Sponsored Legislation

AB 976 – Extend Incentives for Accessory Dwelling Units

Status: Signed Into Law

AB 976 will permanently extend the ability of property owners to build affordable, rental accessory dwelling units (ADUs), also known as “granny flats,” by extending the rental unit provisions of 2020’s AB 881, which expire in 2025. The provisions allow owners to build rental ADUs on the same property as their existing rentals.

Accessory Dwelling Units (ADUs), or “granny flats,” are homes that are built on an existing property to expand the supply of housing. While ADUs can be built at both single–unit and multi-family housing, they can not be sold as a separate unit – meaning they tend to be used as lower-cost rentals, and play a key role in increasing the supply of housing in neighborhoods across California.

According to a report from the Terner Center for Housing Innovation, homeowners cite the ability to offer ADUs for rent as one of the main reasons they build these types of homes. Rental income can serve as an important source of financial security, and since ADU rent typically offsets the cost of construction, ADUs are more accessible for lower-income homeowners.

AB 881, (Bloom), passed in 2020, prohibits local governments from imposing owner-occupancy requirements on properties where ADUs are built until 2025. Prior to AB 881’s enactment, many local governments required the property owner to live in either the ADU or primary home – which killed construction of many affordable rental ADUs.

AB 976 would remove the sunset provision in AB 881, and make permanent the ability for property owners to provide more rental homes with the construction of low-cost ADUs.

Updates: AB 976 passed the State Assembly on 5/31/23 with a 54-0 vote. It passed the State Senate on 9/6/23 by a 22-9 vote, and passed a concurrence vote in the Assembly on 9/11/23. AB 976 was signed into law by the Governor on 10/11/23.

Author: Ting (D, AD 19)

Sponsor: California YIMBY