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If you own property in Salt Lake City and have ever wondered whether you could add a second rentable unit to your lot, the legal landscape just shifted in your favor. Utah recently passed SB284, a law that requires every city with a population of 5,000 or more to permit detached accessory dwelling units, commonly known as ADUs. Many cities previously had the discretion to ban these outright, and plenty did. That discretion is going away.
For property owners already thinking about ways to increase returns on an existing property, this is one of the more significant legal changes to come out of this year's legislative session, and it is worth understanding before your city finalizes its own local ordinance.
Key Takeaways
SB284 requires cities with 5,000 or more residents to permit detached ADUs, with local ordinances due by October 2026.
This is separate from Utah's existing internal ADU law, which has protected basement and attached units statewide since 2021.
Lot size matters. Many detached ADU opportunities apply to lots of 11,000 square feet or larger, though this varies by city.
Short-term rentals through platforms like Airbnb generally require a separate license and are treated differently than standard long-term ADU rentals.
Understanding the Two Different ADU Laws at Play
Utah actually has two overlapping ADU frameworks, and understanding the distinction matters if you are evaluating your options. The first, established under House Bill 82 back in 2021, protects internal ADUs, units created within the existing footprint of a home, such as a basement apartment or an attached conversion. That law made internal ADUs a permitted use across residential zones statewide, meaning cities cannot require a discretionary hearing or conditional-use approval for a qualifying unit.
SB284 goes further. It specifically targets detached ADUs, separate structures like backyard cottages or garage apartments that sit apart from the primary home. Before this law, cities had much broader authority to prohibit these outright, and many did exactly that. Now, cities that do not already have a detached ADU policy in place are required to adopt one by October 2026.
What This Means for Your Property
If your lot meets your city's minimum size requirement, often around 11,000 square feet, though this figure varies by jurisdiction, you may now have a legal path to build a detached ADU where none existed before. That opens up a genuinely useful set of options for property owners: adding a second rentable unit to increase income from an existing property, housing a family member without needing to sell or relocate, or simply increasing the long-term value of the property through additional livable square footage.
For owners specifically focused on rental income, this is the more interesting angle. A well-placed detached ADU on an existing rental property can effectively turn one income stream into two, without the cost of acquiring an entirely separate parcel.
What You Still Need to Check Before Building
This law sets a new statewide floor, but it does not eliminate local variation, and that is where owners need to pay close attention. Cities still retain meaningful control over several details that affect whether and how you can move forward:
Parking requirements. Many cities require an additional off-street parking space for an ADU, and some require replacing any garage parking that gets converted into living space.
Owner-occupancy rules. Some cities, including Salt Lake City itself, require that either the primary residence or the ADU serve as the owner's primary home for standard approval, which limits pure investment scenarios where both units are rented to unrelated tenants.
Short-term rental restrictions. Long-term rentals of 30 days or more are generally permitted under a standard ADU approval, but short-term rentals through platforms like Airbnb typically require a separate license, and cities enforce this distinction closely.
Setbacks and height limits. Detached ADUs typically need to sit several feet from rear and side property lines, with height caps that vary by zoning district.
Because two cities in the same county can implement this baseline differently, checking your specific city's current ordinance before you design or permit anything is essential rather than optional.
Insurance and Management Considerations
If you do move forward with adding an ADU to a rental property, your insurance coverage deserves a second look before placing a tenant. A standard homeowner's policy typically will not extend to cover tenant-related liability or lost rental income on a secondary unit, which means dedicated landlord coverage is worth evaluating specifically for the new unit.
There is also a practical management layer to consider. Adding a second unit on the same lot means twice the tenant relationships, twice the maintenance coordination, and twice the potential for disputes if something goes wrong. Our property management services are built to handle exactly this kind of added complexity, so an ADU addition increases your income without doubling your workload.
FAQ
Can I rent out my ADU to someone unrelated to me?
In many cities, yes, but Salt Lake City and several others require that either the primary residence or the ADU remain owner-occupied for a standard approval. Pure investment scenarios where both units are rented to unrelated tenants may not qualify under current rules.
Does SB284 apply to every city in Utah?
It applies to cities with a population of 5,000 or more. Smaller municipalities are not currently subject to the same requirement.
Can I use my new ADU as a short-term rental?
Generally not without a separate short-term rental license from your city, even if your standard ADU approval is in place. Cities distinguish clearly between long-term ADU rentals and vacation-style rentals.
What happens if my city hasn't adopted its ADU ordinance yet?
Cities are required to adopt a compliant policy by October 2026. Until then, it is worth checking with your local planning department directly to understand where things currently stand.
A New Tool Worth Understanding
This law will not make sense for every property, but for owners with the right lot size and the right long-term goals, it represents a genuinely new way to grow rental income from land you already own. If you are considering whether an ADU makes sense for one of your properties, or want help managing the added complexity once it is built, reach out to our team and we will help you think through the details.