the slideshow below for more details.  

Small Homes: Environmental Benefits and Trends from Oregon Department of Environmental Quality


Further Resources

  1. Small Homes: Benefits, Trends and Policies. Oregon Department of Environmental Quality