SB9 Explained

Senate Bill 9 is a California state law that enables homeowners to split their single-family residential lot into two separate lots and build up to two new housing units on each. By increasing housing supply and diversifying the types of housing available in a given area, SB 9 aims to help alleviate the housing crisis while ensuring local homeowners–rather than real estate development companies–are the ones making the aesthetic decisions and the resulting profits within their own neighborhoods.

We believe SB 9 is an exciting opportunity for homeowners throughout the state to build beautiful, affordable housing in their own backyards. In the following guide, we'll discuss the goals, details, and limitations of the new law. We'll also examine possible development options and explore the benefits and challenges of building under SB 9. Read on to learn more, or use the links below to navigate.

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ContextThe LawWhat Can I Build?ExclusionsBenefitsChallengesDevelopment Options
I photo of a backyard home, duplex, or ADU

The Law - SB 9

Senate Bill 9, also called the California Housing Opportunity and More Efficiency (“HOME”) Act, was signed into law on September 16, 2021. The so-called "duplex bill" is part of an initiative to address California's housing crisis. SB 9 provides a legal, streamlined process for homeowners to subdivide their urban single-family residential lot and/or build additional residential units on their property.

Specifically, SB 9 alters the municipal review process for two-unit housing developments on single-family lots and for the subdivision of property. Where the review process used to be discretionary (subjective, case-by-case), it is now subject to ministerial approval (objective, consistently applied). This change will ideally simplify and expedite the permitting process, making it easier and more accessible for homeowners to build additional housing on their property.

Senate Bill 9 goes into effect statewide on January 1, 2022 and all California cities must comply. However, local governments are allowed to impose their own objective design standards and limitations, as long as they don't directly conflict with the state law. These regional ordinances on SB 9 will likely evolve throughout early 2022.

Context: The Housing Crisis

California is confronting a shortage of affordable housing—particularly in urban areas like Los Angeles—which is increasing rental burden and driving displacement throughout the state. It is estimated that California will need 3.5 million additional units of housing by 2025 to meet the demand; however, fewer than 80,000 new homes are currently built per year.

State legislation passed in 2017 legalized the building of accessory dwelling units in all California cities, regardless of zoning. The resulting ADU boom has helped increase the number of new housing units built over the past few years. And yet, it's still nowhere near enough.

One of the greatest challenges facing housing construction is the predominance of single-family zoning, which allows only one house per lot. Almost 66% of all California residences are single-family housing and nearly 75% of all developable land is zoned single-family. This severely limits the types of housing that can be built and pushes the boundaries of urban expansion ever outward.

Some argue that single-family zoning is intrinsically linked with the "California Dream" of owning a family home with a big private backyard. However, due to soaring housing costs in a highly competitive market, that dream is far out of reach for a growing number of Californians.

Aside from limiting accessibility, the single-family model no longer serves the needs of our modern lifestyle. Multigenerational households, communal living, and the rise of remote work are transforming the ways we live together in cities. It’s time for our zoning rules to reflect this change.

What Can I Build? - SB 9

All single-family property owners are eligible under SB 9 to build a second unit within their existing lot. This provision is a great option for homeowners looking to build additional housing for their extended family. It's also beneficial for rental-property owners who want to add a second long-term rental unit.Single-family property owners can also utilize SB 9 to subdivide their property into two lots.

However, homeowners who split their property must commit to occupying one of the lots as their primary residence for a minimum of three years. Once the lot is split, homeowners have a wide variety of options for developing housing on their newly created lots. These possibilities include single-family dwellings, duplexes, and ADUs.SB 9 entitles homeowners to build one duplex and, depending on local ordinance, up to two ADUs on each lot. This allows for a maximum total of 8 units across the two lots.

Video Demonstration duplexes, ADUs, and other configurations available through SB9 Law

What Are The Exclusions?

SB 9 is structured to encourage housing development in urban environments while protecting vulnerable populations and ecological areas. To be eligible, a property must be located within an urban area and zoned for single-family use. The property cannot be located within an historic zone, flood zone, fire hazard zone, on prime farmland, or within other environmentally protected areas.

Proposed SB 9 projects cannot require the alteration or demolition of any rent-controlled or moderate, low, or very low income housing. Alteration and demolition is also prohibited for any units occupied by a rental tenant within the past three years. Homestead can help you determine if your property is eligible for SB 9 - click here to search your property on our free tool.

What Are The Benefits?

SB 9 opens up a wide variety of housing development options for homeowners to optimize their property's financial potential while maintaining the character of their community.A homeowner looking to access equity within their property could split their lot and either sell it or build up to three rental units to ensure long-term income.

The lot urban lot split provision also creates opportunities for new homeownership, especially for people who have been locked out of the housing market due to ever-increasing prices.

For some homeowners, SB 9 fulfills the dream of multigenerational living by enabling them to share property with aging relatives or adult children.And for tenants, every new unit of long-term rental housing on the market helps to alleviate the demand.

An illustration of a homeowner able to sit back and relax while Homestead takes care of all the work converting their garage into an ADU

What Are The Challenges?

The major challenges concerning SB 9 development are essentially the same challenges homeowners tend to encounter with any home renovation or construction project: permitting and financing. Because SB 9 is so new and revolutionary, however, these obstacles become slightly more nuanced.

Permitting Difficulties

Even with a streamlined process, getting a permit approved for a construction project is still a hassle. To make matters more complicated, every city will interpret and implement SB 9 in their own way. A homeowner looking to develop their property under SB 9 must first understand the limitations and requirements specific to their area's local ordinance. We've build out a city-by-city implementation database where you can look up how your city will be implementing SB 9.

Financing Difficulties

Additionally, property owners may face obstacles to funding SB 9 projects. Securing financing is often a challenge for homeowners looking to renovate or develop their property, but the  uncharted territory of the new law could further complicate matters.

With no established lending practices in place, some lenders might be reluctant to approve funding for SB 9 projects. It's also possible that certain mortgage holders may object to lot splitting. All of these issues will likely improve over time, as Senate Bill 9 settles into practice and becomes more familiar.

Homestead Can Help

Our mission at Homestead is to empower homeowners to unlock equity within their property and invest in the future of their community by creating new housing. California Senate Bill 9 supports this mission by allowing homeowners to maximize the social good and financial potential of their existing property.

So far, much of the SB 9 research and analysis indicates that most homeowners won't pursue SB 9 development because they won't be able to afford it. Homestead wants to change that. At Homestead, we plan to partner with homeowners to finance SB 9 projects and develop new housing for them.

If you’d like to learn more about Senate Bill 9 and its potential, contact Homestead. Our project planners will answer any questions you may have about the new law and how it affects your property. And, if you're interested, we'll let you know if you qualify for Homestead's zero-down development process.

See if your property is eligible for
SB 9 Development

Use our search tool that automatically checks over 15 state databases to assess whether your property is eligible for SB 9 Development.

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