What Are ADUs, and Are They Right For You?

If you follow New Hampshire politics or the housing market, you may have heard a new acronym being tossed around – ADU. ADU stands for Accessory Dwelling Unit, and a new law went into effect last month in New Hampshire that requires cities and towns to allow them. So, what are ADUs, and why should homeowners care about them?

What Are They?

The formal definition of an accessory dwelling unit is a second, smaller dwelling that’s on the same grounds as a single-family home. It can be either attached or detached. In everyday terms, ADUs are often called in-law apartments, family apartments, or secondary units. They are a separate, independent living space where people can sleep, eat and cook.

Why Are We Hearing about This Now?

The law in New Hampshire came into effect June 1, but the story of the ADU is much bigger. Demographically, the state is facing a housing challenge that ADUS are particularly fit to address.

More and more, young adults are living with parents. In New Hampshire, 26.5% of Millennials lived with their parents in 2015 – up from 27.6% in 2005 (Business NH, “Millennials by the Numbers”). Nationally, young men are more likely now to live with a parent than to live with a spouse or partner (Pew Research Center).

There is also the reality that New Hampshire faces an aging population, that by and large prefers to age in place. According to the NH Center for Public Policy Studies 2014 report “Housing Needs and Preferences in New Hampshire,” there is a mismatch between the housing available in the state and what both older and younger residents want and need.

Why Would a Homeowner Consider Adding One?

Having an ADU as part of your home offers various personal and financial benefits. If you opt to be a landlord and charge rent, it offers an additional source of income. For homeowners who have aging parents or disabled family members, it’s an option that allows them to have their loved ones close while giving them the chance to have their own space. For owners with “boomerang” college grads, it gives their children a chance to live at home and pay down college debt before striking out on their own.

Other advantages of the law are it increases the housing supply without causing further development in a community, and presents affordable options for people in a state that is dominated by high rents.

The Nuts and Bolts

Interested in adding an ADU? Time to do your research. Your town or city may have certain restrictions or requirements, such as limiting the number of ADUs, requiring you have parking to accommodate an ADU, or requiring the property to be owner-occupied. However, there are things that cities or towns cannot restrict, such as limiting ADUs to single-bedroom units or requiring the occupants to be related to the owner. Read up as much as you can, and work with your builder and town to make sure you’re abiding by local requirements. Real estate agents can also help you determine how an ADU can impact your home’s value if there is the possibility you’ll be selling it in the future.

Want to know more about ADUs? Check out the Office of Energy and Planning to read the law and find online resources.

Thank you to New Hampshire Housing for coming to Verani’s office and presenting on this topic, providing the information for this blog post! You can find their presentations, as well as a copy of “Housing Needs in New Hampshire,” on their website.