These Cities Will Pay You to Put a Tiny Home in Your Backyard

America's housing availability crisis has grown to become one of the nation's most pressing issues, and one solution to this problem is the construction of accessory dwelling units (ADUs), which are also sometimes known as tiny houses. That's why several cities and states around the country have launched incentives and programs designed to help you build a tiny house on your property.

Tiny Homes Are Not A New Idea

The old saying that "there is nothing new under the sun" is exemplified by the new fascination with tiny houses. In years past, these small units were often built as detached accompaniments to larger homes as guest houses, servant's quarters or in-law suites. They were designed to let homeowners accommodate guests or additional occupants while giving both parties ample privacy and room to operate independently.

As time wore on and American homebuilding became a standardized affair with cookie-cutter floor plans in suburban developments, guest houses and in-law suites were replaced by extra bedrooms inside the main house. Eventually, America came to the place where the only homes that had detached suites were old houses or mansions. This wasn't a problem until cities got so big there was no room to build or appetite for more development.

Home prices and rents in major American cities began outpacing worker salaries to such an extent that affordable housing became a thing of the past. The affordable housing problem has become so acute in the last decade that many American cities are experiencing dangerously high levels of homelessness. Many of those lucky enough to be housed are burdened by high rents and the inability to buy. Governments everywhere are struggling for solutions.

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Suddenly, Tiny Homes Are Back In Vogue

As city, state and local governments grapple with the housing affordability crisis, the concept of the tiny house has come back into vogue. Many people in both the public and private sectors now view the reemergence of tiny homes as a legitimate answer to America's housing woes. Accordingly, many of them are now incentivizing the construction of tiny homes. Here is a look at some of the programs in effect around the country.

New York's Plus One ADU Program

The state of New York recently announced its Plus One ADU program, which carves out $85 million to help residents renovate existing spaces such as carriage houses and basement apartments and convert them to rental housing. It is open to residents in the following cities:

• Amherst
• Babylon
• Bedford
• Brookhaven
• Dobbs Ferry
• Hastings-on-Hudson
• Huntington
• Irvington
• Ithaca
• Kingston
• New York City
• Shelter Island
• Southampton
• Southold

Vermont

The Vermont Housing Improvement Program offers an incentive that grants eligible applicants up to $50,000 toward the construction of an ADU or the renovation of an existing ADU on the applicant's property.

Spokane, Washington

Spokane, Washington, does not offer direct payments to encourage property owners to construct ADUs, but it does offer a local tax exemption for up to three years for single-family homeowners who build ADUs on their property.

These ADU Programs Will Have Strings Attached

If you're fortunate enough to live in a place that has an incentive program for ADUs, it's important to remember there is no such thing as a free lunch. Even the most generous programs will probably not cover the full construction cost, and the money will likely have strings attached. Most ADU programs are designed to add affordable housing stock, not luxury flats or short-term vacation rentals.

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That means there will likely be restrictions on how much you can charge in rent. When it comes to rent, "affordable" means different things in different real estate markets, and there may be a sunset clause on how long you must rent the unit at "affordable or below-market" rates. It's important to look carefully at the program restrictions before proceeding.

How You Can Get A Program Like This Where You Live

The list of places where you can get government assistance to build an ADU is short. However, many of these programs are new and other cities will likely be monitoring their success and considering similar measures. If you'd like to see similar programs in your city, remember that the squeaky wheel gets grease. Reach out to your local representatives and make your voice heard.

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