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 Starts

    Housing starts is a metric that shows many new residential construction ...
  2. Building Permits

    Building permits are a form of authorization required by regulators ...
  3. Entrance Fee

    Entrance fee can refer to a cost for continuing-care retirement ...
  4. Low-Income Housing Tax Credit

    The Low-Income Housing Tax Credit provides an incentive for home ...
  5. Urban Development Act Of 1970

    Urban Development Act Of 1970 is legislation that introduced ...
  6. Housing Choice Voucher Program

    The Housing Choice Voucher Program helps families with very low ...
Related Articles
  1. Insights

    How Does The Economy Affect House Size?

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

    Affordable housing: Investing for profit

    Successful real estate investors are more than just landords - they are savvy business executives. Find out how you can make a sound investment with purpose
  3. Managing Wealth

    Choosing Between The Suburbs And The City

    The location in which you decide to live can deeply influence your well-being, so choose wisely!
  4. Managing Wealth

    10 Reasons Why Moving Might Not Make You Richer

    Find out why moving to a less expensive city may not reduce your expenses.
  5. Investing

    Tips For Maximizing The Value Of A Kitchen Touchup

    At a fraction of the cost of a remodel, a homeowner can make strategic updates to his or her kitchen that could transform this part of the home.
  6. Investing

    5 Ways an Open House Can Actually Hurt Your Home Sale

    They may be more trouble than they're worth.
  7. Investing

    4 Reasons Why Renting a Home is a Wise Decision

    We've all heard that a home is a great investment, but is it really? In this article, we will look at four reasons why renting could be wiser than homeownership.
  8. Managing Wealth

    4 Reasons Why the Housing Recovery Will Be Short-lived (LOW, HD)

    Evidence would suggest that the same culprits from 2008 and some new ones are re-inflating a housing bubble.
  9. Retirement

    How Much Money Do You Need to Retire in Ireland?

    After the Celtic Tiger's boom and bust, retiring in Ireland may be more affordable than you think. Here's an overview of what to expect.
  10. Investing

    Home Improvements That Require Permits

    Many home remodeling projects require permits, which the homeowner is responsible for. Here is a list of projects that may require permits.
RELATED FAQS
  1. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
Hot Definitions
  1. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  2. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  3. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  4. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  5. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center