Housing Policy Explainer

Lot Setbacks

Lot setbacks are land use regulations that dictate how far a building must be from the edge of a property. This land use regulation serves as a buffer zone between the structure and property lines, roads, or neighboring lots. Depending on the local zoning rules, setbacks can apply to the front, rear, and sides of a lot and can vary significantly depending on the use type and density.

Example: Local ordinances may mandate that a home be at least 25 feet away from the front street or 10 feet away from neighboring properties on the sides, while a commercial structure may be able to abut the sidewalk and neighboring buildings.

On Lot Setbacks

Like many policies, lot setbacks are being looked at with additional scrutiny with the ongoing housing crisis they can decrease both housing inventory and affordability when set too large.

• Reduce land use efficiency: Setbacks limit the buildable area of a lot, meaning that much of the land goes underutilized. This is particularly problematic in dense urban areas where every square foot matters.
• Exacerbate housing shortages: Strict setback rules can prevent developers from building the maximum number of housing units that the land can support, especially in places facing severe housing shortages.
• Drive up costs: By reducing the amount of land available for development, setbacks can lead to higher housing prices. With fewer homes per lot, the cost of land is distributed among fewer units, making each one more expensive.

Lot setbacks are increasingly becoming a part of the zoning reform discussion:

“Setbacks are not a substitute for building real parks or making our cities environmental sustainable. Setbacks do not make a place safer (modern building codes require fire proof party walls) nor do they do anything for public health (modern sanitation like indoor plumbing and flush toilets have eliminated most historically urban diseases.) Instead, setbacks are bad economically as they force us to consume more land than needed and encourage land consolidation, they break the sense of enclosure on urban streets, and space our built environment out —making us travel farther to get places.”

Price, Andrew. “The Problem with Setbacks.” Strong Towns. Oct. 2017.

Impact on Housing Inventory

One of the most pressing concerns about lot setbacks is their effect on housing density. When setback regulations are too strict, they limit the number of housing units that can be built on a single lot. This can reduce density in areas where increasing the housing supply is essential.

In cities where housing demand far outpaces supply, reducing lot setbacks can facilitate more construction via increased density and lower housing costs. In contrast, employing large setbacks can push developers toward large-lot homes, which aren’t always the most efficient or affordable options for buyers.

Taken together, front and rear lot setbacks can reduce density by requiring a larger lot from front to back. Large side lot setbacks will increase the space between units and decrease density. Depending on lot setback requirements, impervious surface limitations, elevation design requirements, and parking mandates, small lots may not be possible, even when permitted as a by-right condition.

Impact on Housing Affordability

On the surface, lot setbacks may appear to only dictate the buffer zones between a structure and the lot’s edge, but they can also have an impact on housing costs.

Developers think of lot sizes in terms of liner lot footage, and lot costs are not different. For non-corner lots, adding a single foot to each side setback may not sound like much, but this decreased density can quickly add up as the remaining buyers must absorb any added infrastructure and land costs created by the reduction in density.

Example: If a lot cost is $2,500 per each linear foot, moving from 5-foot side lot setbacks (for which the building code provides safety protections) to 10-foot adds $12,500 to each side lot setback, a total of $25,000.

SUMMARY

While lot setbacks were originally designed to enhance safety and creature uniformity in developments, this land use regulation can have an adverse impact on housing affordability. By limiting how much of a lot can be developed, setbacks can stifle housing production and drive up costs.

Rethinking setback regulations could be an important step toward more sustainable and affordable housing solutions. Balancing the original intent of setbacks with the pressing need for more housing will require thoughtful planning and likely, a more flexible approach.