Streamlining Middle Housing: The Latest In Small-Site Development Reforms

California continues its legislative push to address the state’s housing crisis, particularly focusing on “middle-housing” projects that bridge the gap between single-family homes and large apartment buildings (e.g., duplexes, triplexes, townhomes, cottage clusters, etc.). 

Recent legislation broadens the small lot subdivision framework under SB 684 and SB 1123 (previously analyzed here), strengthens SB 9 duplex and lot-split rights, accelerates ministerial permitting timelines, and further liberalizes ADU development. As we previously reported, SB 79 (signed October 10, 2025) also increases density around transit, including on small parcels in single-family zones.

This alert summarizes the most significant newly enacted state laws affecting small-site residential development.

 

Expanded Opportunities for Small Lot Subdivisions With Remainder Parcels

The Starter Home Revitalization Act — amended and expanded by SB 684 (multi-family zoned sites) and SB 1123 (single-family zoned sites) — continues to evolve through legislative clean-up efforts. This Act provides ministerial approval of projects consisting of no more than 10 units on up to 10 parcels (essentially, smaller, more affordable “starter” homes).

AB 130 expands this framework in two key ways:

Remainder Parcels that Do Not Count Toward the 10-Lot Cap

AB 130 authorizes creation of a “remainder parcel” that is excluded from the Act’s 10-lot limit, provided that the remainder parcel:

1. 1. 1. contains no new residential units, and
      2. is not exclusively dedicated to serving the new housing development (consistent with Gov. Code § 66499.41(a)(1)(B)).

This change expands site eligibility by allowing an additional parcel for existing uses, utilities, or other non-exclusive functions.

Restrictions on Sale, Lease, or Financing of Newly Created Parcels

Except for the remainder parcel, newly created lots may not be sold, leased, or financed unless the parcel:

1. 1. 1. includes a Building Standards Code-compliant residential structure with at least one dwelling unit;
      2. contains an existing legally permitted residential structure;
      3. is reserved for circulation, open space, or common area; or
      4. is the final undeveloped parcel within the subdivision that has yet to be improved with a code-compliant residential structure.

While the remainder parcel option increases flexibility, these new post-subdivision restrictions may complicate financing and phasing for some projects.

 

Bolstering SB 9 Duplexes and Lot Splits (With Notable Exception)

SB 9 (2021) legalized ministerial duplexes and urban lot splits statewide. New legislation clarifies and strengthens its application:

SB 450 (Effective Jan. 1, 2025)

• • Applies SB 9 to charter cities, closing the loophole created by a Los Angeles Superior Court ruling (City of Redondo Beach, et al., v. Rob Bonta, in his capacity as California Attorney General, Case No. 22STCP1143 (2024), pending appeal)  
  • Limits additional local standards, preventing jurisdictions from imposing requirements beyond base zoning and SB 9’s statutory criteria.
  • Creates a firm 60‑day approval deadline, after which SB 9 applications are deemed approved.
  • Raises the bar for denials, requiring specific findings of an adverse impact to public health and safety, not generalized environmental concerns.
  • Expands HCD enforcement authority over local SB 9 compliance.

AB 1061 (Effective Jan. 1, 2026)

AB 1061 extends SB 9 to historic districts, provided the resulting duplexes and lot‑splits do not alter or demolish any historic structure.

Governor’s Executive Order Carve-Out
A July 2025 Executive Order (N-32-25) authorizes local agencies in Los Angeles County to restrict or suspend SB 9 projects in high fire‑hazard areas undergoing post‑fire rebuilding (including Pacific Palisades, Malibu, and Altadena), citing evacuation and wildfire safety concerns.

 

Doubling Down on Accessory Dwelling Units (ADUs)

California's ADU laws have evolved to produce tens of thousands of small but flexible housing units in the last decade. Recent legislative changes further reduce barriers, making ADU construction an increasingly viable option for homeowners, developers, and investors. Key updates include:

Elimination of Owner-Occupancy Requirements:

AB 976 permanently eliminates owner-occupancy requirements for ADUs. 

AB 1154 eliminates owner-occupancy requirement for Junior ADUs (JADU) (defined as a dwelling unit up to 500 square feet contained within the existing space of a single-family home) that do not share a bathroom with the primary unit.

Separate Sale of ADUs as Condominiums:

AB 1033 authorizes local agencies to permit the separate sale of ADUs from the primary residence as individual condominium units. Major jurisdictions such as San Jose, Los Angeles, San Diego, San Francisco, Berkeley, and Sacramento have opted in.

More ADUs for Multifamily Buildings:

SB 1211 allows up to eight detached ADUs on multifamily properties, or as many ADUs as there are existing primary dwelling units — whichever is fewer.

Relaxed Parking Requirements:

SB 1211 also prohibits local agencies from requiring replacement parking where uncovered spaces are removed to construct an ADU.

Pre-Approved Plans:

AB 1332 requires every city to establish a pre-approved ADU plan program by January 1, 2025, streamlining design and permitting.

Legalization of Unpermitted ADUs:

AB 2533 extends the amnesty date for legalization of unpermitted ADUs from January 1, 2018, to January 1, 2020, allowing more homeowners to legalize units with reduced penalties.

ADU/JADU Consistency and Clarification:

SB 543 aligns JADU rules with ADU rules and clarifies square‑footage standards and permitting timelines.

Automatic Statewide ADU Rules (Noncompliant Cities):

Under the newly enacted SB 9 (distinct from the 2021 SB 9), state‑level ADU standards automatically apply when local jurisdictions fail to timely update their ADU ordinances.

ADUs in the Coastal Zone:

SB 1077 (effective July 1, 2026) directs the Coastal Commission and HCD to prepare new streamline ADU guidance for the Coastal Zone. However, Coastal Zone ADUs will continue to face heightened restrictions and longer review timelines as compared to those in inland areas.

 

New “Shot Clocks” Tighten Approval Deadlines

Recent laws impose strict deadlines (shot clocks) on local agencies reviewing middle‑housing projects.

Permit Streamlining Act (PSA) Now Applies to Ministerial Projects:

For the first time, AB 130 applies the Permit Streamlining Act (PSA) to ministerial projects — including ADUs, SB 9, SB 684, and SB 1123 projects. Local agencies must:

1. act within 30 days of deeming the application complete (unless a shorter timeline applies by statute), and
2. issue a decision within 60‑days, except for projects under AB 2011/2243.

Some conflict may arise with other ministerial streamlining statutes (e.g., SB 35/423 or SB 6), which impose their own timelines.

Third‑Party Review of Delayed “Post‑Entitlement” Permits:

AB 253 allows applicants for residential projects with 10 or fewer units and four or fewer stories to hire licensed third‑party plan-check reviewers when local agencies exceed the 30‑day review deadline.

Mandatory Final Inspections Within 10 Days:

AB 1308 requires local agencies to complete final inspections within 10 business days of receiving notice of completion for applicable residential projects of 10 units or fewer.

 

Local Initiatives

Not to be outdone, several jurisdictions have adopted their own small-to-middle housing development incentives:  

• Berkeley Middle Housing Ordinance (effective Nov. 1, 2025):

Eliminates most single‑family zoning and allows small multifamily projects up to 70 units/acre, 35‑foot height and 60% lot‑coverage.

• Santa Monica Emergency Ordinance (adopted in Aug. 2025):

Allows for up to 20 units (with the inclusion of ADUs) on vacant residential lots and permits three‑story structures in areas previously zoned exclusively for single‑family homes. The ordinance complements SB 1123’s ministerial small‑lot framework.

 

Conclusion

Together, new state legislation and proactive local initiatives are significantly expanding opportunities for small‑site housing development across California. Projects historically subject to lengthy, costly, and uncertain discretionary review may now qualify for streamlined, ministerial approvals under multiple overlapping statutes.

For parcel-specific analysis or guidance on how these new laws may affect your active or planned projects, please contact the Allen Matkins land use and entitlements team.