DEFINITION of 'Accessory Dwelling Unit (ADU)'

A legal and regulatory term for a secondary house or apartment with its own kitchen, living area and separate entrance that shares the building lot of a larger, primary house. The ADU may be attached to an existing house or garage, or it may be built as a stand-alone unit, but it usually uses the water and energy connections of the primary house and may be rented separately.

BREAKING DOWN 'Accessory Dwelling Unit (ADU)'

Since the post-World War II housing boom, most residential areas in the United States were zoned to limit density and control the size and separation of single-family dwellings. More recently, as cities and older suburbs have needed to contain urban sprawl, yet provide for population growth and economic diversity within their communities, zoning changes in a growing number of places have permitted the addition of Accessory Dwelling Units. The new zoning rules usually limit the size and general style of the new unit and require that the owner live on the property. 

Some cities, such as Portland, Ore., have lowered the cost of building permits for ADUs, further encouraging construction of these units.

RELATED TERMS
  1. Housing Unit

    One of a house, apartment, mobile home, group of rooms or single ...
  2. Open House

    A scheduled period of time in which a house or other dwelling ...
  3. Housing Starts

    The number of new residential construction projects that have ...
  4. Tenement

    A housing structure that has several houses or units put together, ...
  5. U.S. Department of Housing and ...

    A U.S. government agency created in 1965 to support community ...
  6. Building Permits

    A type of authorization that must be granted by a government ...
Related Articles
  1. Retirement

    New Retirement Living Option - And Income Source

    Here's a new option for retirement planning that could help three generations of a family – and be the glue that binds them together.
  2. Investing

    How Cheap is Affordable Housing Right Now?

    Learn how many affordable housing government programs work in the United States, including income requirements and the scarcity of affordable apartments.
  3. Personal Finance

    How to Live Mortgage Free in a Tiny House

    Downsizing to a much smaller home – no more than 500 square feet – on your own or rented land can be a smart way to offload mortgage debt.
  4. Investing

    Why Housing Costs Shouldn't Exceed 30% of Your Budget

    Financial experts will argue that there’s no problem with allocating 50% of your net income to housing, but that barely leaves enough money for living comfortably. Reducing housing expenses to ...
  5. Managing Wealth

    Investing With Purpose And For Profit: Affordable Housing

    Successful real estate investors are more than just landords - they are savvy business executives.
  6. Insights

    How Does The Economy Affect House Size?

    The better the economy, the bigger the house. But beware - everything that glitters isn't gold.
  7. Managing Wealth

    McMansion: A Closer Look At The Big House Trend

    The average home size is now 2,500 square feet - how big should you go?
  8. Investing

    Real Estate Indicators For Prospective Homebuyers

    If you want to buy a home but you’re holding out until market conditions show signs of improvement, housing indicators can help point the way.
  9. Investing

    5 Ways an Open House Can Actually Hurt Your Home Sale

    Open houses have long been a way to get exposure for a home that's up for sale. But it turns out it may be more trouble than it is worth.
  10. Managing Wealth

    Top US Housing Market Indicators

    A quick overview of the top economic indicators to track the housing market in the US.
RELATED FAQS
  1. What's the difference between housing starts and building permits?

    Both housing starts and building permits are economic indicators used to assess the health of the housing market, but their ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center