Rental conversions in Austin

Austin's HOME Phase 1 code changes allow up to three housing units, including tiny homes, on a property zoned SF-1, SF-2 or SF-3, and remove restrictions on the number of unrelated adults living in a housing unit.¹⁰ Austin's City Council adopted HOME Phase 1 on December 7, 2023, and the city began accepting applications under it on February 5, 2024; Phase 2 was adopted on May 16, 2024.¹⁰

HOME Phase 2 created a small-lot single-family use in Austin's SF-1, SF-2 and SF-3 districts that allows one unit on a lot of at least 1,800 square feet but less than the standard 5,750-square-foot minimum.¹⁰ Austin defines a tiny home as a dwelling unit of 400 square feet or less in floor area, not counting loft space.¹⁰

The HOME Phase 1 rules apply only to duplex, two-unit and three-unit residential uses; a single-family residential use in Austin is still reviewed under the existing regulations, including Subchapter F.¹⁰ Under Austin's Preservation Bonus, preserved portions of existing structures on a duplex, two-unit or three-unit site may be exempt from gross floor area and floor-to-area ratio limits.¹⁰ Keeping the old house and building behind it can leave more room under those limits than replacing it.

In Austin, an additional dwelling unit may be built on a property zoned SF-1, SF-2 or SF-3 with at least 5,750 square feet of lot area, and the size allowed depends on the zoning district and location in the city.¹¹ Austin's zoning rules no longer set a minimum distance between units on a lot, but building code spacing and the fire separation requirements of IRC R302.1(1) still apply.¹¹

Under HOME, duplex, two-unit and three-unit residential uses in Austin are limited to 40 percent building coverage and 45 percent impervious cover, with garages and carports counting toward impervious cover.¹⁰ Austin requires a tree review when a tree 19 inches or more in diameter stands on or next to the property.¹² On many older Austin lots the big live oak decides where the new unit can go before anything else does.

Austin requires a floodplain review if a property is inside the city's 100-year floodplain or within 100 feet of its boundary.¹² Austin says some properties have deed restrictions or restrictive covenants that may affect a project, and that verifying them is the applicant's responsibility.¹¹

Turning a detached garage into a unit keeps the footprint and often the slab. The 2021 IRC requires at least 5/8-inch Type X gypsum board or equivalent between a garage and habitable rooms above it, and does not allow any opening from a garage directly into a sleeping room.¹⁴ The 2021 IRC requires at least one egress door for each dwelling unit, reached by a continuous path that does not pass through a garage, and opening to a public way or a yard or court that leads to one.¹⁴

Austin requires a historic review for structures 45 years old or older whose exterior is being demolished or modified, and for properties zoned as historic landmarks, in locally designated historic districts or in a National Register historic district.¹² A garage or carriage house behind an older house can trigger that review once its outside changes.

In Austin, short-term rentals, residences rented for less than 30 consecutive days, are regulated by city ordinance and licensed by Austin Development Services Code Compliance.¹³ An Austin additional dwelling unit built after October 1, 2015 may not be used as a short-term rental for more than 30 days in a calendar year.¹¹

On a single-family site in Austin, an individual may operate up to two short-term rental units, and may operate more elsewhere only if they are at least 1,000 feet apart.¹³ Austin now lets tenants operate a short-term rental with their landlord's permission.¹³

A new short-term rental operating license in Austin costs $736.60, a $642.00 license fee plus a $94.60 notification fee, and operators must collect the city's hotel occupancy tax from guests.¹³ Austin announced that starting July 1, 2026, it would begin asking short-term rental platforms to remove unlicensed properties.¹³

A landlord who does renovation work on pre-1978 rental housing personally needs both EPA firm and renovator certification; a landlord who hires the work out needs neither, but the firm must be Lead-Safe Certified.¹⁵ Federal law requires renovation firms working in a rented home to give the renters EPA's Renovate Right pamphlet no more than 60 days before work begins.¹⁶

The 2021 IRC requires smoke alarms in each sleeping room, outside each separate sleeping area and on every story including basements, interconnected within each dwelling unit so that one sounding sets off all of them.¹⁴ When work that needs a permit is done, the 2021 IRC requires each dwelling unit to get carbon monoxide alarms as required for new homes, with exceptions for exterior work and plumbing.¹⁴ Ask the company to show every alarm and each bedroom's exit on the plans.

In Austin, building a new dwelling unit with habitable space on the first floor must also comply with the city's Visitability Ordinance.¹² More than one in four adults 65 and older fall each year.¹⁷ For a parent, ask for more than the minimum: a curbless shower, a no-step entry and a lit path back to the main house. NAHB's Certified Aging-in-Place Specialist (CAPS) credential trains remodelers in home modifications for aging in place.¹⁸

Ring the number on this page and a recorded line connects you to one independent company that handles rental conversions in the Austin area. The unit, the review and the price are between you and them.

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A second home on the lot is a big contract. The City of Austin requires trade contractors, general contractors and homeowners acting as contractors to register with its Building and Trade Contractor Services before work starts on a building or trade permit, and mechanical, electrical and plumbing contractors also need a license from the state board for their trade.¹⁹ Before construction starts on a Texas home, the original contractor must give the owner a written list of the subcontractors and suppliers it plans to use, and an updated list within 15 days of any change, unless the owner waives the list in writing.²⁰ When the owner makes final payment on a Texas residential construction contract, the original contractor must sign and deliver an affidavit stating that the bills for the job have been paid.²⁰ Check a Texas license