Accessorizing Homes

ADUs Off to Slow Start as Housing Supply Tightens

Consumer Awareness Limits Construction Opportunities

Two years ago, the state created common rules for ADUs – detached cottages or small apartments carved out of larger homes, which are cheaper to build than ordinary houses. However, the hoped-for affordable units have been slow to materialize.

Jeff Kelley started his construction company in 2017, around the same time New Hampshire enacted a law requiring municipalities to allow accessory dwelling units in single-family homes. Kelley wanted to position his firm as the go-to source for homeowners looking to add these second dwellings to their houses. 

So far, he has found most people dont even know what accessory dwelling units are.  

The general public is still shocked to learn that every municipality has to allow these,” Kelley said. “Most consumers dont even know what ADU stands for.” 

New Hampshire law has since June 2017 required municipalities to allow internal or attached ADUs in single-family homes. While the law was intended to help increase the state’s housing supplyespecially affordable unitsmany homeowners have yet to learn about the options and potential benefits of adding a second unit. 

State Law Sought Common Rules 

ADUs were allowed in the state before 2017, but inconsistent requirements from town to town created obstacles and confusion for homeowners, said George Reagan, an administrator for the Housing Awareness Program at the New Hampshire Housing Finance Authority. He said the New Hampshire Home Builders Association had noticed homeowners were looking for ways to add units to their homes. 

The law eliminated some common zoning restrictions. The owner is no longer required to live in the main building, residents in the ADU do not have to be related to the homeowner, a locked door can be installed between the main structure and the ADU and the unit can include more than one bedroom. 

Reagan has been visiting municipalities to help educate people about ADUs, which could increase the supply of smaller, less expensive homes that have become scarce in the state. 

Among those who could benefit from ADUs are older adults who want to downsize while continuing to live in their communities. They could move into an ADU and rent the main house or have other family members live there. ADUs could also attract younger people who might want smaller spaces to live in. 

Reagan said homeowners need time to understand ADUs and how to benefit from them. 

“Its not like there are dozens and dozens of applications in any one community for building permits to do accessory dwelling units,” Reagan said. “But I think theres homeowner interest, and it takes a while to discover how youre going to do that, how you can afford to do that, so its not something that happens lightning fast.” 

Affordable Source of Rental Income 

Based in Manchester, Kelley’s Solid Roots Construction has mostly built ADUs for people who need housing for older relatives, often in emergency situations 

Kelley has been marketing the units and would like homeowners to see them as rental opportunities. But he finds the term confusing: “Accessory dwelling unit” doesnt make people think about rental income, Kelley said, and “in-law suite is too limiting. 

In California, where recent ADU laws have made these units popular, some have used the Spanish term “casita,” meaning little house, to market them.  

Kelley’attached ADUs range in cost from $110,000 to $180,000, with an average of $160,000, about $200 per square foot. Unlike a new single-family home, ADUs often require less site work. For example, theres no driveway to build, and water and sewer hookups can be connected to the property’s main lines. One challenge is designing the unit to make it look as if it has always been part of the main house. 

Rules Differ from Town to Town 

Another challenge is working with different towns and cities. Despite the 2017 law, municipalities can still create zoning restrictions for ADUs. 

According to the 2018 Annual Municipal Land Use Regulation Survey administered by the state’s Office of Strategic Initiatives, 194 communities regulate ADUs in zoning ordinances out of the 234 municipalities and nine village districts with zoning power.  

While the state law said communities could let homeowners build detached ADUs on their property, about 56 percent of the communities allow only attached units, including Manchester, Concord, Nashua, Salem, Hudson and Derry.  

Communities that allow detached ADUs include Dover, Rochester, Londonderry and Merrimack. 

Most municipalities require the homeowner to live in either the ADU or the principal home. Of the 32 towns that do not require owner occupancy, about two-thirds are in Grafton, Hillsborough or Merrimack counties. 

About half the communities allow ADUs as of right, though some of these require a special exception or conditional use permit for detached ADUs. In municipalities that do not mention ADUs in a zoning ordinance, an attached ADU can be built as a matter of right. 

Kelley was on the New Hampshire Home Builders Association board when discussions about ADUs first started, and he wants the state to continue to see them as an asset. 

“With any new thing theres always excitement around it,” he said. “Its so important that we continue to use this as a tool to help solve our housing crisis and not let it just fade into the background as something that was fought for and was passed, but because of the lack of public knowledge and awareness, it just kind of goes to a corner and fades away.