Business & Real Estate

Exploring the nuances of accessory dwelling units


With the limited availability of affordable housing, there has been much discussion about accessory dwelling units. Examples of ADUs include a pool house, a granny unit and an in-law unit – typically a small house/cottage homeowners build in their backyard.

ADUs either can be attached to the main house or detached as a stand-alone structure. They often are used to house an extended family member or caregiver, or they can be rented out or simply used for additional space (think man cave or she shed).

As a matter of policy, ADUs are seen as a viable option to help provide affordable housing for teachers, service employees, seniors and public employees who have been priced out of the local housing market. But some people see them as increasing density and adding to traffic and parking woes. Whichever side of the argument you are on, you will see more and more of them as the state and local governments work to alleviate the severe shortage of housing.


Q: How do I know if I can build an ADU on my property?

A: The best way to find out is to visit your city planning office and ask. You should do some research on the city’s website ahead of time so that you know what questions to ask.


Q: How big can an ADU be?

A: Each municipality has different restrictions, but approximately 800 square feet is common. Sometimes your permitted ADU space can include a patio area or a gazebo.


Q: Can I build an ADU anywhere on my property?

A: No. City codes will tell you where you can and can’t put an ADU; for example, proximity to the house, height and lot-size restrictions may apply.

Q: How much does an ADU cost?

A: It depends on what you build and how easy it is to access the back of your house. It could be as low as a couple hundred thousand to much more.


Q: Do I need to get a permit from the city to add an ADU?

A: Yes.


Q: Can I rent an ADU out?

A: Usually you may, for whatever amount you want, but you should always check the local zoning codes to see what is allowed or if there are restrictions.


Q: Do I have to pay taxes on my ADU?

A: Usually income generated from a rental is taxable, but you also may be able to deduct expenses involved. Definitely consult your tax professional.


Q: How does rent control affect my ADU?

A: A number of new laws that have just taken effect are much more protective of tenant rights, so before you sign a lease, make sure you discuss the requirements with a California landlord-tenant attorney. Feel free to email me for a referral.


Q: As the homeowner, could I live in the ADU?

A: Yes, if you were looking to downsize. And then you might be able to rent out the main house.

Owen Halliday is a realtor who manages the Sereno Group office in downtown Los Altos. Text or call him with questions, comments and potential column topics at 492-0062 or email This email address is being protected from spambots. You need JavaScript enabled to view it..


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