Would you buy a backyard cottage? Berkeley legalizes sales of ADUs

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Backyard cottages and basement apartments could become Berkeley’s next crop of starter homes, after the City Council approved a proposal that will allow property owners to sell off those and other accessory dwelling units as condominiums.

The change aims to create more opportunities for people to own a home in Berkeley’s notoriously expensive real estate market, where the median price for a single-family home hovers around $1.4 million and almost no new condos have been built for decades.

“We’re trying to create more housing inventory that’s available for less than $1 million — and hopefully substantially less than $1 million,” Councilmember Brent Blackaby said at a meeting Tuesday night where the council approved the change.

State and local laws long prohibited homeowners from splitting accessory units off from their main home and selling them as a separate property. That changed with a 2023 state law, AB 1033, which gave cities the authority to allow those sales; San Jose became the first in California to do so last year.

The ordinance Berkeley’s City Council approved Tuesday will typically allow property owners to get fast-tracked approval to turn their ADUs into condos, without going through a public hearing or appeals process. Owners also won’t have to pay the fee the city typically charges to convert units from rental apartments to condos.

Homeowners will have to submit a map to the city showing how they plan to split up their property. And the ordinance changes give tenants in certain older ADUs that are covered by rent control a three-month period to make the first offer to buy their units.

Accessory units have become one of Berkeley’s most popular forms of new housing, with homeowners embracing them as a source of rental income or space for family members such as aging parents or those struggling to afford high housing costs. The city has issued just over 100 building permits for ADUs on average each year since 2018.

They’re so widespread two councilmembers had to recuse themselves from Tuesday’s discussion of the sale proposal: Rashi Kesarwani left the dais because she owns a home that has an accessory unit, while Igor Tregub rents one.

City Council members all supported the change in broad strokes as a step to make homeownership in Berkeley more realistic for young buyers. But they were divided on a proposal from Councilmember Cecilia Lunaparra to impose new tenant protections on accessory units, which sought to ensure people who rent ADUs today aren’t forced out when they go on the market.

Lunaparra proposed the council amend the ordinance to bar property owners who kick out ADU tenants with a “no-fault” eviction from converting the unit into a condo for five years, and impose the city’s Affordable Housing Mitigation Fee on ADU-to-condo conversions unless the owner agrees to subject the unit to rent control if they rent it out, among other changes.

“The fundamental question right now is how to balance the stability of ADU tenants and the opportunities for potential future ADU homeowners,” she said. “I would love to purchase a condo home in the future and start a family in Berkeley, and I’m so glad to see that council is taking concrete steps in creating these opportunities — and I do not want to displace my friends who are current young tenants in ADUs.”

The amendments were backed by members of Berkeley’s Rent Stabilization Board, several of whom attended Tuesday’s meeting, along with several UC Berkeley students and a representative from the “Yes-In-My-Backyard” organization East Bay for Everyone.

Berkeley has generally limited tenant protections for accessory units, particularly those that homeowners build in their own backyards, which aren’t subject to rent control or limits on no-fault evictions.

Most of the council was cool on Lunaparra’s proposed changes, saying they were concerned the tenant regulations and potential new fees would discourage property owners from converting their ADUs into condos or building them in the first place. The changes were also opposed by the Berkeley Property Owners Association, a landlord advocacy group.

“I’m very committed to increasing pathways and opportunities for homeownership,” Councilmember Terry Taplin said. “I see condo conversion for ADU sales as a valuable tool, and want to be cautious to not unwittingly create impediments that would have a chilling effect on ADU production.”

Seeing there was little appetite for her most substantial amendments, Lunaparra pared back her proposal to a single change, requiring the three-month “right of first refusal” period for all tenants, not only those who are covered by rent control. But that amendment narrowly failed: Lunaparra, councilmembers Ben Bartlett and Shoshana O’Keefe, and Mayor Adena Ishii voted in favor, leaving it one vote short of the five needed to pass, while Taplin, Blackaby and Councilmember Mark Humbert were opposed.

The council then voted 6-1 to approve the ordinance changes without Lunaparra’s amendments; she cast the lone no vote.

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This story was originally published by Berkeleyside and distributed through a partnership with The Associated Press.