Legislators in Illinois have introduced a new bill that could help reduce the state’s housing shortage by guaranteeing property owners in every municipality the right to build accessory dwelling units.
Senate Bill 3726 was introduced by state Sen. Steve Stadelman and it would amend Illinois law to block municipalities from prohibiting the building or use of units such as granny flats, coach houses, and basement units, the Illinois Policy Institute said.
The units are built on the same parcel as a single-family home or a multifamily building. Ranging from 250 to 1,200 square feet, granny flats are either attached or detached and include a kitchen, bathroom, and living space. They often used for aging relatives, rental income, or guests.
The bill is awaiting a hearing and a vote in the Senate executive committee, the institute noted.
While municipalities could regulate the size and location of such units, advocates said their availability would increase density and housing options without radically changing a neighborhood’s character.
State Faces Housing Crisis
The institute said that Chicago could still regulate the size of accessory dwelling units but no longer could limit them to the five small pilot areas where they’re now allowed.
Illinois faces a housing crisis, the institute said, and some researchers estimate a statewide shortage of 142,000 units. They also forecast that Illinois will need to double its production rate during the next five years to meet demand, the institute noted.
The Policy Institute said the housing shortage drives up prices and makes it hard for families to find a place to call home. A recent report by the Illinois Policy Institute showed accessory dwelling units serve as an affordable housing option when restrictions are loosened.
They’re especially suited to Chicago’s low-income families, the institute said.
Many Illinois cities, including Chicago, ban or heavily regulate these units.
Chicago received 1,031 applications to build accessory dwelling units from December 2020, when the data first became available, to February 2026, the institute said.
Of those, 809 were pre-approved, meaning they met all surface-level requirements and could submit a building permit application. While data is not available on how many of the 809 pre-approved applications applied for a permit, only 398 have been granted to date, IPI said.
Red tape, like the longer than average processing times for ADU permits in Chicago and burdensome construction requirements, as well as the costs associated with it, have played a part in stalling hundreds of otherwise eligible ADU projects.
The institute said that building these units would allow property owners to increase the value of their main home and possibly earn rental income. Families would gain the flexibility to accommodate aging parents, adult children, or extended family members, the institute said.
The measure also would promote efficient use of residential lots and give everyday people the opportunity to help provide the housing Illinois needs, the institute noted.
