For homeowners in the San Fernando Valley—from the established estates of Encino to the thriving neighborhoods of Van Nuys and Sherman Oaks—the landscape of property investment has fundamentally changed. The recent passage of state legislation (specifically AB 976 and the feasibility of AB 1033) has permanently removed the most significant barrier to using your Accessory Dwelling Unit (ADU) as a pure investment vehicle: the owner-occupancy requirement.
At Gaga US Construction, we understand that homeowners like you are looking for trusted, licensed builders who are not just experts in framing for ADU construction, but are also experts in code compliance. This in-depth guide is designed to clarify the new ADU laws California 2025, explain the critical differences between an ADU and a Junior ADU (JADU), and show you exactly how to maximize adu rental income Los Angeles style, right here in the SFV.
For years, many San Fernando Valley homeowners who wanted to build an ADU on a rental property, or rent out both the main house and the ADU, faced uncertainty. AB 976 has finally ended that ambiguity.
Permanent Prohibition: Effective January 1, 2024, AB 976 makes it illegal for local jurisdictions (including the City and County of Los Angeles, which govern the SFV) to impose an owner-occupancy requirement on any new ADU.
Investor Freedom: This opens up massive opportunities for property owners to generate adu rental income Los Angeles-level profits by renting out both the primary residence and the ADU simultaneously.
No More Sunset: This law makes permanent a previously temporary exemption, providing long-term certainty for your investment.
In plain terms: If you build a standard Attached or Detached ADU with Gaga US Construction in the SFV, you are now legally free to move out and treat the entire property (main house + ADU) as a dual-income rental asset.
While the owner-occupancy rule is gone for ADUs, it remains firmly in place for their smaller cousin, the Junior Accessory Dwelling Unit (JADU). Understanding this difference is key to maximizing your rental strategy.
| Feature | Accessory Dwelling Unit (ADU) | Junior Accessory Dwelling Unit (JADU) |
| Location | Attached, Detached, or Garage Conversion | Must be contained entirely within the Primary Residence. |
| Maximum Size | Up to 1,200 sq. ft. | No more than 500 sq. ft. |
| Owner-Occupancy | PERMANENTLY NO LONGER REQUIRED (AB 976) | STILL REQUIRED. Owner must live in the main house or the JADU. |
| Kitchen | Must have a full, independent kitchen. | Must have an efficiency kitchen (small sink, counter, and cooking appliance). |
| Cost Driver | New foundation, roof, and utility trenching. | Junior ADU cost is lower due to interior conversion. |
The junior adu cost is often significantly lower than a full ADU because it avoids major exterior work like foundation digging and separate utility hookups. This makes it ideal for homeowners in Van Nuys or Sherman Oaks who want quick, low-cost rental income but do not mind remaining on-site.
However, because the owner-occupancy requirement remains for JADUs, if your goal is to move out and rent both units, the full ADU is the only viable option under the new ADU laws California 2025.
While the law has changed the rules of use, the construction standards remain strict, especially in the San Fernando Valley. Homeowners hire Gaga US Construction not just for compliance, but for the quality of the build itself.
The biggest question about where you can place an ADU comes down to setbacks. The good news is that state law has streamlined this, overriding most restrictive local SFV ADU setbacks.
Side and Rear Setbacks: The minimum required setback for a new detached ADU is only 4 feet from the side and rear property lines. This allows homeowners in tight urban lots across the Valley (like in Van Nuys) to maximize the unit’s size.
Front Setbacks: The front setback is still generally governed by the primary zone regulations.7 Our architects ensure your design adheres to these while maximizing the buildable area.
Existing Structures: For garage conversions or additions, the existing structure’s setbacks are often preserved, which is a major time and cost saver.
The frame is the skeleton of your investment. When considering your adu rental income Los Angeles-level goals, you need a frame built for durability and tenant appeal.
Load Bearing Design: Our engineers design the framing for ADU structures to withstand high winds and seismic activity, particularly important in the SFV. This means strict adherence to sheer wall requirements and correct nailing patterns as per the CBC.
Soundproofing: To maximize rental appeal and minimize tenant complaints (especially for attached or above-garage units), we integrate strategic sound dampening materials within the walls and floors. A quiet unit in Sherman Oaks commands higher rent.
Fire Safety: While new state laws often exempt ADUs from needing sprinklers if the main house doesn’t have them, correct fire-rated wall construction is essential, particularly when dealing with the 4-foot SFV ADU setbacks.
Gaga US Construction’s Commitment: We are licensed builders specializing in every facet of the process, ensuring that the structural work—from framing for ADU units to final finishes—is done right, protecting your investment for decades.
With the owner-occupancy rule gone, the focus shifts entirely to maximizing revenue.
AB 1033 permits local jurisdictions to create ordinances that allow an ADU to be sold separately from the main house as a condominium unit.
Future Homeownership: While this is optional for the City of Los Angeles to adopt, if implemented, it would allow a homeowner in Encino to essentially “condo-ize” their property, sell the ADU separately to recoup the full junior adu cost or ADU cost, and generate a massive capital gain, while retaining ownership of the main house.
Gaga’s Advantage: Our designs are prepared for this future. We ensure every ADU is built with necessary design features (like separated utility meters) that would make it eligible for independent conveyance under a future AB 1033 ordinance.
To attract the highest rents in the SFV market, your ADU needs high-end features:
In-Unit Laundry: A non-negotiable amenity that drives a higher monthly rent premium.
Private Outdoor Space: Even a small, fenced-off patio or deck separates your unit from the competition in Van Nuys.
Separate Meters: Having separate electrical and gas meters is crucial for simplified tenant billing and maximizing profitability. Our construction process includes coordination with utility providers for this essential step.
The new laws create opportunity, but only if you partner with a licensed builder who understands the specific codes and construction requirements of the San Fernando Valley.
If you own property and are looking to capitalize on the new ADU laws California 2025 by building a high-quality, profitable ADU or JADU, your search ends here. Gaga US Construction is the fully licensed, insured, and local firm dedicated to delivering budget certainty and code compliance.
Call us at (747) 609-6912 or fill out our quick online form. We will analyze your property against the latest SFV ADU setbacks and legal changes to provide a fixed-price quote for your ADU or JADU project.
In the San Fernando Valley, your driveway is more than just a place to park; it’s the gateway to your home and a major contributor to your property’s curb appeal and functionality. For homeowners in areas like Encino, Sherman Oaks, and Van Nuys, choosing the right material for this high-traffic, heavy-load area is a critical long-term investment decision.
If you own a home in the San Fernando Valley—whether you’re enjoying the sunshine in Sherman Oaks, relaxing in Encino, or hosting poolside gatherings in Van Nuys—you know the summer heat is more than just warm; it’s intense. The dream of a comfortable patio or a refreshing pool deck can quickly turn into a nightmare of scorching concrete that makes walking barefoot impossible.
For homeowners in the San Fernando Valley—from the established estates of Encino to the thriving neighborhoods of Van Nuys and Sherman Oaks—the landscape of property investment has fundamentally changed. The recent passage of state legislation (specifically AB 976 and the feasibility of AB 1033) has permanently removed the most significant barrier to using your Accessory Dwelling Unit (ADU) as a pure investment vehicle: the owner-occupancy requirement.
GAGA US INC is a licensed (#1074874 – B, C13) General Building Contractor based in Los Angeles. GAGA US works with professional contractors to ensure your construction needs are fully met and executed promptly.
