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A NEW HAMPSHIRE HOMEOWNER’S GUIDE TO

ACCESSORY

DWELLING

UNITS

NHHFA.org New Hampshire Housing Finance Authority | Board of Directors Stephen W. Ensign, New London – Chair | Amy L. Lockwood, Deerfield – Vice Chair Kendall Buck, Wilmot | John A. Cuddy, North Conway | Pauline Ikawa, Manchester Connie Boyles Lane, Concord | Mary Beth Rudolph, Dover | Stephanye Schuyler, Portsmouth Donald L. Shumway, Hopkinton | Dean J. Christon, Executive Director

A NEW HAMPSHIRE HOMEOWNER’S GUIDE TO ACCESSORY DWELLING UNITS © 2018 New Hampshire Housing Finance Authority

Writer Richard A. Minard, Jr., Bow, NH

Technical Support The Resilient Group, Concord, NH: Dana Nute, General Manager and Paul LeVeille, High Performance Buildings Specialist

Graphic Design Ronald X. DuLong, Jr., Merrimack

NHHFA Staff Editors Benjamin D. Frost, Esq, AICP, Director of Legal and Public Affairs Grace Lessner, Public Information Manager

NEW HAMPSHIRE HOUSING FINANCE AUTHORITY 603-472-8623 | P.O. Box 5087 | Manchester, NH 03108 | NHHFA.org

NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units A NEW HAMPSHIRE HOMEOWNER’S GUIDE TO ACCESSORY DWELLING UNITS CONTENTS

TO BUILD OR NOT TO BUILD?

ADUs: What They Are...... 3

ADUs: The Potential...... 4

Weighing the Costs...... 6

Being a ...... 8 14

GETTING UNDERWAY WITH YOUR ADU What Does Your ADU Ordinance Allow?...... 9

Design and Construction...... 10

Design, Accessibility & Energy Efficiency.... 10 Financing an ADU...... 12 16

SIX EXAMPLES OF NH ADUs...... 14

APPENDIX A Comparison of ADU Elements in Municipal Zoning...... 24

APPENDIX B 21 ADU Project Worksheet...... 24

APPENDIX C New Hampshire’s ADU Law Explained...... 24

APPENDIX D ADU Resource Information...... 24 23

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org INTRODUCTION Could an accessory dwelling unit – also known as an "in-law " or "granny flat" – be an opportunity to provide housing for a relative, caregiver or yourself? Or is it an opportunity to create a rental unit that brings additional income into your household? If you've been won- dering how this type of apartment might potentially benefit your family, our guide will help you explore their possibilities and options.

Since the New Hampshire Accessory Dwelling Unit (ADU) statute (RSA 674:71 – 73) became law in 2017, many Granite State homeowners have seen how an ADU would be advantageous not only to them and their families, but also to their communities. New Hampshire has had a very tight housing market for a number of years. The creation of more ADUs will expand the supply of housing in New Hampshire, encourage efficient use of existing housing stock and infrastructure, and provide more affordable housing options.

This guide is written with homeowners in mind. We hope you find it a useful tool as you consider if you want to pursue constructing an ADU, or renovating space in your into an ADU.

Last year NHHFA published a guide for municipal officials, to assist them in complying with the law and guiding their community's homeowners. You can download PDFs of that ADU guide and this one at NHHFA.org/ADU.

Our ADU guides, along with a range of other publications, data and research, are part of our services and outreach to support the development and preservation of affordable housing in our state. If you are looking for a mortgage to buy a home, need housing assistance, are interested in affordable rental housing, are looking for data on housing trends, want to learn more about workforce housing – we are here to help. You can email us at [email protected] or call 603-472-8623.

Dean J. Christon Executive Director New Hampshire Housing Finance Authority

2 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units 2 TO BUILD OR NOT TO BUILD? If you’re worried about your aging parent living alone, or wish your daughter and her kids lived closer and didn’t have to pay so much for rent, or if you’ve dreamed of having extra income through an apartment, this guide is for you.

With so much potential variation across New Hampshire, this guide can't answer every question or define every possibility, but it will make you familiar with the range of possibilities and help you start asking good questions. And it includes six homeowners sharing their ADU "how and why" stories and photos that may inspire you.

Once you start looking for ADUs in the around you, you’ll spot them. Look for separate entrances to over a , A Plainfield homeowner discusses her ADU plans with a builder. or maybe a wing off the that looks self-contained, or even a detached unit on the property . ADUs can be the perfect home to single-family . Across

for aging parents, for adult chil- the country, ADUs are seen as a Where would you create your dren, for college students, or for great long-term investment and a ADU? As soon as you start seri- people starting a career. Their use means to strengthen communities ously contemplating that ques- is flexible and can change with by expanding housing options. tion, check with your or town, your family's needs. It can be a your mortgage holder, and your place for an older relative, a guest Before you start putting up new insurance company. They will suite, an alternative living space or searching for tenants, help you focus on what’s possible. for you, living quarters for care- there’s a lot to consider. This giver needed in the main house, guide will help you decide ADUs: What They Are or as a rental unit that provides whether to build. It covers: Accessory dwelling unit or acces- income for a homeowner. n The benefits and challenges sory unit (ADU) is a standard of adding an accessory term in and zoning. There’s such a strong market in dwelling unit, You may know them as in-law New Hampshire for decent rental or granny flats. housing that the state enacted a n Costs and financing, law to make it easier for home- n Planning, designing and An ADU can be built inside an owners to create accessory building an ADU, and existing home: in the , over dwelling units (ADUs) – apart- n ADU information, ideas the garage, in the , in a ments more-or-less connected and resources

2 A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 3 converted office or . It keep it unlocked (an old rule can be added to the side of an designed to limit ADU rent- existing home and attached in als to close family members). a variety of ways. It can even be a free-standing, self-con- Municipalities can’t arbi- tained home if it’s on the trarily require separate water same lot as the main house. or septic connections, but they can require you to demonstrate State law and local zoning ordi- that your existing systems are nances distinguish ADUs from designed to accept additional ADUs are also known as: duplexes and various tempo- usage based on the total number rary or mobile structures such of on the property. In-law apartments as the “tiny houses” that have Granny flats been featured widely in recent If the existing septic system years. This guide pertains only is not designed to accommo- English basement apartments to legal, permitted, permanent date the additional use from Guest houses units, where both the main home the ADU, the municipality can Garage suites and the smaller “accessory” unit require you to get a new septic are owned by the same person. system design permitted. They Carriage houses cannot require you to install a DADUs (detached ADUs) new system unless the current Read New Hampshire’s AADUs (attached ADUs) ADU law in Appendix C. system is already failing. Mother-daughter apartments Towns and have consider- Accessory apartments Since the statute went into effect able latitude in how they imple- in 2017, New Hampshire cities ment the statute. They can per lot, as Conway does in and towns must allow home- prohibit ADUs larger than 750 some of its zoning districts. owners to create an ADU of at square feet or with more than least 750 square feet, provided two bedrooms. They can prohibit ADUs: The Potential the unit includes facilities for free-standing ADUs (includ- The broad social benefits of sleeping, cooking, eating, and ing ADUs built into or over a ADUs are significant. They offer sanitation. The law allows cities detached garage), also known as more affordable housing, more and towns to enact their own detached or DADUs. And they efficient use of land and public ADU ordinances, so they will can require that the ADU owner infrastructure, and a means to vary within the constraints of live on the property in either keep some of our great big old the law. If a municipality does the ADU or the main home. New Hampshire houses fully not enact an ADU ordinance, occupied and maintained. the statute is the guiding law. Municipalities can regulate the appearance of ADUs to maintain But what about the personal bene- Municipalities must allow you the look of single-family neighbor- fits? An ADU can make it possible to rent out the ADU to anyone, hoods. For example, some towns for an aging parent to live inde- or to live in it yourself while prohibit adding a new access pendently right beside you at far you rent out the “main” home. to the front of the house. lower cost than in an assisted They can require you to connect living establishment. Most of the two units with a doorway, ADU ordinances also can the ADU stories featured in this but they can’t require you to allow more than one ADU

4 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units guide were built specifically for their owners, particularly if they the homeowners’ family members. are willing to hold the asset for DERRY That’s why in real estate listings a decade or more. Whether you ADUs are frequently called rent the rest of the house out to a in-law apartments. family member or an unrelated family, you’ll have an income Many homeowners reach a point stream and close neighbors. where they no longer need or want their large, multi-story Examples of listings of ADUs for home, but they may still wish to rent in New Hampshire shown in stay in or near that home. When this guide came from the Craig- ADUs are built on a single level, slist and Zillow websites. The 800 ONE their occupants don’t have to first is a classified advertise- sq. ft. deal with . That makes ments website with sections $1,575 them ideal for anyone who devoted to jobs, housing, items may be concerned about their for sale, and more. Zillow is an Private property, on 4 acres, mobility and accessibility. online real estate marketplace parking for 2 vehicles, 2nd for homeowners and renters. private access. Owner pays all An ADU designed with separate utilities, hot water, AC/heat, trash entrances and good soundproof- The listings on these sites illus- removal. Washer/dryer in unit. Large ing can provide these bene- trate the range of ADUs for rent, w/roll out drawers, double fits while producing as little or including how much they rent ovens, microwave, dishwasher & as much interaction between for depending on location, the refrigerator. Cable ready. Tenant pays for phone. Private entrance owner and tenant as suits them. type of unit, and what's included in the rent (utilities, cable, furni- beyond garage . ADUs as an ture, amenities). You'll also get Income Source some insight into what kind of slist.com, and click on Housing, In addition to offering practical tenants the owners are seeking. then “housing type,” then “in-law.” family- related benefits, ADUs For listings on Zillow, go to www. can provide financial benefits to To find what’s currently available on Craigslist, go to www.craig- zillow.com, click on Rent, then enter New Hampshire in the loca- tion bar. Use the keyword “in-law” to search the listings.

Backyard Revolution: The Defin- itive Guide to ADU Develop- ment is currently the most comprehensive and useful book about ADUs. Among many other topics, it includes a chapter on the costs associated with build- ing different types of ADUs and a chapter on income models.

This house on a corner lot in Concord has an attached ADU.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 5 n The author, Kol Peterson, is a Weighing the Costs Attic conversion or other inter- nal space: $20,000 to $140,000 long-time ADU advocate. He Unfortunately, we don’t yet have notes that small isn’t necessarily a lot of data about the cost of n Garage conversion (400 sq. inexpensive. A bathroom costs as building ADUs in New Hamp- ft.): approximately $100,000 much to install in a small home as shire or the rents they generate. n Detached (800 sq. ft.): in a big one. Attaching a self-con- In the ADU examples section $120,000 to $250,000 tained dwelling to an existing of this guide, you'll find infor- n Attached: $15,000 to home may cost more than build- mation on the approximate $30,000 more than a compa- ing it as a free-standing house construction cost and the rental rable detached unit. because it may require re-engi- income for several of the ADUs. neering part of the main structure. In other words, building an and garages must be Kol Peterson uses the follow- ADU is not a simple renova- brought up to code. Garages, in ing ranges for ADUs in the tion project like remodeling particular, aren’t usually built to Portland, Oregon, area: a kitchen. On the other hand, standards required for habitation. n Basement conversion: $20,000 as nice as it is, the remodeled to $100,000 depending on kitchen will never write you structural challenges a check for $1,200 a month.

A DETACHED ADU DESCRIBES A TYPE OF UNIT, NOT A STRUCTURE TYPE. Like attached ADUs, DADUs must be secondary to the primary dwelling unit. Under New Hampshire’s ADU law, municipalities may allow DADUs at their discretion and may limit them to being fixed to a permanent founda- tion. (See RSA 674:73.) A detached accessory dwelling unit (DADU) can be built using a variety of techniques, including any of those shown below, as well as “stick-built” or a variety of more creative alternatives. Any DADU has to meet the standards of the state building code. See Appendix D for further details on DADU.

A Tiny Home Manufactured Housing Pre-site Built Housing Popularized in recent Commonly called “mobile Pre-site housing ( or factory years, this type of homes,” these types of resi- built) includes modular hous- housing has no specific dences are defined by state ing and panelized housing, the definition and can be statute as having specific components of which are built either mobile or on a minimum dimensions and off-site and transported to the permanent . must be on a permanent house site for assembly. These chassis. do not have a permanent chassis.

6 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units The simplest way to think about sell your home, the ADU could the economics of an ADU is to help you get a higher price. RYE: IN-LAW divide the total construction and finishing costs by the expected But how much higher? Your monthly rent to calculate a investment in the improvement “payback period.” A $120,000 of your home by adding an ADU project that earns $1,200 per will likely reward you when it's month ($14,400 per year) would sold, but the extent of return be “paid off” in 8.3 years. After on that investment is virtually that, all the rent can go straight impossible to estimate. Real to your retirement account. estate appraisal relies heavily on purchase price data from compa- 950 TWO ONE sq. ft. bedroom bathroom Some ADU owners choose rable properties recently sold. to live in the smaller unit Researching the purchase prices of $1,550 and rent out the main house, local properties with in-law apart- The in-law apartment for rent in thereby earning more in rent ments or ADUs might give you Rye is situated on the left side of and making the payback a sense of value in your market. the house on the property and period considerably shorter. Rental income is also commonly is located on a beautiful private factored into appraised value. The wooded 4-acre lot on a low traffic If you’re planning to borrow to influence of ADUs on local tax street. It abuts 30 acres of forest/ finance the ADU, then a rele- assessments is largely unknown. conservation land. Tons of privacy. vant question is whether you It is 2 miles from the beach. No will be able to collect more per If buyers begin to pay a premium smoking & no pets. Utilities not month in rent than you need for homes with ADUs, apprais- included. Tenants are responsible to pay the loan's principal and ers and assessors will gradu- for snow removal, trash removal interest. Your ADU may gener- ally build those prices into their and yard upkeep. Qualifies for Rye ate a positive cash flow from the understanding of the market. beach parking sticker! start or it may take a few years. This process happens slowly.

In addition to potential borrowing In the meantime, the ADU ities in NH is about $4,855/ costs, you will probably need to you’ve invested in may produce month, according to Genworth's buy additional insurance to cover considerable value to you in 2017 Cost of Care Survey.) the increased value of your home other ways. Having your in-laws and liability as a landlord. Your or children close is valuable in Given the number of variables town may reassess your property a non-monetary way. Having (construction costs, rent, financ- and raise your real estate taxes as a smaller place to eventually ing costs, tax implications, real well, because you will likely have move to on your property has estate assessments, insurance, increased the value of your home. a unique personal value. avoided costs), you’ll want to do some careful analysis before The increased value of your And if an ADU can help you setting a construction budget home deserves additional atten- or a loved one avoid paying and financing the project. tion. During the eight or so years $60,000 a year to an assisted that you’re “paying off” the ADU living facility for even a few construction costs, the ADU’s years, that’s an important value, value is probably increasing too. (The monthly median or holding its own. When you rent for assisted living facil-

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 7 Being a Landlord expect our new ‘in-laws’ to treat There is a very tight and compet- the property as if it were their ETNA itive rental market in most of own!” A Derry listing cautioned: the state that is expected to “Landlord is in law enforcement, continue for some time. Rents some applicants may not like this.” in New Hampshire have been rising for years (the median gross The Consumer’s Sourcebook, rent for a two-bedroom unit published by the New Hamp- in 2018 was $1,269 per month; shire Attorney General’s Office, up $220 per month from 2013, is a useful resource for land- according to a recent NHHFA lords and tenants. It covers a rental housing survey). Inven- range of important topics from 1,400 TWO 1.5 tory is low, vacancy rates are to security deposits to sq. ft. bedroom very low, and consequently the health codes and smoke detec- $1,850 tenant market for a New Hamp- tors to building maintenance. shire landlord is promising. In-Law located 5 miles from New Hampshire statutes Dartmouth College and DHMC. If you're considering renting cover many aspects of the Hardwood in kitchen and your ADU and becoming a land- landlord-tenant relation- . Master bedroom with full lord, it's important to ask your- ship, including how and when bath and walk-in . Full size self if you want to be a landlord. a landlord can evict a tenant. washer/dryer with large storage Most of us have been a tenant closet. Private / off at one time or another, but Owner-occupied dwell- living with picturesque being a landlord is a special role ings—including a home and meadow views. No pets. and holds special responsibil- its ADU—are exempt from the Rent includes heat. ities. It is not for everyone. anti-discrimination requirements of the Federal Fair Housing Act. 5

Being a landlord means that The Sourcebook notes that in New Hampshire law gives you have serious obligations to New Hampshire, tenants rent- owners of ADUs and similar your tenants and are respon- ing part of a privately owned and rental units considerably more sible for the building, day and owner-occupied home can be latitude than owners of apart- night. And being an ADU land- evicted for almost any reason. lord means living in close prox- ment buildings. Nonetheless, as a landlord, it is advisable to imity to your tenants. The Zillow There are a number of online comply with these laws for legal, and Craigslist ads shown here resources and books that practical and moral reasons. provide a sense of what some provide in-depth guidance to offer and expect. being a landlord. Carefully And despite our best efforts to consider your circumstances ensure things go smoothly, ulti- One couple put it this way in their before committing to this role. Craigslist ad: “This is a rather mately a tenant may not be a unique ‘rental’ situation. We own good fit. This might require you the house and live upstairs. We to evict the tenant for cause, but are a quiet and respectful couple it likely will not be easy, and that mind their own business. We it certainly will not be with- ask for the same in return. We out stress and some expense.

8 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units GETTING UNDERWAY WITH YOUR ADU This section will introduce you to the key pieces of an ADU project: planning and zoning, design, financing, and construction. Appendices A and B will help you map out resources and ideas to create an ADU.

What Does The ADU of the zoning ordinance by call- building permit to proceed. If you Ordinance Allow? ing your town or city’s Commu- need a conditional use permit or New Hampshire allows munici- nity Development Director, the special exception, you may have palities considerable flexibility in Planning Board staff person, the to present your plans to the Plan- their implementation of the ADU Zoning Administrator, or the ning Board or Zoning Board of statute. Your zoning administra- Building Inspector. Adjustment. tor can explain what’s permit- ted or you may find the answer In Bow, for example, the ordi- If there’s any ambiguity in the on your municipality’s website. nance allows ADUs up to 800 ordinance that your conversa- Search for the “zoning ordinance” square feet, but leaves some tions with municipal officials and then search the ordinance questions unanswered. Since don’t resolve fully, get their for “accessory dwelling units” or it is silent on ADUs built over interpretation in writing. Also, “accessory apartments.” detached garages, it would be consider hiring a lawyer for guid- prudent to ask a town official if ance before drawing up your Most zoning ordinances are writ- they are allowed. plans. ten in fairly clear language, so you should be able to determine what And what if you want to convert These are the kinds of questions your town will permit. To get the your basement’s 1,000 square that need to be worked out care- full picture in some towns, you’ll foot game room and into fully with planning officials and also have to check the zoning ordi- something more productive? Can documented in your records. nance’s “ of Uses,” which you use all that space for an ADU? While you may be the right person summarizes the different require- to start that dialogue, you might ments in different zones and Freedom’s zoning ordinance want to consider having a builder “overlay districts.” provides a clear answer to that: or attorney with a track record by special exception, an ADU of successful projects get the For instance, in Belmont, acces- may exceed the 800 square foot answers for you. The discussions sory dwelling units are not maximum but only if the unit is can get technical and it may be allowed in commercial or indus- a conversion of existing space a better use of everyone’s time trial zones, but are permitted with within the home (not an expan- for municipal staff members to a special exception in the town’s sive addition). Other towns do not work with someone who’s already single-family residential zone and offer that possibility. familiar with the process. permitted by right in the village, rural, and multi-family residential If your town allows ADUs “by One very important rule of thumb: zones. right,” you will probably only never build it without getting need to present plans for the reno- proper approvals first. Don't risk To ensure that you have accurate vation and information about a fine or even having to dismantle information, confirm the scope the septic system to get a simple what you've built.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 9 Design & Construction Do consider hiring an architect several quotes and compare their Hiring good people to design and if your home is unique or your approaches and experience, as build your project is critical to vision for the ADU is complex well as their price estimates. a successful outcome. The level or idiosyncratic. Because ADU of complexity of the project may spaces are compact, look for Check the contractors’ credentials, direct who you should work with people with experience designing their status with the New Hamp- to ensure a successful construc- small spaces. shire Secretary of State’s Office tion project that finishes on time. (www.sos.nh.gov), and be sure they and their subcontractors are To find good, reliable profession- One very important rule fully insured. (Sole proprietors als, ask around. Ask your town of thumb: never build it may not be listed with the Secre- building inspector which builders without getting proper tary of State’s Office.) have consistently done good work approvals first. Don't risk in town. Ask friends and neigh- a fine or having to dis- Ask the contractors to provide bors who have had renovation mantle what you've built. references from customers in the projects completed about their area. Contact them and ask if you experiences with designers, build- can see the work and talk to them. ers, and contractors. Expect the To get a building permit in some Truly satisfied customers often best professionals in the field towns and cities, you will need to are glad to do this. to be the busiest, though, so present plans stamped by an engi- plan ahead. neer or an architect. If you live in Examine the contracts carefully. one of those communities, you Know exactly what will happen The fear of being ripped off or may want to hire an architect up to costs and materials if the esti- hiring someone who will make front. mates aren’t accurate, or if the your home worse inhibits many schedule changes. people from undertaking home Remember that constructing an renovation projects. The New ADU is not a typical do-it-yourself Design Considerations Hampshire Homebuilders Asso- project. Most jobs won’t require As you plan your ADU, there are ciation (www.nhhba.com) has engineers, though complicated two design considerations worth links to its members and other projects may need a structural thinking about: how to make the resources. The Better Business engineer’s review as part of the unit accessible, and options for Bureau may also be helpful. design process. energy efficient features.

For most ADU projects, you prob- You will probably want to work The law doesn’t require your reno- ably won’t need to hire an archi- with a kitchen designer to get just vation to be compliant with the tect. You can save on that expense the right cabinets and appliances Americans with Disabilities Act, by hiring a good designer or a for your small space. Kitchen but designing for people with designer-builder who can turn designers work on their own or at reduced mobility makes sense. your ideas and building specs some of the larger building supply Even if you don't intend to move into building plans for contrac- companies. an elderly relative into your home, tors. Software allows designers wheelchair accessibility may to lay out plans fairly quickly and When you’ve identified who turn out to be a benefit for others, enables you to see the planned you’d like to work with, make whether visitors or would-be resi- structure in 3-D from many angles an appointment for them to see dents. before any construction starts. your property, and request a writ- ten quote for the project. Get

10 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units How to build for accessibility. Use the ADU Budget er-door test and rate at least an Wider interior doors, a walk-in Estimator in Appendix B ACH50 of 3 or less (Air Changes shower, door levers instead of per Hour). (To achieve that rating, knobs, grab-bars in the bathroom, New Hampshire’s legal energy you may have to add spray-foam somewhat lower counter tops code is the International Energy insulation in parts of the main – these are simple changes that Conservation Code (IECC) 2009 house at the same time.) can make your unit attractive to a edition, but the IECC has been wider range of potential tenants. updated three times since then. Most ADUs have open floor plans Ask your builder to meet the 2015 to make the relatively small space The critical items to build in or 2018 IECC code. Each genera- flexible and feel spacious. Kitch- from the start are 36-inch-wide tion delivers more comfort, more ens, dining areas, and living door frames and an easy-access safety and less energy consump- rooms often are essentially one shower. Hardware can be added tion than the version before it. large room, and bedrooms and when it is needed but the The higher standards can provide bathrooms are tucked in around framing should be constructed at better indoor air quality too. them. Spaces like that are easily the outset to accommodate their heated and cooled by air-source potential addition. Also consider Don’t feel compelled to acquire heat pumps. These systems are (type and switches), LEED certification (Leadership incredibly efficient and use elec- appliances, location, level in Energy and Environmental tricity (not oil, gas, or propane). entry and general design features Design) though doing so could that might impact someone who be beneficial. You don’t need to is mobility or visually impaired. get a HERS (Home Energy Rating Score) rating, either, though it too would be informative. Building in energy efficiency and low-cost operation. Do purchase Energy Star-rated Designing an ADU is an oppor- appliances for the unit. And tunity to build energy efficiency consider building the whole home into the core of your project and to Energy Star standards. New into your whole house. An energy Hampshire Saves, the utility-man- efficient ADU will be cheaper and aged rebate program, can help you easier to operate and will return identify these appliances and it An ADU is seen attached to the left side more on your investment. Upfront offers numerous rebates. of this home in Hollis, NH. costs may be higher, but they will return savings year after year. And The first step to creating an ener- If you’re adding an ADU onto if you fold the cost of utilities in gy-efficient space – whether an your home or even reconfiguring your tenant's rent, that income ADU or your main home – is space within your home, tell your will help pay back your investment. proper insulation and careful air designer you want an air-source sealing to eliminate drafts and heat pump or “mini-split,” not Smaller spaces are ideal for effi- heat loss. Tell your builder you baseboard electric heating. cient design. The key is finding expect R-60 in the / a designer or builder who knows and R-30+ in the walls. A small installation could how to work with the best insulat- generate most of the electricity ing, air-sealing, heating, and light- Proper air sealing of the unit is the ADU will need, when averaged ing technologies. critical as well. When complete, out over the course of a year. If the ADU should have a blow- the ADU is metered with the main

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 11 house, then your electric bill will will use some combination of Cash-out Refinancing drop. Your bill will also be more personal funds and a bank loan Another option for properties stable over time because the sun that is secured by the property. with sufficient equity is to refi- won’t ever increase its rates. nance the initial mortgage for Qualifying for any loan will a higher amount and use these To find a certified “green builder,” depend on your household funds to build the ADU. A cash- check out Build Green NH, which income, your existing debt out refinance loan typically allows is affiliated with the New Hamp- (including credit card and auto financing up to 80% of the value of shire Homebuilders Association. purchase debt), how much of your a property, so this option is better Even if your designer or builder existing mortgage has been paid suited to a homeowner whose isn’t experienced in green technol- off, and the appreciation in the home has appreciated in value ogies, they can learn on the job. value of your home. It's important since it was financed. An advan- to work with a reputable lender, so tage to a refinance is that the You may need to hire an energy talk to several before you decide. repayment period of the new loan professional to consult with them Loan products and services can can be set at thirty years, lowering as they finish the ADU plans. For vary widely. the monthly payments by spread- resources and energy consultants, ing the cost of the ADU over a visit the New Hampshire-based Anticipated Rental Income longer period. Residential Energy Performance When you apply for financing, Association’s website. Borrowing Against the lenders will ask for informa- Value of Your Property tion about your income and debt. For More Resources on For most homeowners, the prop- ADUs see Appendix D Generally, they will not take your anticipated rental income into erty they own is their biggest consideration if there’s no rental asset and building an ADU adds To get the latest on rebates or history. They also are unlikely value to that real property asset. other financial incentives for to include rental income in their Banks are willing to make loans energy efficiency and renew- calculation of the value of the secured by real property for two able energy, visit the Sustainable property when putting a limit reasons—if payments aren’t made, Energy Division of the Public Util- on the size of your loan as deter- they can foreclose on the property, ities Commission. Also check with mined by the loan-to-value ratio. and most people will go to great your utility company. However, different lenders have lengths to avoid the loss of their different guidelines and rates. home. There are a variety of ways Financing an ADU Take the time to find the one that to leverage your existing property What’s the best way to pay for an best fits your needs. for funds to build an ADU so it is ADU? As you might expect, that useful to understand how the vari- depends on how much money Initial First Mortgage (when ous tools could work for you. is needed, and where the money purchasing primary home) Second Mortgage: Home Equity will come from. It also depends A standard first mortgage would Line of Credit (HELOC) on whether the unit will gener- cover a property that already has ate rent, as well as how long it will an ADU. A first mortgage does not If your property has sufficient take to recover the cost of building typically cover the cost of both the equity (meaning value above the and create positive cash flow. home acquisition and the cost to amount owed in loans for the build a new ADU, however there property), then it is possible to use Here are some considerations and are loan products that could make a second mortgage on the prop- financing options. Most home- this possible. erty to finance any type of home owners looking to build an ADU improvement, including the

12 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units construction or legalization of an repayment over a period of years If you have assets that could be ADU. The most common type of (generally 15 years). It is based on used for your ADU, your second mortgage in recent years is the same lending criteria as with options include: a HELOC. a HELOC and can be used for the same purpose. n Retirement account loans. Typically, a HELOC is payable Many retirement accounts in 10 to 15 years and can provide Construction Loans allow loans to be taken against them for home improvements. financing up to 80%-90% of the If you’re borrowing to build a new Repayment is sometimes made property’s value, so it is a tool home that will include an ADU, through a payroll deduction and available to many homeowners there’s no collateral up front, so interest paid on money taken with even a few years of equity in you may need a construction loan. their homes, especially in a hous- out goes towards retirement Here, the bank pays the builder savings. ing market where home values during the construction phase n are increasing. A HELOC works and then converts the loan to a Construct ADU with cash and then refinance the property. like a credit card, allowing you to mortgage when the work is done. Some homeowners may decide draw on the line of credit and pay You can also use a construction to take advantage of low mort- it down as often as needed for the loan on your existing home to gage interest rates by using life of the loan, up to the maxi- build your ADU. mum amount allowed. personal savings to construct the unit and then refinance the This may be an attractive option if property once it is complete. the scale of your project requires To find a certified “green n Personal line of credit. If you builder,” check out Build more than the current value of the home. In this case, the amount lack sufficient equity to qualify Green NH, which is affili- for a loan secured by the prop- you borrow before renovation ated with the New Hamp- erty, a personal line of credit depends on the appraiser’s esti- shire Homebuilders could be used to bridge the gap mate of the renovation project on Association. between the cost of building the finished product. The lender your ADU and any cash you may require that they approve may be able to access. Typically, The advantage of the line of credit your choice of a contractor and is that the borrower only borrows personal lines of credit from a will usually control when to bank are not as large as might as much money as is needed to disburse funds for project costs. finish the project rather than be available with a HELOC or During the construction phase refinance, and interest rates are a lump sum up front (as with a you will be required to make higher. Using credit cards to home equity loan or refinanc- monthly interest payments with support some of the construc- ing). A HELOC’s interest rate may a floating interest rate. At the end tion costs would also fall under fluctuate and is typically based of the construction loan period this category. on the Prime Rate plus a margin, which is generally fixed, the It's well worth exploring your whereas a home equity loan prod- loan must be converted to a financing options in order to uct generally has a fixed rate. permanent mortgage. determine which one suits your situation best. The same applies to Second Mortgage: Use of Personal Assets selecting a lender. Home Equity Loan Many property owners utilize With this loan, you are borrow- personal savings or work with ing a lump sum and usually have friends or family members to a fixed interest rate and fixed raise cash to finance their ADU.

This section was adapted from the Santa Cruz County (CA) Accessory Dwelling Unit Cost and Financing Guide, June 2018 (sccoplanning.com/ADU).

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 13 SIX EXAMPLES OF NEW HAMPSHIRE ADUs One of the underlying messages of this guide is that ADUs are all around. In this section, six New Hampshire homeowners talk about their ADUs and their reasons for having one.

As you'll see in this section, each the entire house so the garage Since he was experienced in ADU is as unique as the home and would blend in. the design and construction of its homeowner. They also have senior housing, Bill sketched his many commonalities, as you'll see The two-car garage now has stor- plans out and had an associate in the stories shared by six New age space for the home, as well as use a computer-assisted design Hampshire homeowners who a ventilation unit and a separate program to convert the sketch into explain why they chose to create water heater for the apartment. building plans. Local contractors an ADU in their home. The apartment’s heating source made it happen; Bill did much of is an extension of the main house the finish work himself. boiler to provide baseboard forced A NEW ADU ABOVE A hot water. The electric supply is NEW GARAGE: off from the main panel of the BELMONT house.

It’s an ADU that looks like it’s There's a door to the Working with always been there and could go of the main house, and another Belmont town officials almost anywhere in New Hamp- door to a staircase with an electric was straightforward. shire: an apartment above the lift from the garage level. Zoning allowed attached garage and attached to a tradi- ADUs by right, so only tional New England cape. Upstairs, there’s a small kitchen a building permit was with a mini-fridge, a , needed. Laurie and Bill built the garage a bedroom with closet, and a bath- and the apartment in 2009 for room equipped with grab bars by about $100,000. Laurie’s mother the shower and . A curtained has lived in the apartment ever glass door in the apartment’s since. Now 91, she only uses living room connects directly the electric stair lift to carry to the living room of the main her groceries up and her water- home, making the two households ing cans down, but it’s there for connected but independent. Grab bars are an anyone who can’t manage the accessibility feature in the bathroom. flight of stairs. Bill said that working with offi- cials in Belmont was straight- Before the addition, the house had forward. Town zoning allowed no garage. Step one was to prepare attached ADUs by right, so he for the 22 x 30-foot addition by needed only a building permit and grading the land to allow the to show that his septic system was first floor of the house to connect adequate. directly to the second floor of the addition. When the structural work was complete, Bill re-sided

NHHFA and this guide's authors wish to thank the people who generously shared their ADU stories and photos for use in this guide.

14 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units ADU Type: Addition $100,000 660 sq. ft.

The kitchen table is in the center of the apartment.

An electric stair lift can take a person upstairs to the ADU but is mostly used for carrying groceries and other items.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 15 The ground floor ADU has an ADU Type: exterior door and large ; above it is the living room of the Renovation 842 sq. ft. main home.

A DOWNSTAIRS ADU: HANOVER

Kathy and Norm raised six chil- with a door that opens out to the meantime, the kids and grandchil- dren in their home on a dirt road back yard and another fire-safe dren use the space at holidays. outside of downtown Hanover. A door that leads upstairs. The suite mid-century modern built in 1949 can be a self-contained living unit The owners turned to architect into the side of a hill, the entry- or a comfortable extension of the Sloane Mayor, the daughter of an way and primary living spaces are primary living space upstairs. old family friend, to design the on grade with the driveway and space and handle all of the permit- garage. Kathy and Norm said they ting details. embarked on the project without Downstairs also had living space: a specific plan for its use. Perhaps The project’s biggest challenge a with a , a bath- their parents would move in, was updating the radiant heat room, and two small bedrooms off perhaps they would use it them- that had been built into the orig- a long narrow hallway. Five years selves, perhaps one of their chil- inal concrete floor. The home’s ago, Kathy and Norm decided dren’s families would move in, main boiler continues to warm decided to turn the downstairs or a caregiver, or a rent-paying the floors through that system, into what Hanover used to call a tenant. but new electric air-source heat mother-daughter suite. pumps heat and cool the apart- They see each of these options as ment efficiently. They took down the walls that valuable possibilities, and in the defined the hallway (leaving a support that can be seen in the photo), enlarging the room Perhaps an aging parent would move in, perhaps they enough to add a compact kitchen would use it themselves as they “age in place,” perhaps and eating space. The living room one of their children’s families would move in, or a is now spacious and comfortable caregiver, or a rent-paying tenant.

16 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units Extend soffit above tub to edge of wall for installation of recessed light

Existing 2x6 wall Pull cabinet out to accomodate ref. door Site verify dimension

Bath Ref. Existing wall to be removed Chase 4 W/D Existing wall to remain 3 A-2 1 4'-1" 2 Existing tub, sink and toilet 2 / New wall construction to remain. New fittings. Laundry Refinish cast iron tub 1'-6" Closet

5 1'-6" Dishwasher Bedroom 7 2'-1"

6 rod 6 1

4 Oven 2'-0" Up to

and main level 5 A-2 shelf New tile flooring 1'-0"

173 sf +/- 12"

3 1'-0"

Laminate countertop see A-2 for detail Existing mechanical chase extend soffit to new door location into mech. room Existing magnalite glass in wall to be re-used in door 3. Remove with care. New Roppe rubber treads and risers Existing steel column paint finish Remove existing doors and drawers replace with 4 equally spaced open shelves See drawing E-1 for existing plan layout New plaster finish over New tile flooring existing 505 sf +/- finish, typ all spaces Patch and repair any unused existing openings See E-1 for locations

New grasscloth wallcovering Living Room this wall only

H. Sloane Mayor A r c h i t e c t 11 Bank Street Studio 306 Lebanon, NH 603-667-0303 Yanofsky Renovation Kathy and Norman Yanofsky Hanover, New Hampshire

Basement Floor Plan Looking over the living room’s sectional couch to the kitchen, the black pole used 1/4" = 1'-0" to be encased in the study’s back wall. The open door on the right leads to a staircase up to the main floor. The ADU's bathroom and bedroom are to the left. A-1 February 3, 2012

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 17 ADU Type: Repurposed Garage 830 sq. ft. $100,000

FROM 2-CAR GARAGE TO ADU: PLAINFIELD

Jill and Sean embarked on their However, ultimately the price The ADU will fit into the existing ADU project to provide a new tag for the anticipated 644 sq. ft. 668 square feet garage and will home for Jill’s father, a retired unit was too high for their budget. repurpose an existing 162 square minister and long-time resident of After reassessing their house and feet work room into a living Plainfield. property, they decided to convert room with access to a deck. An structures that are already there insulated floor will go over the They moved into their home and in sound condition. They are garage slab and highly insulated in 2017 and have been focusing converting their two-car garage wall panels will wrap the existing on updating its basic systems into a one-bedroom apartment. structure to make it comfortable since then, including insulation, and affordable to heat. air-sealing, and heating. The one-story home is long and relatively narrow. Being on one The architect is cognizant of the They had originally planned to floor and not having to go up and need to keep total costs to about attach a modular unit to one end down stairs was important to Jill $100,000. This amount is well of their home. Jill saw units manu- in both the home and ADU. She below the bids for the modular factured in factories in Montpe- is also incorporating universal unit. She did note one of the chal- lier, Vermont, and Claremont, design features in the new ADU, lenge of building small: costs are New Hampshire, that appealed to such as a walk-in shower, wide higher per square foot. her. She also was impressed with doors, and supports around the their quality control process. toilet.

18 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units This doorway will connect the ADU to the rest of the house.

Jill in front of the garage which will be converted to an ADU.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 19 ADU Type: $1,000/mo. Addition 700 sq. ft. plus utilities

A HOME WITH A RENTAL ADU: ROCKINGHAM COUNTY

In 2015, Robin and Henry found and replaced the carpet. A washer/ two young men, could only afford their dream home. It was a ranch dryer and bathroom exhaust fan the rent together. When one situated on a pond in southern were installed, and they repainted. moved out, so did the other. Rockingham County, in a town that had amenities for their active Then they checked the market After that, the couple reassessed family, and a half-hour commute and set the rent for the unit at who they wanted living in the to Manchester for work. The mort- $1,000, enabling them to cover ADU. They found Kate through a gage on the $400,000 home was a significant portion of their mutual friend. She had recently manageable, but it would make monthly mortgage payment. They sold her home and, with a daugh- their budget tight. Then…an ADU also opted for a six-month , ter in college, was looking for a came to their rescue! in case the tenant wasn’t a good smaller place that gave her some fit with their household. They flexibility. She also had a dog and Built in the 1970s, their 1,900 collected a month’s rent for a wanted outdoor space for him. square foot house has an ADU at security deposit and advised their one end. It has two bedrooms, a tenants to buy rental insurance. Although Robin and Henry hadn’t living room, full bath, separate been looking for one, the rental utilities and its own exterior Robin says they learned a lot ADU in their home has turned out door (as well as an interior about how to evaluate prospective to be financially and personally connecting door). tenants in their first run as land- advantageous. “Kate’s been living lords. With young kids, she and with us for two years, and she’s Before they moved in, the couple Henry were particularly cautious. an awesome tenant,” Robin noted. spruced up both the house and the Their first tenants were a couple “We have a friendly relationship ADU. They installed a pellet stove who subsequently broke up and and she even helps us out because to supplant expensive electric heat moved out. Their next tenants, she loves gardening.”

20 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units ADU Type: $25,000 Addition 730 sq. ft. for materials

FAMILY UNIT ABOVE THE GARAGE: CONCORD

With a career in the building a variance from the zoning board They could swap units with their trades, it was a given that Al and paid an impact fee for the son's family. And because he's a would construct his family’s second unit. An impact fee is used builder and thinks of these things, Concord home himself. Built in by the city to offset the additional Al noted that had he not created 1984 with a two-car garage, he use of city systems such as water the ADU above the garage, he and his wife decided to add an and sewer created by development. might have considered creating an accessory dwelling unit above the apartment in their basement. garage in 2002 to provide a home The arrangement has worked for their son, daughter-in-law, and out well for both families. The That space is currently config- new granddaughter. proximity has provided the young ured with three bedrooms and a family with a comfortable place laundry, so it could conceivably Al and his son built the 730 square to live and given the grandparents be converted to a single bedroom foot, two-bedroom unit over his the opportunity to be involved in with a galley kitchen and bath. existing garage, spending approx- their granddaughter’s life. imately $25,000 on materials. The "I've been renovating and repair- utilities from the house were tied Rent for the unit, Al joked, reflects ing houses for a long time," Al into the addition; the home’s heat- “the family discount” from the said. "It's second nature for me to ing system had enough capacity market rate. In turn, his son helps consider floor plan options and to heat the new unit, and existing his father out with maintenance how they might fit in." water and sewer connections were and improvement projects on easily connected. the house and property. "Adding the ADU for my son's family has worked out very well Since he had a little less road Now, as empty-nesters with retire- for all of us," he added. frontage than was required for a ment on the horizon, Al and his two-family property, Al obtained wife are considering their options if they decide to stay in Concord.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 21 ADU Type: DADU approximately $127,000- 600 sq. ft. $132,000

A DETACHED ADU WITH ENERGY-EFFICIENT OPTIONS: WHERE ALLOWED BY ZONING Detached ADUs (DADU) may $132,000; with slab on grade and become a “Net Zero Energy” home appeal to homeowners who no land acquisition the estimated by generating as much electricity want more separation from their cost is $123,000. as it uses each year. It would need tenants. Your ability to create a 6 kW solar photovoltaic (PV) a DADU is contingent on your If your contractor built this ADU system with 20 conventional solar zoning ordinance, whether you to meet New Hampshire’s current panels on the roof. choose a new construction ADU or energy code, the home would use convert a free-standing building approximately 320 gallons of heat- With these improvements, the on your property to an ADU. ing oil per year and 6500 kwh of total annual utility bill would electricity. At today’s prices, the be about $150, the cost of stay- The detached ADU pictured here house would cost about $2,000 ing connected to the grid. To could be built wherever local ordi- per year to heat. achieve these energy savings, nances allow them on the same lot your contractor would charge you as a primary residence. This small For both your budget and the about $4,300 for the above-code house is styled as a traditional environment, you could install a insulation. The heat pump would guest cottage. It is a stick-built, low-temperature air source heat cost $1,500 less to install than a completely detached building, pump. These are quiet, efficient, propane and $8,500 less separately heated and metered. electric units that heat in the than an oil burner and basement. winter and can cool when it’s hot. The most expensive item, the The unit is a 980 square feet This tight house with an air source solar PV, would add $11,000 to the DADU (with 600 square feet of heat pump will cost about $1,200 construction cost (after taking the living space) and is built on a to heat and cool each year. 30 percent federal tax credit), but slab on grade (no basement). The would pay for itself in about 5.4 estimated cost with a full base- Because the house is using so years. ment and no land acquisition is little electricity, it could easily

22 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units ADU Type: approximately $ Side Addition 400 sq. ft. 50,000

MAKE ROOM FOR MOM: PORTSMOUTH When the family home in Ports- revamped their plan. Jeanette Among the considerations in mouth became too much to keep would move into the house with being a landlord, Lulu said that up with, Jeanette and her daughter Lulu, and the ADU would become when you have a “mother-in-law” Lulu had a conversation. Newly a rental unit and generate income. type apartment, it has to be a divorced and with a job on the good fit for both the landlord and Seacoast, Lulu suggested that she In the 14 years she has been rent- tenant. Mutual respect and cour- buy the house from her mom and ing the ADU, Lulu noted that her tesy are necessary because of the they would live together. tenants are on an annual lease and close proximity. typically stay several years. The They agreed to build an ADU on current tenant sometimes stops “When I was considering the the side of the house near the by to visit, as the three have a design and function of the ADU, driveway, where Jeanette would congenial relationship. I focused on what my mother live. With one level, an interior would need or want, although it connecting door and an exterior “Currently, I am renting the apart- turned out she never lived in it.” door, the one-bedroom unit was ment for $950 a month, with mapped out carefully. the tenant paying for heat and Lulu added, “At the same time, I electricity. I provide hot water, considered what would make it Lulu refinanced the house in WiFi and plowing/shoveling of appealing to renters in the future. order to pay for the addition, the driveway and walkways. I How would it work? What would and went to the zoning board to don’t allow smoking on the prop- help bring and retain desirable request the necessary variance to erty,” said Lulu. “Amenities? The tenants? While it's worked out add the ADU. apartment comes with off-street well, in hindsight, I would have parking, a fenced-in , made the apartment slightly Then came Jeanette’s health scare and they can have a pet with my bigger to accommodate a larger while the ADU was being built, approval. I have a dog and I know kitchen and a separate washer/ and the two sat down again and how much I enjoy her company.” dryer area.”

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 23 APPENDIX A Comparison of ADU Elements in Municipal Zoning

This table captures a few key zoning elements from a sampling of New Hampshire cities and towns. Below the table is a section to record your city or town's ADU requirements.

MIN/MAX MAX DETACHED OWNER BY-RIGHT BY EXCEPTION OTHER SQUARE FEET BEDROOMS ALLOWED? OCCUPIED? IN ZONES IN ZONES

STATE LAW At least 750 At least 2 Town’s Town’s Town’s choice, but must choice choice allow where single family houses are allowed

BELMONT 300/750 2 No Yes Multi-family Single-family or 25% of family res, res building rural, village

CONWAY 300/800 Yes Yes Some zones Most Home must residential beat least 50 zones years old

DERRY -/800 2 No Yes Residential 4 parking zones spaces/lot

FREEDOM -/800 No Yes Village, > 800/sq ft +1 parking general res space

HANOVER 350/1000 2 If built Yes D, RO, I, GR, “Adequate” before 5/9/17 SR & RR parking

LANCASTER No explicit Wherever reference to single family ADUs so state homes are law applies allowed

MANCHESTER -/750 2 No Yes Conditional $1720 impact use in fees requires res zones

SOMERSWORTH -/800 2 Only as part Yes Permitted in Annual of a detached any single certificate of garage family home use required ($75 fee)

D= Downtown RO= Residence and Office GR =General Residence SR=Single Residence RR=Rural Residence

MY TOWN / CITY ZONING REQUIREMENTS

MAX DETACHED OWNER MIN/MAX MY TOWN / CITY BEDROOMS ALLOWED OCCUPIED SQUARE FEET

BY-RIGHT IN ZONES BY EXCEPTION ZONES OTHER

24 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units APPENDIX B ADU Project Worksheet

Use this worksheet to get a sense of how the economics of building an ADU might work for you.

Design cost $

Construction cost $

Permitting cost $

Loan closing cost $

Other up-front ADU costs $

TOTAL DEVELOPMENT COST $

ANTICIPATED MONTHLY RENTAL INCOME $

Monthly loan payment $

Monthly insurance prorated cost ADU $

Monthly property tax prorated $

Monthly ADU utility cost if owner responsibilty $

Other monthly costs attributed to ADU $

TOTAL MONTHLY COST $

NET MONTHLY INCOME $

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 25 APPENDIX C New Hampshire’s ADU Law Explained (RSA 674:71 - 73)

Section of Law Explanation

674:71 Definition As used in this subdivision, “accessory dwell- n The four defining elements – provisions for ing unit’’ means a residential living unit that is sleeping, eating, cooking, and sanitation – must be within or attached to a single-family dwelling, allowed by the municipality for the unit to consti- and that provides independent living facilities tute an ADU. for one or more persons, including provisions n This may all be done in a relatively small space, for sleeping, eating, cooking, and sanitation on such as a or “tiny home,” or it the same parcel of land as the principal dwell- may be in a larger unit with multiple rooms. ing unit it accompanies.

674:72 Accessory Dwelling Units I. A municipality that adopts a zoning ordinance n The municipality needs to choose how it will pursuant to the authority granted in this allow ADUs: by right (generally requiring only a chapter shall allow accessory dwelling units as building permit), by special exception (board of a matter of right or by either conditional use adjustment), or by conditional use permit (often permit pursuant to RSA 674:21 or by special the planning board, but other officials can be exception, in all zoning districts that permit involved; see RSA 674:21, II). single-family dwellings. One accessory dwelling n The municipality must allow at least one attached unit shall be allowed without additional re- ADU wherever single-family residences are also quirements for lot size, frontage, space limita- allowed by zoning. tions, or other controls beyond what would be required for a single-family dwelling without n Regardless of how ADUs are allowed, the mu- an accessory dwelling unit. The municipality is nicipality cannot impose greater dimensional not required to allow more than one accessory standards on homes with ADUs than it does for dwelling unit for any single-family dwelling. homes without ADUs. The municipality may prohibit accessory dwell- n Municipalities may restrict ADUs from being ing units associated with multiple single-family built with manufactured housing or town- house- dwellings attached to each other such as town- style units. houses, and with manufactured housing as defined in RSA 674:31. Subsequent condomini- n ADUs may not be sold as unless um conveyance of any accessory dwelling unit the municipality explicitly allows it; such sales separate from that of the principal dwelling may be allowed either through zoning or subdivi- unit shall be prohibited, notwithstanding the sion regulations. provisions of RSA 356-B:5, unless allowed by the municipality.

II. If a zoning ordinance contains no provisions n If a municipality’s zoning ordinance is silent on pertaining to accessory dwelling units, then the topic of ADUs, the municipality must allow one accessory dwelling unit shall be deemed a at least one attached ADU in any single-family permitted accessory use, as a matter of right, to home. any single-family dwelling in the municipality, and no municipal permits or conditions shall be required other than a building permit, if necessary.

26 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units APPENDIX C New Hampshire’s ADU Law Explained

Section of Law Explanation

III. An interior door shall be provided between the n The requirement for an interior door only applies principal dwelling unit and the accessory dwell- to attached ADUs. ing unit, but a municipality shall not require n This requirement may suggest that there must be that it remain unlocked. a common wall between the units, but local interpretation could allow ADUs above attached garages where there might be more than one intervening door between the ADU and the main house.

IV. Any municipal regulation applicable to sin- n There can be no additional dimensional require- gle-family dwellings shall also apply to the ments for an ADU. combination of a principal dwelling unit and n Reference to HUD occupancy standards means an accessory dwelling unit including, but not that a municipality can limit per-bedroom occu- limited to lot coverage standards and standards pancy in ADUs only if it is also doing so in sin- for maximum occupancy per bedroom consis- gle-family homes. Check with legal counsel about tent with policy adopted by the United States limitations before trying this. Department of Housing and Urban Develop- ment. A municipality may require adequate n A municipality can require off-street parking or parking to accommodate an accessory dwelling some other demonstration of parking adequacy unit. for an ADU.

V. The applicant for a permit to construct an n The property owner must demonstrate the ade- accessory dwelling unit shall make adequate quacy of water supply and sanitary disposal. provisions for water supply and sewage dispos- n The municipality cannot require water or sanitary al for the accessory dwelling unit in accordance disposal systems for the ADU that are separate with RSA 485-A:38, but separate systems shall from those of the principal dwelling. not be required for the principal and accessory dwelling units. In order to comply with this n The owner may be required to have a new septic paragraph and prior to constructing an accesso- system designed and approved if the existing ry dwelling unit, an application for approval for system does not meet NH Department of Environ- a sewage disposal system shall be submitted mental Services standards for the house including in accordance with RSA 485-A as applicable. the addition of the ADU. This may be true even if The approved sewage disposal system shall be the overall number of bedrooms using the system installed if the existing system has not received is unchanged by the ADU’s construction. construction approval and approval to operate n A new septic system does not need to be built under current rules or predecessor rules, or the unless the existing system is unlicensed or has system fails or otherwise needs to be repaired failed. or replaced.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 27 APPENDIX C NEWNew HAMPSHIREHampshire’s ACCESSORY ADU Law Explained DWELLING UNITS LAW EXPLAINER TABLE

Section of Law Explanation

VI. A municipality may require owner occupancy n The municipality may require owner occupancy of one of the dwelling units, but it shall not of one of the units; if it does this, the municipal- specify which unit the owner must occupy. ity should consider what it means by “owner”: A municipality may require that the owner does the owner need to be a physical person, or demonstrate that one of the units is his or her can it be (1) a member of an LLC that owns the principal place of residence, and the munici- property; (2) a beneficiary of a revocable trust that pality may establish reasonable regulations to owns the property; or (3) a person with an interest enforce such a requirement. in another legal entity (e.g., partnership or corpo- ration) that owns the property.

n Residency of the owner may also be required, and could be demonstrated through voter registration, automobile registration, or similar indicators of domicile

VII. A municipality may establish standards for ac- n Standards to perpetuate the “look and feel” of a cessory dwelling units for the purpose of main- single-family home may be required by the taining the aesthetic continuity with the princi- municipality, and this may best be done through pal dwelling unit as a single-family dwelling. A a permit by special exception or conditional use municipality may also establish minimum and permit. maximum sizes for an accessory dwelling unit, n ADU minimum and maximum size may be spec- provided that size may not be restricted to less ified, but the municipality cannot require ADUs than 750 square feet. to be smaller than 750 s.f. The owner, however, may build a unit smaller than that, subject to local ADU unit size minimum, if any.

VIII. A municipality may not require a familial rela- n Despite the colloquial name “in-law apartment,” tionship between the occupants of an accessory a municipality may not limit ADU occupancy to dwelling unit and the occupants of a principal family members of the owners of the main dwell- dwelling unit. ing.

IX. A municipality may not limit an accessory n A municipality may limit an ADU to two bed- dwelling unit to only one bedroom. rooms, but not to one.

X. An accessory dwelling unit may be deemed n This section only means that if an ADU meets the a unit of workforce housing for purposes of rental price standards of the Workforce Housing satisfying the municipality’s obligation under Law, then the municipality may count the unit as RSA 674:59 if the unit meets the criteria in RSA part of its “fair share” calculation. 674:58, IV for rental units. n The reference to workforce housing does not con- fer upon a municipality the authority to impose affordability restrictions on the ADU.

28 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units APPENDIX C New Hampshire’s ADU Law Explained

Section of Law Explanation

674:73 Detached Accessory Dwelling Units A municipality is not required to but may n A municipality may choose to allow detached permit detached accessory dwelling units. ADUs wherever attached ADUs are allowed, in a Detached accessory dwelling units shall comply more limited geographical area, or not at all. with the requirements of, and any municipal n Only regarding detached ADUs may a munici- ordinances or regulations adopted pursuant to, pality require an increased lot size, but it is not RSA 674:72, IV through IX. If a municipality al- necessary to do so. lows detached accessory dwelling units, it may n Perhaps more important for a municipality to require an increased lot size. consider is a proximity requirement, so that the detached ADU is somehow physically associ- ated with the main home, instead of being in a remote location on the lot.

Statute text includes amendments Explanation column written by Benjamin D. Frost, Esq., AICP adopted by the Legislature in 2017. New Hampshire Housing Finance Authority

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 29 APPENDIX D ADU Resources

STATE AND FEDERAL RESOURCES Terner Center for Housing Innovation, University of California at Berkeley, and New Hampshire Housing Finance Authority the Urban Land Institute www.nhhfa.org/ADU Jumpstarting the Market for Accessory Dwelling Units n Provides links to downloadable ADU guides, and reference information and presentations www.ternercenter.berkeley.edu/uploads/ADU about ADUs. _report_4.18.pdf n The authors researched the economics and mar- New Hampshire Office of Strategic Initiatives ket forces that have made ADUs important in www.nh.gov/osi/planning/resources/accessory the Pacific Northwest. The piece has great pho- -dwellings.htm tos and quotes from homeowners. Its primary message: when housing is tight and prices are n The OSI webpage has a section dedicated to rising, loosening land-use regulations will allow ADUs and includes links to New Hampshire’s the market to respond with ADUs. ADU statute and presentations.

AARP U.S. Department of Housing and Urban Creating Room for Accessory Dwelling Units Development www.aarp.org/livable-communities/housing/info www.huduser.gov/portal/publications/adu.pdf -2015/accessory-dwelling-units-model-ordinance Accessory Dwelling Units: Case Study .html n Presents the rationale for ADUs and describes n AARP’s focus is on helping seniors stay in their the basic types that can be built, and provides homes and ADUs are one of their answers. This case studies from around the country. website is part policy advocacy and part guide for homeowners. It contains numerous links to other sites and publications. PUBLIC POLICY AND ADUs

Strong Towns New Hampshire Says Yes to ADUs Strength Test #4: Are Accessory Dwelling Units www.aarp.org/livable-communities/housing/info Allowed in Your Town? -2017/adu-accessory-dwelling-units-law-new www.strongtowns.org/journal/2017/8/14 -hampshire.html /strength-test-accessory-dwelling-units n Peter Morelli’s feature (6/2017) documents how ?gclid=EAIaIQobChMIgszQptiC2gIV2bX New Hampshire’s ADU statute generated such ACh1ayQNJEAMYAiAAEgIIl_D_BwE broad political support. n This article discusses why ADUs are an import- ant tool for creating strong communities and illustrates that ADUs are likely to be part of a housing trend across the country.

30 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units APPENDIX D ADU Resources

‘HOW-TO’ PUBLICATIONS Tiny Houses of Maine www.tinyhousesofmaine.com/adus/ Backdoor Revolution: The Definitive Guide to ADU Development, by Kol Peterson n Tiny Houses of Maine is a private company in South Portland that builds the kind of mobile www.buildinganadu.com/backdoor-revolution units that are featured on the “tiny house” TV n This book really is the definitive guide to ADUs. shows. Their website also devotes space to From his website, you can sign up for occasion- ADUs. al emails and he'll send links to free resource publications like 10 ADU Design Principles and Down East Magazine/ Maine Homes The ADU Resource Packet. Is an In-Law Unit Right for Your Property? www.mainehomes.com/is-an-in-law-unit-right-for Acessory Dwelling Unit Guides -your-property/ (Santa Cruz County, CA) n This feature by Maine architect Eric Reinholdt www.sccoplanning.com/ADU explains the basics of ADUs and has some great n A very thorough series of guides, which can be photographs of very nice units, plus links to downloaded as PDFs: ADU Basics, ADU Design HOUZZ, a source of information about build- and ADU Financing. ings, furnishings, and design.

Acessory Dwelling Unit Homeowners' PROPERTY VALUE Handbook The Appraisal Journal (Hawaii Appleseed Center for Law & Economic Justice) Understanding and Appraising Properties with www.hawaiiadu.org Accessory Dwelling Units n A guide tailored for Oahu homeowners with www.accessorydwellings.files.wordpress. useful information regardless of where you com/2012/12/appraisingpropertieswithadusbrown- live. watkinsnov2012.pdf

‘HOW-TO’ ARTICLES (PLANNING, DE- n Appraisers take their work seriously and this SIGN, CONSTRUCTION) is a serious publication to help them put a fair market value on homes with an ADU. This Old House www.thisoldhouse.com/ideas/prep-your-home Earth Advantage.org -return-boomerang-kid A Practioner’s Guide to Appraising ADUs (2014) Prep Your Home for the Return of a Boomerang Kid www.earthadvantage.org/assets/documents n The article discusses ways to accommodate an /Publications/PractitionersGuideAppraisingADUs adult son or daughter in your home, including -140521-v5.pdf adding an ADU. Includes links to articles on n This short publication won’t help you estimate selecting and managing contractors. the value of your ADU but it does include an important “tips for homeowners” box that will help you talk with your banker or appraisers.

A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 31 APPENDIX D ADU Resources

WHAT IS A DETACHED ACCESSORY DWELLING UNIT (DADU)? Like attached ADUs, DADUs must be secondary to the primary dwelling unit. Under New Hampshire’s ADU law, municipalities may allow DADUs at their discretion and may limit them to being fixed to a per- manent foundation. (See RSA 674:73.)

A detached accessory dwelling unit (DADU) can be built using a variety of techniques, including any of those listed below, as well as “stick-built” or a variety of more creative alternatives – any of which would have to meet the standards of the state building code. Beyond renovating a building detached from the primary dwelling unit that is already sited on your property (e.g., a garage, carriage house, , barn, etc.), any of these structures could be a DADU in New Hampshire, if the zoning ordinance allows it.

A Tiny Home Popularized by various TV shows, this type of housing has no specific definition and can be either mobile or on a permanent foundation. If built as a mobile trailer, state law might regard it as a recreational trailer (exterior area of 400 square feet or less) for use only as a temporary dwelling (see RSA 216-I:1, VIII(c)). State law does not require local zoning to allow these types of dwellings. If built on a foundation, the state build- ing code (2009 International Residential Code) would require it to have a minimum living space of 120 square feet (not including bathrooms, , etc.). (See RSA 155-A:1, IV and IRC 2009 R304.1.)

Manufactured Housing Commonly called “mobile homes,” these types of residences are specifically defined by state statute as hav- ing minimum dimensions (at least 8 feet wide, 40 feet long, 320 square feet area) and must be on a perma- nent chassis, regardless of whether it has a foundation, and must meet construction standards of the U.S. Department of Housing and Urban Development. State law requires manufactured housing to be allowed by local zoning, either on individual lots or in parks, or both. (See RSA 674:31 and 32.)

Pre-site Built Housing Distinguished from manufactured housing, pre-site built (or factory built) housing includes both modular housing and panelized housing, the components of which are built off-site and transported to the house site for assembly. These do not have a permanent chassis and are treated by statute and local zoning in the same manner as housing that is built on site (“stick built”). (See RSA 674:31-a.)

32 NHHFA.org A New Hampshire Homeowner’s Guide to Accessory Dwelling Units A New Hampshire Homeowner’s Guide to ADUs NHHFA.org 33 P.O. Box 5087 | Manchester, NH 03108 603-472-8623 | 800-640-7239 | TDD: 603-472-2089 NHHFA.org | [email protected]

As a self-supporting public benefit corporation created by the New Hampshire legislature, New Hampshire Housing Finance Authority promotes, finances and supports affordable housing.