New Hampshire Revisits Accessory Dwelling Units

The New Hampshire House Special Committee on Housing is considering a transformative bill for homeowners and real estate investors. House Bill 423, proposed by Rep. Ellen Read, aims to allow homeowners with half-acre or larger properties to build two accessory dwelling units (ADUs). The objective is to create “gentle density” and address the housing shortage without building large apartment complexes. However, the bill faces opposition over neighborhood aesthetics. According to a University of New Hampshire Granite State Poll, housing is “the most pressing issue in New Hampshire.” A 2023 St. Anselm Center for Ethics in Society survey revealed that 78% of respondents demand more affordable housing.

What’s the Impact of More ADUs for Investors?

For real estate investors, the prospect of more ADUs is tantalizing. If the bill passes, it opens up new avenues for rental income, essentially doubling the potential on each qualifying property. But it’s not a done deal; the bill’s success hinges on overcoming opposition related to neighborhood aesthetics.

The American Apartment Owners Association outlines why ADUs are beneficial for investors: they offer versatility, increase property value, and are generally more affordable than buying a new rental property. Some ADUs can pay for themselves in 3-5 years. In high-cost markets, an ADU might cost around $300k, while a duplex could start at $700k with a 20% down payment. Importantly, ADUs can command market rates immediately upon completion.

The House bill remains in committee as of September 2023.