Thinking about adding an accessory dwelling unit or renting one in Denver? With recent rule changes, ADUs are more accessible than ever, but the process still involves permits, design standards, utilities, and licensing. Whether you want extra space for family, rental income, or a flexible living option, it pays to know the basics before you start. In this guide, you’ll learn what ADUs are, how the rules work, what they cost, and what renters and owners should expect. Let’s dive in.
ADU basics in Denver
An ADU is a self-contained secondary home on the same lot as a primary residence. It includes living, sleeping, cooking, and sanitary facilities and must be accessory to the main home. Denver explains the definition and key standards in its Citywide ADUs resources, which outline context-based rules and recent updates to the code. Review the Citywide ADUs overview.
In 2024, Colorado passed HB24-1152 to expand ADU access in communities that allow single-unit homes. The law limits certain local requirements and sets minimum size allowances. See the state legislative update. Denver then adopted a citywide ordinance in November 2024 that took effect in December, expanding where ADUs are allowed across residential areas. Read the city’s ordinance update.
Permits, zoning and rules
One ADU per lot and required permits
Every ADU needs zoning approval and building permits through Denver’s e-permits system. Most residential zones now allow one ADU per zone lot, subject to the specific standards of your district. You will also need sewer, drainage, and utility approvals before construction. Start with Denver’s ADU permit guide.
Design, size and access
ADUs must be compatible with the main home and smaller than the primary dwelling from a zoning standpoint. Height, setbacks, and bulk planes depend on your zone and context. State law sets minimum size allowances within local rules, so always confirm what applies to your lot. Check the Citywide ADUs standards.
Parking and driveways are regulated. In many cases, new separate driveways are not allowed except with alley access, and state law limits cities’ ability to require new off-street parking in many situations. Your project must be built by a licensed contractor, and the ADU will receive its own address assignment. Review Denver’s ADU permit steps.
HOAs and private covenants
Colorado’s 2024 law restricts many HOA bans on ADUs, but private rules can still affect design and approvals. Always verify your HOA documents before proceeding. See the state’s ADU resources.
Design, utilities and special areas
Utility connections often drive cost and schedule. Tap fees, separate services, and right-of-way work can add up, and Denver Water may require additional licensing or services depending on your site. Historic districts need Landmark Preservation review before building permits can move forward. Use Denver’s ADU permit guide to plan these steps.
Timeline and budget ranges
Plan review for smaller residential projects often takes a few weeks to a couple of months, depending on backlog and complexity. You can check current averages to set expectations. Track plan review timelines here.
From feasibility to move-in, many ADU projects run 6 to 12 months. Conversions tend to be faster than detached new builds. Local builder estimates put turnkey detached ADUs commonly in the $180,000 to $400,000+ range, with per-square-foot costs often around $400 to $550+ depending on scope and finishes. Conversions can fall in the lower bracket. Review typical Denver cost ranges.
Common extras to budget for include utility taps or upgrades, foundation and soil work, lead or asbestos remediation on older structures, landscaping and site restoration, separate metering if chosen, and permit and inspection fees. New construction adds value to your property and is typically reflected in the next assessment, which can increase property taxes. See an example of how assessors treat ADUs.
Financing options
Owners often use a cash-out refinance, HELOC, home equity loan, or a construction loan. Following HB24-1152, state and local programs may offer incentives or grants aimed at eligible homeowners, with details rolling out as programs launch. Check the state’s ADU toolkit for updates.
Renting rules for ADUs
Long-term rentals
If you rent an ADU for 30 days or more, you need a Denver residential rental property license. Licensing requires a third-party inspection and a written lease along with the city’s tenant rights materials for your renter. See Denver’s rental licensing requirements.
Short-term rentals
Short-term rentals are limited to your primary residence. That means you can only STR an ADU if it is your primary home and you meet all license and tax rules. Listings must display the STR license number. Review STR rules and license details.
What renters should expect
- Confirm the ADU was lawfully built and has a current residential rental license for long-term leases.
- Ask to see the license number and inspection results, and keep a copy of the tenant rights document with your lease.
- Review how utilities are handled. Some ADUs share meters and services, so clarify who pays what and how usage is measured. See common utility considerations during ADU builds.
- For short stays, verify the STR license and that the listing displays the license number.
Owner checklist
- Confirm zoning and whether an ADU is permitted on your lot.
- Assess site constraints: alley access, utilities, setbacks, and any historic review.
- Build a realistic budget that includes taps, site work, contingencies, and soft costs.
- Hire a licensed contractor and submit plans through e-permits; expect plan review cycles.
- After you receive a Certificate of Occupancy, secure the proper rental license before leasing.
Renter checklist
- Verify the unit’s rental license for long-term leases and ask to see the inspection report.
- Confirm safety basics and habitability items in writing.
- Review the lease for utility splits, entry and repair timelines, and shared areas.
- For STRs, look for the license number on the listing and confirm it with the host.
ADU use cases in Denver
- Multi-generational living with privacy and separate space.
- Long-term rental to offset some housing costs.
- A flexible suite for guests, caregivers, or future downsizing on your own lot.
Get local help, start smart
If you want to build or rent an ADU in Denver, getting the plan right early can save time and money. You can compare lending paths, confirm permitting steps, and line up the right contractor before you spend on design. When you want one accountable point of contact for search, financing, and contractor coordination, connect with UGotAGuy. I can help you evaluate your property, run loan options, and coordinate the right pros to keep your ADU project moving.
FAQs
Are ADUs now allowed citywide in Denver?
- Denver adopted a citywide ordinance in November 2024 that expanded ADU eligibility across residential areas, with specifics depending on your zone district. See the city update.
What does it cost to build a detached ADU?
- Recent local estimates show many turnkey detached ADUs ranging from about $180,000 to $400,000+ depending on site, utilities, and finishes. View cost ranges.
How long do permits and construction take?
- Plan review can take a few weeks to a couple of months, and full projects commonly run 6 to 12 months from feasibility to occupancy. Check plan review timing.
Can I Airbnb an ADU in Denver?
- Only if the ADU is your primary residence and you obtain the short-term rental license, meet all rules, and display the license number on listings. Review STR rules.
Will an ADU increase my property taxes?
- Yes. ADU construction is an assessable improvement and can increase your assessed value at the next reassessment or when captured by the assessor. See an assessor’s guidance example.
Do HOAs still block ADUs in Colorado?
- State law limits many HOA bans, but private covenants can still affect design and processes, so review your HOA documents carefully. Check the state’s ADU resources.
