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North Carolina’s housing supply could increase after a bill with bipartisan support passed the Senate on Wednesday.
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The provision, which is part of a broader regulatory reform bill, targets accessory dwelling units, also called “granny flats” and “backyard cottages.” These are separate housing units built on the property of a primary residence in backyards, garages or basements. They can also be attached to a primary residence.
The bill requires local governments in cities with a population of 50,000 or greater to allow the development of ADUs on the property of single-family homes and long-term rentals, with an exception for the state’s coastal region. It passed the Senate with a unanimous vote and awaits a final approving vote in the House, which returns next week.
Some areas of the state don’t allow ADU development. Others allow development with some restrictions like sizing limits and special zoning districts. Many lawmakers believe that removing those restrictions and increasing ADU development will address North Carolina’s growing housing shortage as it continues to be one of the fastest growing states in the nation.
“Providing additional opportunities for the private sector to construct dwelling units is a net positive,” Republican Senate leader Phil Berger told The News & Observer on Wednesday.
Durham, Wake and Orange counties allow ADUs. Many cities and towns in the area have their own restrictions. Raleigh has some of the most flexible ADU requirements after the city council voted to allow them by right in 2020.
Sen. Jay Chaudhuri, a Wake County Democrat, said that housing policy has brought Republicans and Democrats together nationwide, and he wants North Carolina’s legislature to do the same.
He said that housing shortages shouldn’t be blamed on a lack of land, but rather on restrictive rules like zoning and parking mandates.
“For many, many years, legislatures across the country sat on its hands while housing shortages got worse and worse,” Chaudhuri said during discussions about the bill. “And so, North Carolina, with this provision, is helping write the playbook.”
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Some local government officials have expressed concerns about this bill, lawmakers say, because it creates some restrictions their ability to regulate ADUs.
The bill restricts local governments from creating minimum parking and special zoning district requirements. Chaudhuri said that he’s discussed concerns about the initial language in the bill concerning the role of local governments in ADU development with the North Carolina League of Municipalities, an advocacy group representing North Carolina cities and towns. But he said increasing housing supply outweighs concerns of local jurisdiction.
“The bill today kind of reflects on step forward in … addressing the housing crisis and trying to allow for folks that live in these counties … to have access to affordable housing,” Chaudhuri told The News & Observer on Wednesday after the vote. “The fact remains is that if you are a high school teacher in Raleigh or Wake County, you can’t afford to buy a house. And I think that this bill reflects one step towards providing better and more affordable housing.”
“Most cities and towns above the 50,000 population threshold are already allowing ADUs by right in substantial portions of areas that are zoned for single-family residential homes,” Scott Mooneyham, a spokesperson for NCLM, wrote to The N&O in a statement. “So, by and large, we don’t expect it to have much of an effect. While it is restrictive in some ways for local governments, it does allow for some local limitations related to size, setbacks and locations on lots.”
Democratic Gov. Josh Stein expressed his support for increased ADU development at a bill signing event in early July.
If the bill gets its final approval in the House and is signed by the governor, local governments would have until July 2027 to create regulations to accommodate the new policy.
This story was originally published July 30, 2026 at 11:10 AM with the headline “Housing supply may grow after NC Senate passes bill allowing more backyard cottages.”
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