Homeowners in Orlando, FL, can now get more than $10,000 in rebates to build accessory dwelling units on their property and rent them out as workforce housing.
The ADU Incentive Program—which was approved by the City Council last month—provides financial incentives for homeowners who construct ADUs and lease them at an affordable rate.
“Orlando’s ADU Incentive Program is a meaningful step toward expanding attainable housing supply in a market where affordability pressures continue to weigh on renters and first-time buyers alike,” says Hannah Jones, senior economic research analyst at Realtor.com®.
“While ADUs likely won’t solve the affordability crisis on their own, programs like this that incentivize homeowners to add workforce-priced units can meaningfully supplement housing stock without the lengthy timelines of large-scale development.”
Details of the program
The ADU Incentive Program offers a build-out rebate of up to $10,000 for construction costs; 100% rebates for park, transportation, and sewer impact fees, which range on average between $1,300 and $3,100; and a 100% rebate on building permit fees, which range on average between $450 and $1,050.
The city is currently creating a library of pre-approved ADU plans that will be pre-reviewed for code compliance to streamline the permitting process. For example, New York City started ADU for You. It’s a site that showcases a collection of eye-catching designs already reviewed for general code and zoning compliance.
To get the rebates, the ADU must be rented to an individual earning at or below 120% of the area medium income for 12 of the first 24 months once the certificate of occupancy is received. The lease requirement may be waived if the ADU resident is aged 62 or older.
Program requirements
The ADU, including any new driveways, patios, or walkways, cannot exceed 500 total square feet. In addition, an individual’s existing house, planned ADU, and all existing and planned paved areas cannot cover more than 55% of their property.
The ADU cannot be built in a front yard or on any dedicated easement, and must also be at least 10 feet away from all property lines.
The program will run through the end of 2027 or until the city’s funds for the program are exhausted.
Because the city has so many temporary workers, city officials say ADUs will hopefully create more rental options and help ease the housing affordability crisis.
ADUs will help the temporary workforce
Orlando’s identity as a hospitality and tourism hub creates a specific housing need that standard apartment stock has never fully addressed.
“Given Orlando’s high concentration of hospitality, tourism, and service-sector workers, many of whom are seeking flexible, shorter-term leasing arrangements, ADUs offer a particularly well-suited housing option that can fill a gap where traditional apartment inventory often falls short,” says Jones.
In a market where the average home lists for $375,000 and renters pay $1,636 a month on average, ADUs represent one of the more practical tools for closing the affordability gap.
“ADUs are perfect solutions to a lot of issues,” says Florida real estate broker Jeff Lichtenstein, CEO of Echo Fine Properties. “Temporary workers who can’t afford something expensive and young people who just want to get in and own something don’t care so much about size. A piece of the American dream right now is paramount.”
Lichtenstein says that the demand is through the roof, as long as states and counties start to change laws making ADUs easier to build.
“What Orlando is doing is a perfect solution,” he says. He expects to see more ADUs being built in the coming months and years.
“If you visit other countries where there are population density issues, these are practical solutions that those countries deploy,” he says. “I think we will see these built in mass, because the demand is overwhelming for this. It is a real solution, and it also builds some community as well.”