Backyard Homes May Soon Be Legal in Las Vegas

In 2025, Nevada lawmakers introduced Assembly Bill 396 (AB396) to address one of the most urgent challenges facing the state - affordable housing. If passed, this bill could reshape how Las Vegas homeowners, buyers, and property investors think about single-family lots.

The centerpiece of AB396 is the statewide requirement for counties, including Clark County, to allow Accessory Dwelling Units (ADUs) - commonly referred to as “granny flats” or “casitas” - on single-family properties. The legislation has already passed the Assembly and is currently under Senate consideration as of May 2025.

What Are ADUs?

Accessory Dwelling Units are small, self-contained residential units that share a lot with a primary single-family home. These structures can be:

• Detached, such as a backyard cottage or freestanding unit.

• Attached, such as a garage conversion or basement apartment.

They are fully equipped with a kitchen, bathroom, and separate entrance, allowing them to function as independent rental units or private living spaces for family members.

Key Highlights of AB396

Let’s break down the core components of this bill and what it could mean for Nevada real estate:

1. Statewide ADU Requirement

AB396 mandates that every Nevada county - including Clark County - must pass local laws permitting the construction of at least one ADU on single-family residential lots. This policy opens up new opportunities for property owners across the state, especially in the growing Las Vegas market.

2. Tahoe Area Exemption

The bill specifically exempts the Tahoe Area Master Plan from these requirements, allowing that region to preserve its unique environmental and zoning standards.

3. Local Control Maintained

While the bill requires counties to allow ADUs, it still grants local governments the power to establish reasonable rules related to:

• ADU size and height

• Parking requirements

• Setbacks and design aesthetics

However, outright bans on ADUs (outside of the Tahoe area) will no longer be allowed.

4. Legislative Progress

AB396 passed the Nevada Assembly on a party-line vote (27-15), with support from Democrats and opposition from Republicans. It is currently awaiting further review in the Senate. If passed, it would add Nevada to a growing list of states enacting ADU-friendly laws to combat housing shortages.

Why AB396 Matters for Las Vegas Real Estate

Las Vegas is one of the most dynamic and competitive real estate markets in the western U.S. Property owners, buyers, and property management companies in Las Vegas should pay close attention to AB396 for several reasons:

Increased Property Value & Flexibility

Allowing ADUs can significantly boost the value of single-family homes. Homeowners may convert existing garages or build detached structures to create rental income or multi-generational living space.

More Affordable Housing Options

The bill is a direct response to Nevada’s housing shortage. By expanding the number of units on existing lots, AB396 could help stabilize rental prices and provide more options for tenants - especially in high-demand areas like Las Vegas.

New Opportunities for Real Estate Investors

Investors looking to maximize rental income may be able to purchase single-family properties, add an ADU, and list both units. This approach increases rental yield without acquiring separate parcels of land.

Implications for Property Management

With more ADUs likely to be constructed, Las Vegas property management services may see increased demand. From marketing ADU rentals to handling tenant relations, maintenance, and compliance with evolving regulations, professional managers can help property owners adapt and thrive.

Potential Challenges and Considerations

While AB396 offers many benefits, homeowners and investors should also consider:

• Permit and design costs: Building an ADU is not cheap, and construction must meet local zoning and building code standards.

• HOA restrictions: Homeowners in HOA-governed communities should verify whether their covenants allow for ADUs, even if county law permits them.

• Parking and neighborhood impact: Additional units may affect parking availability and neighborhood density - factors that could draw pushback from existing residents.

What You Should Do Now

Whether you’re a homeowner considering a backyard unit or a buyer evaluating a property’s potential, here are your next steps:

For Homeowners:

• Talk to your city or county planning department about potential ADU designs and rules.

• Begin budgeting and planning for construction if you’re interested in building an ADU.

• Consult with a property manager to assess rental potential.

For Buyers:

• Consider homes with larger lots or existing detached structures that could be converted into ADUs.

• Ask your real estate agent whether a property is ADU-ready under proposed or existing laws.

For Investors:

• Evaluate the return on investment (ROI) of acquiring single-family homes with ADU potential.

• Partner with property management companies in Las Vegas to streamline tenant placement, maintenance, and compliance.

Final Thoughts

AB396 is a potential game-changer for Nevada’s housing market. If passed, it would remove barriers to building Accessory Dwelling Units across most of the state, including Las Vegas. By expanding housing options, it helps address the affordable housing crisis while unlocking new value for property owners.

Whether you’re buying, selling, or managing residential real estate in Nevada, it’s essential to stay informed. ADUs may soon be more than just a niche solution - they could become a standard part of single-family housing in the state.