New Law Clears the Way for Backyard Homes Across the State
A quiet but powerful shift is taking root in Iowa’s housing landscape. Beginning July 1, a new state law will require all cities and counties to permit accessory dwelling units (ADUs) “by right” in areas zoned for single-family homes. The move opens a path for homeowners to add a second, independent housing unit to their property — whether in the form of a backyard cottage, finished basement apartment, or garage conversion — without the layers of red tape that have historically stood in the way.
The bipartisan legislation passed with overwhelming support: a unanimous vote in the state Senate and an 89–7 vote in the House, with every local lawmaker backing the bill. That kind of unity is rare, especially in debates about housing, but the Iowa Legislature managed to strike a balance between housing innovation and local oversight.
What the Law Allows
Under the new law, ADUs can be up to 1,000 square feet or 50% the size of the primary home — whichever is greater. That means even homeowners with modest-sized houses can build decently sized secondary units. While ADUs located in historic districts may be required to conform to neighborhood design standards, those outside such districts are not required to match the materials or style of the main home — a detail that could significantly reduce construction costs and open the door for offsite and modular construction options.
The law applies across Iowa and overrides existing local ordinances that either prohibited ADUs outright or placed heavy restrictions on them. Homeowners will now have the legal backing to move forward with projects that might previously have been stalled by zoning boards or planning commissions.
A Coalition of Support
The bill drew support from an impressive coalition that spanned political ideologies and industries. AARP Iowa championed the bill as a win for seniors seeking to age in place or live closer to family. The Home Builders Association of Iowa saw an opportunity for increased construction and investment in housing. Credit unions advocated for the measure, recognizing that homeowners with ADUs could gain new streams of rental income and home equity.
In a time when housing costs are rising faster than incomes and young adults are struggling to find affordable options close to work or school, ADUs offer a flexible solution. For older homeowners, they represent a chance to downsize without leaving their neighborhood. For younger families, they offer an entry point into increasingly expensive communities. For developers and builders, they open a new niche market of small-scale residential infill.
More Than Granny Flats
While often referred to as “granny flats,” ADUs have evolved far beyond that image. They can house aging parents, adult children returning home, full-time renters, or even traveling nurses and other essential workers. In some cities across the U.S., ADUs have been deployed to combat homelessness and create more equitable access to housing.
In Iowa, the law encourages that kind of flexibility. Homeowners can choose whether to use their ADUs for family, for tenants, or for personal use — such as a home office, guest suite, or caregiver’s quarters. And because ADUs are now permitted by right, homeowners will be spared the often lengthy and unpredictable process of applying for conditional use permits or zoning variances.
The Road Ahead
While the law takes effect on July 1, it will likely take time for cities and counties to update their zoning codes and educate residents about the changes. Builders and manufacturers — particularly those in the offsite and modular home sectors — are expected to see increased interest in small-scale units that can be delivered quickly and affordably.
For those already in the business of building backyard homes, Iowa’s shift is a green light. For others, it’s a call to get creative: reimagining underutilized garages, basements, and backyards as part of the state’s future housing strategy.
And for Iowa residents? It’s a rare legislative moment when state government, housing advocates, financial institutions, and homebuilders all agreed on one thing: it’s time to make room for more — more options, more flexibility, and more places to call home.
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