Denver has recently embraced a transformative approach to housing by passing legislation permitting accessory dwelling units (ADUs) to be constructed across all residential zones. This progressive move aims to address housing affordability and provide homeowners with versatile options to enhance their property value and living arrangements.

Understanding the New ADU Legislation in Denver

In November 2024, the Denver City Council unanimously approved measures to amend the city's zoning code, allowing ADUs—often referred to as "granny flats" or "casitas"—in all residential areas. This change expanded ADU eligibility from 36% to 70% of Denver, significantly broadening opportunities for homeowners. Colorado House Bill 24-1152, signed into law by Gov. Jared Polis in May 2024, will go into effect on June 30, 2025. This bill aims to boost the supply of affordable housing by making it easier—and less expensive—for most Colorado homeowners to build an ADU. The law provides opportunities for homeowners who were previously ineligible to add an ADU or found bureaucratic hurdles too cumbersome. This can offer homeowners more personal space or a source of rental income while increasing property value by as much as 35%.

Benefits of ADUs

The benefits of adding an ADU to a property extend beyond just housing affordability. Homeowners can reap financial, functional, and lifestyle advantages, making ADUs a smart investment.

1. Enhanced Property Value

Adding an ADU can substantially increase a property's market value. These units offer additional living space, making homes more attractive to potential buyers seeking rental income opportunities or flexible living arrangements. Industry reports suggest ADUs can boost a home's value by up to 35%, making them a lucrative investment for homeowners looking to maximize their real estate assets.

**2. Multigenerational Living**

ADUs provide an ideal solution for families desiring close proximity while maintaining privacy. They serve as independent living spaces for aging parents, adult children, or extended family members, fostering stronger family bonds and support systems. With the rising cost of assisted living and elder care, ADUs allow families to provide care and housing for their loved ones in a financially sustainable way.

**3. On-Premise Childcare**

An ADU can house caregivers or nannies for families with young children, ensuring convenient and flexible childcare arrangements. This setup offers peace of mind and seamlessly integrates childcare providers into the household. It also allows working parents to have additional support within the comfort of their own homes.

4. Passive Rental Income

Homeowners can rent out ADUs to generate additional income, offsetting mortgage payments or other expenses. This financial benefit makes homeownership more attainable and sustainable, especially in high-cost areas. Short-term rental opportunities (such as Airbnb) can also be lucrative in areas with high tourism demand.

5. Additional Living Space Without Losing a Low Mortgage Rate

For homeowners who have locked in historically low mortgage rates but need additional space, an ADU is a cost-effective way to modify a home without refinancing or moving. Whether for a home office, guest suite, or expanded living quarters, an ADU provides much-needed flexibility while adding significant value to the property.

Constructing an ADU in Denver

With the new legislation, building an ADU in Denver has become more accessible. Homeowners interested in adding an ADU should consider the following steps:

Step 1: Review Zoning Requirements

Ensure your property complies with the updated zoning regulations permitting ADUs in your residential area. The new law eliminates previous restrictions, but verifying lot size, parking requirements, and height limitations is still essential before proceeding.

Step 2: Design and Planning

Develop plans that meet both your needs and the city's building codes. Consider factors like size, placement, and design to ensure the ADU complements the primary residence. Many homeowners opt for pre-designed plans to streamline the approval process.

Step 3: Obtain Permits

Submit necessary applications to the city's planning department and secure all required permits before commencing construction. Working with a contractor experienced in ADU construction can help expedite this process.

Step 4: Construction and Compliance

Hire licensed professionals to build the ADU, ensuring adherence to all safety and quality standards. The timeline for construction varies, but on average, ADU projects can take six months to a year from start to finish.

Step 5: Maximizing Use

Once built, determine the best use for your ADU. Whether for family, rental income, or additional living space, ensure your ADU is properly maintained and utilized to its fullest potential.

The Future of ADUs in Denver

Denver's shift toward ADU-friendly policies reflects a broader effort to address housing shortages and promote more sustainable urban growth. By capitalizing on the new legislation, homeowners can enhance their property's value, accommodate family needs, and create additional income streams, all while contributing to the city's diverse and affordable housing landscape.

For those considering an ADU, now is the perfect time to explore this opportunity. With streamlined regulations and growing demand for flexible housing, ADUs represent a smart investment in Denver's evolving real estate market.

MAG's Favorite Homes with ADUs

At MAG Builders, we recognize the value of ADUs in creating functional, stylish, and investment-worthy properties. Some of our favorite homes feature seamlessly integrated ADUs that blend beautifully with the main residence while providing private, independent living spaces. Whether it's a modern apartment over a detached garage or a chic backyard studio, we take pride in crafting high-quality, well-designed ADUs that enhance form and function.