North Carolina Enacts Another Reform Easing Regulatory Impediments to Housing Development

North Carolina is doing a lot winning lately when it comes to removing regulatory barriers to the development of new housing. On August 11^th, Governor Josh Stein signed Senate Bill 445 into law, the second reform enacted this summer that will help alleviate housing costs in North Carolina, one of the nation’s fastest growing states. This regulatory package, introduced by Senator Steve Jarvis, will cut burdensome red tape and expand opportunities to build new kinds of housing.  

Eliminating Chassis Requirements

SB 445 reduces regulations on manufactured homes, making them more affordable to build and lowering costs for home buyers. For example, SB 445 repeals the state requirement that manufactured homes have a permanent steel chassis, a metal frame that enables easier transportation. It is estimated that the elimination of these requirements could reduce the cost of manufactured homes by up to $10,000, with the savings flowing through to consumers.

Expanding Accessory Dwelling Units

SB 445 also reduces government barriers to the construction of guest houses, carriage houses, and in-law suite, which are commonly referred to as accessory dwelling units (ADUs). Unfortunately, local governments are captured by “Not in my Backyard” (NIMBY) activists who stymy the construction of ADU on other people’s property. SB 445 requires local government to issue ADU permits in cities in towns with more than 50,000 residents. Under SB 445, local governments will no longer be able to prevent the construction of ADUs by imposing minimum lot requirements, charging excessive fees, and/or blocking ADUs’ access to utility services.  

Establishing a Residential Right of Use

SB 445 also helps expand the supply of housing by setting up its residential right-of-use provision. This prevents local governments from blocking conversion of commercial properties to residential use through special discretionary approvals or mandated public hearings. This reform was enacted in Texas, where it facilitated in the creation of 8,400 new units. Additionally, SB 445 preempts local height restrictions of less than 60 feet. Analysis after analysis demonstrates that height limits increase apartment prices and have a large negative effect on housing affordability, especially in more land-expensive places. By encouraging more efficient land use that is unencumbered by onerous and outdated regulations, North Carolina will be able to build more housing, keeping the state affordable.

Protecting Vested Rights

In property law, vested rights allow developers to proceed with an approved project even if the city passes new rules. SB 445 extends the length of these rights from two years to five years. Local governments can also choose to extend these rights for up to eight years when the circumstances change. Developers want certainty and stability, knowing that their approved plan will not be derailed by local government meddling. With their property rights secured and stable, developers can continue their projects and more will choose to operate in the state. The impact is that North Carolina will be able to build more necessary housing.

North Carolina needs housing. The Tar Heel state currently has a 764,000 unit housing gap, fueled by housing not meeting the growing demand. If these are not addressed, costs will rise, and the population boom North Carolina is experiencing will fade as potential North Carolinians plant their roots elsewhere. Meeting the demand will take cutting red tape in the housing market, which Senate Bill 445 does. By securing property rights, reducing burdensome red tape, and blocking chokepoints in development, North Carolina has positioned itself to sustain the growing demand.