How to Increase the Value of Your Greenwich Property and Create More Income

Historic houses are a lot of what makes Greenwich the great place to live that it is.

^{By Mark Pruner}

ADU’s, HO’s and Splits

RENTALS

If you own a house, there are several ways that you can make money off of your property without selling your house. The Greenwich Planning and Zoning Commission regulations allow anyone to rent their house without a permit in every zone in Greenwich. Many people do rent to roomers and that number increased substantially during Covid.

You can rent all your house or just a part of it for months or years. (If you are going to do short term rentals, ala Airbnb, then you do need to check with P&Z, since these are regulated.) This article, however, is not about rental income, from roomers that share your kitchen. It is about your other options under Greenwich’s Planning and Zoning regulation; accessory dwelling units, historic overlays and lot splits, which allow for one or more additional residential units.

ACCESSORY DWELLING UNITS

Accessory Dwelling Units can be in either a standalone structure or be within your present house. Accessory dwelling units, as the name implies, are accessory to the main house. Many of them are a part of a house with a separate entrance that homeowners rent out. The thing that distinguishes an ADU from a rental is the fact that the accessory dwelling unit is allowed to have a full kitchen. Normally in our residential zones you’re restricted to a single-family residence and the prime distinguishing characteristics of a single-family residence that has a single kitchen.

To encourage more housing the Connecticut Legislature passed a law mandating ADU’s, but the new law allowed each town the right to opt out of these new state requirements, which Greenwich did, since Greenwich had had 3 different types of ADU’s for decades. Our new ADU regulation, adopted in July of last year, is actually more generous than the state’s but then the average house is substantially larger than the average house in Connecticut.

The Connecticut law was passed to encourage more housing units at more reasonable prices. Here in Greenwich, there isn’t a limit on what rent can be charged, however, due to their size these our ADU’s will be some of the more affordable units in town.

New easier, quicker and cheaper process

In the new regulation, P & Z has greatly simplified the process to get an ADU and broadened its application to all homeowners and houses in Greenwich. Previously you could only have an ADU if the owner was over 62 or the owner was handicapped or if the unit was rented out at a statutorily defined affordable price. Back in July of last year P & Z consolidated all these regulations into one and got rid of those restrictions. Today to create an ADU all you need to do is to file an application with the planning and zoning staff along with the requisite documents. The staff can review it and approve it if it meets the ADU requirements.

How big can you make the ADU?

One of the primary requirements is that the accessory dwelling unit, if it is in a separate structure has to be less than 800 square feet in zones smaller than a quarter acre (the R-12 zone). In the half acre and one-acre zones, the maximum size for the separate structure is 1,000 square feet. In the two and four-acres zones your free standing ADU can be up to 1,200 square feet.

If you build the ADU within your present house, it can be up to 35% of the size of the structure. So, if you are living in a 10,000 square foot house and your beloved mother-in-law comes to live with you, you could create an ADU of up to 3,500 square feet for.
Owner in residence requirement

We have 98 ADU under the prior regulations which you’ve been in effect for a few decades. Don’t expect to see an explosion of ADUs under this new easier regulation. The primary reason for that is that in order to have an ADU, the owner has to be in residence. They have to live in either the primary residence, or in cases where people are looking for additional income, particularly seniors that need more income, they can live in the accessory unit. Once again, the accessory unit can be either in the house or as a separate structure in the backyard. The homeowners don’t have to be there every day. if you spend the winters in Florida, it still counts as an owner resident property and qualifies under the ADU regs.

Don’t have to rent your ADU
Also, there is no requirement that you actually rent out your ADU. If you want to build a 1,200 square foot pool house and include two bedrooms and a kitchen on a two-acre lot in mid country, subject to planning and zoning approval, you’re free to do so. Such an approved unit will add value to your property whether it is rented or not. The end result is additional income and higher property values, with minimal impact on the primary residence.

HISTORIC OVERLAYS

No one that I know enjoys tearing down 100, 200 or even 300-year-old houses. These houses are part of our history and whenever possible should be preserved. Many years ago, Planning and Zoning created a historic overlay zone to help save these historic houses by allowing owners additional FAR for historic houses or additional houses on the property.

More FAR or a second house

The additional FAR is fairly straightforward in the one-acre and smaller zones you get a 15% increase in your FAR if you deed restrict the historic house and prevent it from being demolished. In the two- and four-acre zones you get a 25% increase in your FAR.

Alternatively, you can build a second house on the property. In the R-7 and R-6 zones the multiplier is 1.2 and in the R-12 and above zones the multiplier is 1.5 and you round up. The way this works is if you have a 1-acre lot in a 1-acre zone you get to multiply that times 1.5 resulting in 1.5 allowed units. You then round up to the next whole integer which in this case is 2 and you are entitled to a second house. The 2nd house needs to be subordinate to the 1st house, so you aren’t likely to get approval to build a new 8,000 square foot house behind a 3,000 square foot historic house.

Two Owners, One Lot

The other major restriction on historic overlays is that it remains as one lot: now with two houses on it. As a result, you have a little condo association where each homeowner contributes to the taxes and the maintenance. This does not mean that you can’t restrict certain areas to one house such as we see in limited common areas that are assigned to a particular condo in many associations.

If the planning and zoning Commission wanted to save more historic houses removing the one-lot requirement would be the biggest incentive for owners of historic properties. Most people don’t want to have to split expenses and get permission from their fellow lot owner when what they want is their own single-family home.

LOT SPLITS

Both ADU’s and historic overlays are applied to a single lot which continues with same boundaries as before. Lot splits allow you to create two conforming lots. If your lot is more than twice the size of the minimum required, you may be able to split your lot. For example, if you have a 2 1/2-acre lot in a one-acre zone you can request that Planning and Zoning approve a lot split creating 2 new lots. Both lots need to meet the frontage, lot shape, area, and setback requirements.

Once you have a second approved lot you can do whatever you want with the second lot. You can build another house on it, you can sell it, you can donate it for open space.

Lot splits are subdivisions in Greenwich

Under the Greenwich Planning and Zoning regulations, a lot split has for many years required a full subdivision application. In the good old days, Greenwich homeowners were allowed one free cut whereby if they were simply subdividing one property into two parcels that were conforming lots, they didn’t need Commission approval. Greenwich is one of the few towns in Connecticut that requires a full subdivision application for a lot split. One place where they are more lenient is that traditionally when you subdivide property into multiple lots, 15% has to be set aside for open space. The Commission has the authority to lower that amount.

SUMMARY

ADU’s: You can create an ADU and rent out either the accessory dwelling or the main house to create more income. This comes in handy for first time home buyers or anyone, especially seniors, with limited income.

HO’s: With the historic overlay you get to go one step further and build an even larger house with the additional FAR or a second house that is subordinate to the main house. Houses on historic overlays are not limited to certain sizes as ADU’s are.

LOT SPLITS: With the lot split you can create a second property with a second tax ID number. The assessor is going to increase value of the two lots, since they are both buildable lots. This is only fair as two buildable lots have greater value than the one lot did, even though the one lot is the same size as the two lots.

If you’re planning on selling off the new lot and keeping your house, you can generate substantial income from the sale of the lot. You can also restrict the sold lot as you wish as to the type, size and location of the new house on the second lot. Go overboard with restrictions and you will lose the sale.

Once you sell off the second lot, your property taxes will actually go down given that the lot you retained is now smaller. Another strategy is to do the lot split prior to the time the owner passes away. The heirs will get a step up in basis and won’t have to pay the additional capital gains incurred from the additional value.

CHECK OUT THE 90 MINUTE, ONLINE SEMINAR

This article is only a general overview, if you’d like to learn more there is a seminar online that I did with Margarita Alban, chair of Planning and Zoning, and Tom Heagney, one of our top local land use attorneys. You can find it by searching for “Zoning for Greater Property Value in Greenwich CT” on YouTube or on your favorite search engine. You can also sit it at our website, GreenwichStreets.com | About | Videos.

Mark Pruner is a realtor with Compass Connecticut. You can reach him at [email protected] or at 203-817-2871 or just by stopping by the Compass office at 200 Greenwich Ave across from Saks.