Chicago Expands ADU Program Citywide
The City of Chicago is expanding its accessory dwelling unit (ADU) program citywide, effective April 1, 2026. The policy change is expected to create new revenue opportunities for landlords by allowing the addition of new rental units on existing properties. This could introduce a new form of rental supply in neighborhoods previously dominated by single-family homes.
- The legalization of accessory dwelling units reverses a long-standing Chicago policy, as the construction of new coach houses and similar units was banned by a 1957 zoning ordinance change. - A pilot program, which began in May 2021, was limited to five designated zones across the city. Since its inception, this initial phase has resulted in the creation of approximately 400 new ADU units. - Data from the pilot program showed a heavy concentration of new units in wealthier areas; 94% of all ADU permits were issued for properties in the city's North and Northwest zones. - Under the expanded ordinance, individual alderpersons will have the authority to "opt-in" to allow ADUs in single-family (RS) zoned districts within their wards. All multifamily residential zoning districts (RT, RM) will now permit ADUs, except in the downtown core. - For properties with two or more ADUs created within an existing building, an affordability requirement is triggered, mandating that 50% of the new units be rented at a rate affordable to households earning 60% of the area's median income. - A new provision in the citywide expansion requires that contractors hired to build new detached coach houses must participate in a registered apprenticeship program, a rule that could increase construction costs. - Property owners who build ADUs may be eligible for a Home Improvement Exemption, which can defer any property tax increase resulting from the new construction for up to four years.
