Texas Moves to Expand Accessory Dwelling Units with SB 673
Texas is on the path to making it easier for homeowners to build Accessory Dwelling Units (ADUs)—also known as granny flats, casitas, or backyard homes. Senate Bill 673 (SB 673), recently passed by the Texas Legislature, removes many of the barriers that local governments can impose on ADU construction, giving property owners more freedom and flexibility.
ADUs are small, independent residential units located on the same lot as a primary single-family home or duplex. They’re an increasingly popular solution to address housing shortages, provide multigenerational living options, and generate rental income.
What SB 673 Does
SB 673 limits how cities and counties can regulate ADUs. Under this bill, local governments cannot:
Prohibit ADUs from being built
Ban rentals of ADUs or require the owner to live in the primary home.
Restrict the size of ADUs to less than 800 square feet or 50% of the main house
Restrict the ADU to less than 14ft in height
Require setbacks greater than 5ft in most circumstances
Require parking on small lots or lots near public transit.
Impose stricter lot size or setback rules than those used for single-family homes.
Impose costly fees or design requirements.
Prohibit ADUs based on how they’re positioned on the lot.
To reduce delays, SB 673 requires cities and counties to approve or deny ADU permit applications within 60 days. If no action is taken in that time, the permit is automatically approved. No public hearing or discretionary review is allowed—making the process faster and more predictable for homeowners.
Who’s Exempt and what cities can regulate
Some smaller cities (under 150,000 residents) and counties (under 300,000) are exempt from several parts of the bill—but only if they’ve already adopted ADU-friendly policies that allow units of at least 850 square feet. While the bill is bold in limiting overregulation, it does allow cities and counties to apply some basic rules—if they apply equally to single-family homes. This includes building height limits above 14ft, front setbacks, drainage requirements, and environmental protections. Local governments may also regulate short-term rentals, require at least one parking space except as noted above, and prohibit the sale of an ADU as a separate property—unless certain conditions are met. SB 673 does not override historic preservation regulations, private deed restrictions, or homeowners association rules. Property owners should still check their local and neighborhood rules before starting construction.
Why It Matters
Texas Senate Bill 673 comes at a critical time—especially for cities like Austin that are grappling with a growing housing crisis. Over the past decade, demand for housing in Austin has consistently outpaced supply. This imbalance has driven up home prices, reduced affordability, and made it increasingly difficult for residents—especially first-time buyers, seniors, and working families—to find suitable housing close to jobs, schools, and services.
According to the Austin Board of Realtors and local housing studies, the region needs tens of thousands of new housing units over the next several years just to keep up with projected population growth. At the same time, zoning constraints, high construction costs, and lengthy permitting processes have created a significant backlog of housing projects.
Accessory Dwelling Units (ADUs) offer a practical and relatively low-cost way to increase housing supply within existing neighborhoods—without requiring large-scale development or new infrastructure. They allow homeowners to add a rental unit, create space for family members, or downsize without leaving their community.
By removing unnecessary regulatory hurdles and streamlining the approval process, SB 673 enables more homeowners to contribute to Austin’s housing solution. It encourages incremental, community-scaled growth and supports more diverse, flexible housing types—a key ingredient for both affordability and resilience.
For Austin and other fast-growing cities, this legislation represents a meaningful shift toward housing policy that prioritizes access, equity, and efficiency—not just density. And for homeowners, it opens up new possibilities to build smarter, live more affordably, and invest in the future of their neighborhoods.