On August 6, 2024, Massachusetts Governor Maura Healey signed the Affordable Homes Act (the Act) into law. The Act aims to counter the rising cost of housing in the commonwealth by implementing new policies and providing funding for the construction of affordable housing. New policies include:

• A requirement that municipalities permit the construction of accessory dwelling units (ADUs) on the same parcel as a primary dwelling.
• A requirement that municipalities permit the construction of single-family residences on previously unbuildable lots held in common ownership with an adjacent residential lot.
• The creation of a commercial property conversion program to support the conversion of commercial space into housing or mixed-use developments.

The Act also unlocks over $5.1 billion in new funding for the renovation of public housing, construction of new affordable housing developments, and various sustainable and green housing initiatives.

The Act amends Massachusetts General Law chapter 40A, § 3, to prevent municipalities from requiring zoning variances for the construction or rental of ADUs on parcels zoned for single-family homes and prevents any requirement that ADUs be owner-occupied. Municipalities may still require that ADUs comply with requirements for site-plan review, bulk and height limits, setbacks, and short-term rental bans. Municipalities are permitted to require an additional parking space for ADUs, except if the ADU is located within a half-mile from any commuter rail station, subway station, ferry terminal, or bus station.

The Act also amends Massachusetts General Law, Chapter 40A, § 6, to allow the construction of single-family homes on residential lots that are held in common ownership with an adjoining residential lot. Under prior law, a municipality was permitted to treat adjoining residential lots held in common ownership as a single lot for zoning purposes. As a result, owners of such lots were prevented from building an additional home on the vacant lot, even if the lot would be buildable if not held in common ownership. The Act now permits the construction of homes on these lots if the lot conformed with certain zoning requirements at the time of recording; the lot is not less than 10,000 square feet and has at least 75 feet of frontage, and the lot is in a single-family zoning district. Homes built on these adjoining lots are limited to 1,850 square feet of heated living area with a minimum of three bedrooms. The Act prohibits these homes from being used as seasonal or short-term rentals.

The Act creates an office conversion program that will support the conversion of certain commercial buildings from commercial-use to residential- or mixed-use developments. The new program will allow developers to apply for a “qualified conversion project” certification. Completed qualified conversion projects will then be eligible to apply for a tax credit of up to 10% of the development cost for the project’s residential portion.

The Act authorizes $5.16 billion in new spending for affordable housing initiatives over the next five years. Included in this new funding is $2 billion for capital improvements to the Commonwealth’s public housing; $800 million for the Affordable Housing Trust Fund, which supports the construction and preservation of housing for people with incomes that do not exceed 110% of the area median income; and $275 million for initiatives that accelerate new housing strategies, support transit-oriented housing, and support the creation of sustainable multi-family housing.

The passage of the Act promises to significantly impact affordable housing construction in coming years. Owners, developers, and contractors are encouraged to review the Act to determine how best to take advantage of the new policies and funding made available under it.