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Starter Homes (Small Lots)
Legalizing Smaller Lots
This bill legalizes starter homes — townhomes, cottages, and modest houses — by allowing homes to be built on smaller lots.
Starter Homes (Small Lots)
About the bill
“Reducing minimum lot size requirements enables construction and essentially restores the concept of starter homes.”
— Glenn Hamer, CEO of the Texas Association of Business
What this bill does
This bill makes it legal to build starter homes — townhomes, cottages, and modest houses on small lots — by lowering the lot size required for a home. Today, most cities demand 5,000 square feet or more per house; this bill caps that at 1,400, so the size of the home can match the budget of the buyer.
Why it's needed
The starter home is disappearing. Entry-level homes made up about 40% of new construction in the early 1980s and by 2019, they were just 7%. The typical first-time buyer is now 40 years old, the oldest on record.
The modest houses and townhomes that earlier generations bought as their first step into ownership are now illegal to build in most American cities, not because builders won't build them or buyers won't buy them, but because local rules require every home to sit on a big, expensive piece of land. When a city requires 5,000 square feet or more for every home, it sets a minimum land cost before construction even begins. Families who cannot afford that land are priced out, even if they could afford a modest house or townhome.
Frequently asked questions
What does this bill actually do?
This bill makes smaller residential lots legal on land with adequate water and sewer service. It prevents local governments from requiring lots larger than 1,400 square feet, wider than 14 feet, or deeper than 60 feet, and ensures that density rules allow at least one home on every qualifying lot. It also caps setbacks, allows buildings along interior lot lines, and blocks cities from using frontage, open-space, lot-coverage, design, or similar rules to make the smaller lots unusable. Cities may still enforce ordinary building, fire, health, environmental, and infrastructure protections, and the bill does not independently rezone land for housing. The result is a practical path for building modest detached homes and townhomes on less land, without requiring a public subsidy.
How do starter homes make housing more affordable?
- The lot is the hidden cost. Land can account for as much as a third of a home’s sale price in expensive metros. Requiring a big lot makes all costs go up. The most direct discount is to allow buyers and builders to purchase less land. In Houston, townhomes on small lots averaged $310,000 in 2021, versus $545,000 for traditional single-family homes.
- Ownership starts sooner. Every starter home converts a renter into an owner, building equity – the first rung of the ladder this bill puts back.
- Infrastructure is already there. This reduces the up-front cost of building homes where new electrical and water utility connections would be needed.
Who benefits from allowing more starter homes to be built?
First-time buyers benefit most. The typical first-time buyer is now 40 years old, the oldest on record, not because young people stopped wanting homes but because the entry-level rung of the ladder has been regulated away. When Houston capped lot minimums at 1,400 square feet, small-lot homes created homeownership opportunities for more than 100,000 families.
Downsizing seniors also benefit. A smaller lot means less yard to maintain and a cheaper home near the neighborhood they already know. So do the move-up sellers, employers, and communities that need first-time buyers entering the market.
Why does this need to be state law?
State standards give builders, lenders, and buyers one predictable rulebook, which itself lowers costs. Local Authorities retain control over health and safety codes; the state sets a limit on how much land a city can require a buyer to purchase.
The Legislation
Full model legislation text
Clean version
Annotated
Section 1. Title.
(a) This Act shall be known and may be cited as the “Starter Homes Act”.
Establishes the title of the legislation as the “Starter Homes Act.”
Section 2. Purpose and Intent.
(a) The purpose of this Act is to expand the supply of smaller, lower-cost residential lots and homes by limiting minimum lot size, lot dimension, density, setback, and related zoning requirements on land served by adequate water and sewer infrastructure.
(b) This Act is intended to ensure that lots authorized by its standards can be created, developed, and redeveloped for residential use without being made impracticable by conflicting local requirements.
States the goal: allow smaller, lower-cost residential lots on land with adequate water and sewer service, and prevent other zoning rules from making those lots unusable.
The approach draws from Texas SB 15, which limits municipal lot-size and dimension requirements, and California SB 478, which prevents minimum lot-size and floor-area rules from blocking qualifying small housing projects.
Section 3. Definitions.
For purposes of this Act:
(a) “Generally Applicable” means a requirement that is not tailored to, triggered by, or imposed uniquely on a Qualifying Project, a Serviced Lot, or residential development relying on this Act, and that is:
(1) applicable to all residential development in the same zoning district;
(2) applicable to all ministerial residential permit applications in the jurisdiction; or
(3) applied uniformly to all new residential construction of a similar building type.
Except for a requirement mandated by binding state or federal law, a requirement shall not be considered Generally Applicable if it was adopted or materially amended within one year before the effective date of this Act, or after the effective date of this Act, for the purpose or effect of reducing the number of lots or dwelling units, development capacity, or feasible residential development authorized by this Act.
(b) “Minimum Lot Size” means the smallest lot area required for the creation or residential development of a legal parcel under applicable zoning or subdivision law.
(c) “Local Authority” means a city, county, city and county, town, village, parish, borough, or other local jurisdiction with authority to adopt or enforce land use, zoning, subdivision, design, or development standards or to approve a Qualifying Project under this Act.
(d) “Objective Standard” means a zoning, subdivision, design, parking, infrastructure, or development standard that:
(1) is uniformly verifiable by reference to an external and uniform benchmark or criterion; and
(2) does not depend on personal or subjective judgment by a public official.
(e) “Qualifying Project” means an application for the creation, development, redevelopment, or residential use of one or more Serviced Lots that seeks approval under or relies on one or more of the standards or protections established by this Act.
(f) “Setback” means the minimum required distance between a building or structure and a property line.
(g) “Lot Coverage” means the percentage of a lot’s total area occupied by buildings or structures. The term does not include driveways, walkways, patios, or other impervious surfaces unless expressly stated.
(h) “Project Site” means the parcel or contiguous parcels included in a Qualifying Project before the creation of any new lot lines.
(i) “Serviced Lot” means an existing legal parcel, or a proposed parcel that would become a legal parcel upon approval, that is served by or capable of receiving adequate service from a public or community water system and wastewater system, or equivalent water and wastewater infrastructure.
Defines the lots, projects, standards, and local governments covered by the Act.
The definition of Generally Applicable allows ordinary rules for comparable residential construction to remain in place, but prevents jurisdictions from creating new rules aimed specifically at reducing the housing capacity provided by the Act. Objective Standards must be clear and measurable rather than based on personal judgment.
A Serviced Lot may be an existing parcel or a proposed parcel that will have adequate water and wastewater service once approved.
Section 4. Residential Lot Standards.
(a) A Local Authority may not adopt or enforce an ordinance, rule, standard, or other measure requiring a Minimum Lot Size exceeding 1,400 square feet for a Serviced Lot that is designated or permitted for residential use under applicable zoning, or proposed for residential use as part of a Qualifying Project.
(b) A Local Authority may not require a Serviced Lot that is designated or permitted for residential use under applicable zoning, or proposed for residential use as part of a Qualifying Project, to be wider than 14 feet or deeper than 60 feet.
(c) If a Local Authority regulates residential density on a Serviced Lot that is designated or permitted for residential use under applicable zoning, or proposed for residential use as part of a Qualifying Project, it may not impose a density limitation below 30 dwelling units per acre or otherwise prevent the development of at least one dwelling unit on each Serviced Lot that complies with this Act. Any greater density or residential capacity permitted under state or local law shall continue to apply.
(d) Nothing in this Act independently authorizes residential use where residential use is otherwise prohibited by state or local law. However, when considering an application that proposes or seeks authorization for residential use, a Local Authority may not require lot sizes, lot dimensions, density, or other development standards more restrictive than those established by this Act.
(e) The protections of this Act apply both to:
(1) the creation of a Serviced Lot; and
(2) the development or redevelopment of an existing or proposed Serviced Lot that relies on one or more of the standards or protections established by this Act.
(f) This Act does not apply to land where residential development is prohibited by binding state or federal law because the land is:
(1) a protected wetland;
(2) located within a regulatory floodway;
(3) subject to a recorded conservation easement prohibiting residential development;
(4) located within a formally designated habitat-protection area in which residential development is prohibited; or
(5) a hazardous-waste or contaminated site that has not been cleared for residential use by the responsible state or federal agency.
A Local Authority may not create or expand a local environmental designation for the purpose of avoiding the requirements of this Act.
The heart of the bill: a Local Authority may not require residential lots larger than 1,400 square feet, wider than 14 feet, or deeper than 60 feet. It also may not use density limits to prevent at least one home from being built on each qualifying lot.
The 1,400-square-foot figure draws from Houston’s small-lot framework and the introduced version of Texas SB 15. Texas ultimately increased its statewide limit to 3,000 square feet, 30 feet wide, and 75 feet deep.
The Act applies both when a new lot is created and when an existing lot is developed. It does not independently rezone land for housing, but once residential use is permitted or being considered, the locality may not impose more restrictive lot standards.
Poison pill alert: The 1,400-square-foot standard is the central policy choice. Increasing the number legalizes fewer starter-home lots and can quickly turn the bill into a modest zoning adjustment rather than meaningful reform. Texas SB 15 illustrates this risk: it began at 1,400 square feet but was enacted at 3,000 square feet.
Section 5. Preemption.
(a) Notwithstanding any other law, a Local Authority shall not impose or apply any Objective Standard, including an objective zoning, subdivision, design, setback, lot coverage, frontage, landscaping, or open space standard, that would, individually or cumulatively, physically or financially preclude a Qualifying Project from using the lot size, lot dimensions, density, setbacks, or other development entitlements authorized by this Act.
(b) Any local ordinance, regulation, policy, condition, or practice that conflicts with this Act is preempted and shall not be enforced as applied to a Qualifying Project.
(c) A Local Authority may not require the establishment of a homeowners’ association (HOA) solely to oversee common areas, amenities, or private streets as a condition for lot development approval, except where necessary for stormwater management.
(d) Nothing in this Section prohibits a Local Authority from enforcing Generally Applicable building, fire, health, safety, stormwater, utility-connection, floodplain, or historic-preservation requirements that are necessary to protect public health or safety, provided those requirements are not applied in a manner that conflicts with this Act or physically or financially precludes a Qualifying Project.
Closes the backdoors. Local governments cannot use frontage, landscaping, lot coverage, open space, design, or similar standards to prevent a project from using the smaller lots and development rights authorized by the Act.
This follows the same basic anti-preclusion principle used in California SB 9, which allows objective local standards only when they do not physically prevent the housing authorized by state law.
The section also prevents a Local Authority from forcing a project into a homeowners’ association merely to manage common areas or private streets, except where an association is needed for stormwater management.
Poison pill alert: The physical and financial preclusion language is what prevents a city from technically allowing a 1,400-square-foot lot while making a home impossible through other requirements. Broad exemptions or removal of the cumulative-effects test would reopen that loophole.
Section 6. Development Standards.
(a) For a Qualifying Project, a Local Authority shall not adopt, impose, or enforce building setback requirements that exceed the following limits:
(1) Front setback. a maximum of 10 feet from the property line
(2) Rear setback: a maximum of 4 feet from the property line;
(3) Exterior side setback: a maximum of 3 feet from a boundary of the Project Site;
(4) Interior side setback: zero feet from a lot line located within the Project Site.
(b) A Local Authority shall allow the reduction or elimination of a side setback along a boundary shared with a separately owned parcel outside the Project Site where the owners of both adjoining parcels consent in writing, subject to applicable building and fire code requirements.
(c) A Local Authority shall not require a setback between buildings within the same Qualifying Project except as required by applicable building and fire codes.
(d) Except as modified by this Act, a Qualifying Project remains subject to the Objective Standards that applied when the application was determined to be complete. A standard does not apply if it conflicts with this Act or physically or financially prevents the project from using the development rights established by this Act.
(e) Where this Act and a state or local law regulate the same development standard, the standard that allows greater residential development shall apply.
Caps setbacks so required yards cannot consume the small lots the Act has legalized: 10 feet in front, four feet in the rear, three feet along the outside boundary of the project, and zero feet along interior lot lines.
The setback structure is influenced by Texas SB 15, which caps setbacks on covered small lots. This model goes further by expressly allowing zero interior setbacks, making attached and zero-lot-line homes practical.
Neighboring owners may agree to reduce an exterior side setback, subject to building and fire codes.
Poison pill alert: Requiring side setbacks on both sides of a 14-foot-wide lot can leave too little room for a usable home. The zero-foot interior setback is therefore essential, not a technical detail.
Section 7. Enforcement .
(a) A Local Authority shall not deny, condition, delay, or obstruct approval of a Qualifying Project on the basis of a requirement that conflicts with this Act.
(b) An applicant or property owner aggrieved by a violation of this Act may bring an action in a court of competent jurisdiction to enforce this Act. If the applicant or property owner prevails, the court shall order the Local Authority to comply with this Act and shall award reasonable attorney’s fees and costs.
(c) The state housing or land use agency designated by the Legislature, or the Attorney General if authorized by state law, may provide technical assistance and pursue any enforcement action authorized by state law to ensure compliance with this Act.
(d) No local implementing ordinance shall be required for this Act to apply. A Local Authority’s failure to adopt or amend an implementing ordinance shall not relieve it of its obligation to comply with this Act.
Allows applicants and property owners to enforce the Act when a Local Authority unlawfully denies, delays, conditions, or obstructs a qualifying project.
A successful applicant receives a court order requiring compliance and reasonable attorney’s fees and costs. Texas SB 15 uses a similar private-enforcement structure, including declaratory and injunctive relief and mandatory attorney’s fees for a prevailing claimant.
The state housing or land-use agency and Attorney General may also assist with enforcement. The Act is self-executing, so a locality cannot postpone compliance by refusing to amend its zoning code.
Poison pill alert: Removing attorney’s fees or requiring a local implementing ordinance would make enforcement far more difficult. A statewide right has little value if an individual property owner must fund a long lawsuit or wait for the locality to voluntarily implement it.
Section 8. Severability.
(a) If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end, the provisions of this Act are severable. It is the intent of the legislature that this Act would have been enacted even if such invalid provision or application had not been included.
This is a standard severability clause. If one provision or application of the Act is found invalid, the remaining lot standards, development protections, and enforcement provisions continue in effect wherever they can operate independently.
Section 9. Effective Date.
(a) This Act shall take effect on [date].
Establishes the date on which the Act takes effect. Because the Act is self-executing under §7, Local Authorities must begin applying its standards on that date even if they have not updated their local ordinances.
Lessons from other states
The reform has proven salient across the political spectrum because it rests on things nearly everyone wants: the freedom to build on your own land, lower home prices, and a first rung back on the homeownership ladder. States across the political spectrum — including California, Idaho, Indiana, Montana,and Texas — have moved against oversized lot mandates in the last few years. Houston cut its minimum lot size from 5,000 square feet to 1,400 in 1998, producing a townhome boom that created homeownership opportunities for 80,000 families and became the most-studied lot-size reform in America. Texas scaled Houston's experiment statewide in 2025.
The lesson from these early laws is the same one ADU reform taught: the details decide the results. Texas's statewide version was amended up from Houston's proven 1,400-square-foot standard to 3,000, and its population thresholds left much of the state uncovered — gaps that some fast-growing counties are already exploiting. Our model bill keeps the number that the evidence supports and applies it statewide.
Research:
- Lot-Size Reform Unlocks Affordable Homeownership in Houston, The Pew Charitable Trusts
- Liberalizing Land Use Regulations: The Case of Houston, Mercatus Center (Gray & McBirney)
- Do Minimum-Lot-Size Regulations Limit Housing Supply in Texas?, Mercatus Center (Gray & Furth)
- Housing Reforms Aren't Just Popular, They're Effective, The Pew Charitable Trusts
- Urban Minimum Lot Sizes: Their Background, Effects, and Avenues to Reform, Mercatus Center (Gardner)
- 2024 Home and Community Preferences Survey, AARP
Texas — SB 15 (2025)
In 1998, Houston reduced its minimum lot size from 5,000 square feet to 1,400, and as a result more homes were built. At least 25,000 new homes were constructed on existing infrastructure as a result, with townhomes averaging $310,000 in 2021 versus $545,000 for traditional single-family homes.
In 2025, SB 15 passed statewide with bipartisan majorities: large cities can't require lots above 1,400 square feet in new subdivisions, while existing neighborhoods, HOAs, and deed restrictions stay untouched. AEI projects construction of roughly 9,000 additional starter homes a year.
Indiana – HB 1001 (2026)
Indiana's HB 1001 passed as part of a broader push to reduce red tape and limit costly local mandates on housing — but was scaled back before passage. The introduced bill would have directly prohibited local governments from imposing minimum lot sizes on certain parcels; that provision was stripped out in the Senate. What passed requires local authorities to evaluate their zoning ordinances with the goal of increasing housing supply and report housing data to the state annually beginning in 2027. Author Rep. Doug Miller, R-Elkhart, called the data provisions "scaffolding" for future action.
Idaho — SB 1352 (2026)
With home prices skyrocketing in its major cities, Idaho's average first-time buyer is now over 40. In order to develop large-scale solutions in one package, a bipartisan committee spent 2025 convening builders, planners, realtors, lenders, and local officials. Following the committee’s findings, the legislature then passed six housing bills in 2026,, including SB 1352, the starter homes bill. SB 1352 stops larger cities from blocking starter home subdivisions: in developments of four acres or more, cities must allow lots as small as 1,400 square feet.
Rhode Island — H 5798 (2025)
Rhode Island took the townhome route. As part of House Speaker Joseph Shekarchi's six-bill 2025 housing package, H 5798 requires every municipality to allow attached single-family homes, a.k.a. townhouses, in designated districts. It also sets statewide minimum standards for lot dimensions and development capacity so local rules can't undermine the state requirement. Governor McKee's office framed the bill squarely as low-cost homeownership: the townhome is the starter home for a dense, high-cost state. The law took effect on January 1, 2026.
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