Montgomery County homeowners will no longer have to live on the property to rent out an accessory dwelling unit, under a bill the County Council passed 10-1 on Nov. 10 (via Montgomery County Council). Bill 41-26 also caps how many ADU rental licenses one owner can hold and waives a stack of county fees for owners who agree to keep rents affordable for a decade.
Under current law, either the main house or the ADU has to be the applicant's primary residence to get a rental license. The bill removes that requirement for both new licenses and renewals, according to the council's action packet. In practice, that means an owner could rent out both units.
To address worries about investors buying up properties, the bill limits a single owner to two ADU rental licenses countywide. A committee amendment from Councilmembers Jawando and Mink requires the people who control trusts, estates, LLCs or other entities to sign an affidavit saying they won't control more than two ADUs, closing a loophole where someone could spread licenses across several companies. The county executive also has to report back by Dec. 1, 2028, on applications, fee-exempt ADUs and whether owners are individuals or corporations.
The fee waiver kicks in if the owner signs an agreement with the Department of Housing and Community Affairs to rent the ADU at a level affordable to households earning 65% or less of the area median income for at least 10 consecutive years. The packet lists what gets waived: DHCA's $125 annual license fee, its $260 filing fee and $230 sign fee, plus building, mechanical, electrical, fire and use-and-occupancy permit fees from the Department of Permitting Services. The Office of Legislative Oversight put the one-time savings on a new detached ADU at about $2,701, plus about $1,250 in license fees over 10 years.
Those numbers are small next to the build itself. The packet cites construction estimates of roughly $300,000 for a detached ADU and $150,000 to $200,000 for an attached one.
The bill builds on the county's 2019 zoning changes, which made ADUs easier to build. The Department of Permitting Services counts 222 ADUs permitted since then. Councilmember Andrew Friedson, who chairs the Planning, Housing and Parks Committee, and Council President Natali Fani-González introduced the bill in September, The MoCo Show reported, with seven other councilmembers signed on as cosponsors.
"Greater production of ADUs is one tool in our toolkit to create more housing options for more of our residents," Friedson said in the council's release. Fani-González called it "a practical step that benefits homeowners, renters, and the long-term strength of our communities."
Not everyone was on board. The county executive opposed fully removing the owner-occupancy rule in a Sept. 30 letter, backing instead a narrower waiver that would let owners rent both units during a temporary absence of up to three years, according to the packet. DHCA raised concerns about administering and monitoring the 10-year affordability agreements, and opponents at the Oct. 6 public hearing worried about investor and private equity purchases. The Planning Board supported the bill. The council's release didn't give an effective date.
Why it matters for Contractors
For small builders and remodelers working in Montgomery County, the upside is a bigger pool of potential ADU clients. Dropping owner-occupancy opens the door to owners who want an ADU purely as a rental, or who plan to move out later and rent both units, people who couldn't easily get a rental license before.
The fee waiver is worth knowing, but it's modest against a six-figure build and comes with a 10-year rent commitment. Present it to clients as an option, not a selling point, and ask DHCA and Permitting Services how and when the waiver gets applied before permits are pulled. It's also worth watching Montgomery Planning's separate ADU zoning work on setbacks, parking and density, which could matter more to what you can actually build.