It used to be that many homeowners in DC weren’t allowed to build a small apartment, called an accessory dwelling unit (ADU), onto their property. Under DC’s new zoning code, they will soon have the right to build some without seeking special permission.
An ADU could be a basement or attic apartment, or an apartment over a garage or small cottage in the backyard. The important thing is that you can rent an ADU to a tenant. Allowing ADUs to go up more freely is one of the biggest changes of the new zoning code, which will take effect starting September 6.
In DC, households are shrinking from large families to singles or couples, while demand for housing is rising. Allowing homeowners to rent out parts of their property can help alleviate this demand, while providing income to offset the increasing cost of property.
Apartments have always been relatively easy for homeowners to add in higher-density row house zones — consider the classic DC “English Basement.” Under the old zoning code they were allowed with a special exception, but now they are allowed by right in residential neighborhoods.
A big change under the new zoning code is making it easier to build new apartments in accessory buildings and inside houses. In the past, the lowest-density R-1 zones were the only place homeowners could build them, and even in those cases, they had to be occupied by a “domestic,” meaning a family member or servant— a rather outdated stipulation.
Also, a apartment in an accessory building (a separate building on the property, like a garage) required a variance, meaning the owner would need to prove that they have a unique condition or situation that would make it a burden to comply with existing regulations. That was pretty much impossible, since accessory buildings were not allowed.
If the accessory building is already on the property, then homeowners can add an apartment by right. If the accessory building isn’t there yet, the homeowner only needs a special exception, which neighbors can only stop by demonstrating that the building would be an undue burden on them.
These apartments are subject to conditions, such as those found in the building code that make sure there is enough living space and that the space is safe. The homeowner has to still live on the property, and there are a number of other conditions as well.
Under the new code, buildings can house a garage, artist studio, or storage area in addition to the apartment. They can’t have a roof deck, perhaps because there’s more of an argument that those are burdensome to neighbors. Apartments in accessory buildings also have to have dedicated access to the street.
How to make an ADU work on your property
Other things to consider with an ADU? First, keep in mind that only three people are allowed to live in the unit, with an additional three in the main home. Additionally, to rent out the property, homeowners need a Residential Rental Business License from the Department of Consumer and Regulatory Affairs.
There’s also the question of how to actually build it. Few people have the experience or skills to construct an apartment or small building by themselves. With labor and materials, how much will it cost? How can you make sure that the rent you are charging will cover the cost of your financing and provide rental income?
Especially when building an accessory building, there are many that first time builders may not consider. Because even a small building requires a foundation, four exterior walls, and roof, they will be considerably more costly than an interior apartment.
Other costs include an architect’s fees, as well as fees to tie into utilities. And, while its tempting to save 8-15% and not hire an architect, you don’t want to skimp here; an architect’s job is to make sure buildings are up to code and therefore legally rentable. With so many conditions in the new zoning code, you want to be certain you’re meeting them.
Financial feasibility is also a major concern. Financing can come from banks either through loans, or refinancing the property, or it can come from friends and family. If a bank is making the loan, then the repayments may be higher, which may impact the rents that need to be charged. Its important to understand the rental demand in the neighborhood, and compare the prices being charged to the desired rent for your unit. Make sure the market can bear your rents.
If you are interested in learning how to use tools like financial modeling for rental properties, and in talking through financing options for small real estate projects like accessory units, consider attending the Small Developer Bootcamp in Silver Spring from Friday, May 13 to Saturday, May 14. This training designed to teach people how to build the kind of small real estate projects that make cities better and it is sponsored by the Incremental Development Alliance.
Correction: The initial version of this article suggested that the zoning changes were now in effect. They take effect September 6. Also, this article initially reflected an earlier proposal for the zoning update which would have allowed apartments in accessory buildings by right under some circumstances; the final version requires a special exception hearing.
Correction 2: My bad. I totally messed up this correction. I incorrectly thought that the DC Office of Planning had taken out the by right permission to build an accessory apartment in an external building. This is wrong. Well, it’s right and wrong. OP did try to take that out, but this was one retreat that the Zoning Commission rejected and asked OP to reverse. I therefore incorrectly corrected this article. Emily Brown’s original was more accurate, and has been restored (with a few minor edits). — David Alpert