General information only. This article is educational and is not legal, tax, financial, lending or investment advice. Do your own due diligence and confirm everything with your own qualified professionals before relying on it. Read the full disclaimer.
AB 1751, the Missing Middle Townhome Ownership Act, lets for-sale townhome projects of up to 150 homes skip public hearings and CEQA review from January 1, 2027. In exchange, larger projects must include homes that lower-income households can afford to buy. This article explains what the law requires, who the homes are for, how their prices are set, and how local rules can change the answer.
What the Law Requires
A townhome development project with 11 or more homes must meet one of two standards:
- The state standard. At least 10 percent of the total units are dedicated to lower-income households, sold at an affordable housing cost, and kept affordable for at least 45 years.
- A stricter local rule. If the city’s inclusionary housing requirement calls for a higher percentage of affordable homes, the local rule applies instead.
Projects of 10 or fewer homes are not subject to the requirement. “Total units” is defined by reference to the state Density Bonus Law, and the city is responsible for making sure the homes stay affordable for the full 45 years.
| Project size | AB 1751 affordable homes |
|---|---|
| Up to 10 homes | None required by AB 1751 |
| 20 homes | At least 2 |
| 50 homes | At least 5 |
| 150 homes | At least 15 |
For projects whose unit count is not a multiple of ten, such as 11 to 19 homes, confirm with the city how a fractional unit is counted.
Who the Homes Are For
AB 1751 uses the state definition of lower-income households in Health and Safety Code section 50079.5. In general, that means households earning no more than 80 percent of area median income, adjusted for household size. The state publishes these income limits by county each year.
That is a different group from the buyers most AB 1751 homes will be built for. The market-rate homes in a project are aimed at middle-income households, many of whom earn too much for deed-restricted housing but cannot easily save a large down payment.
How the Price Is Set
The affordable homes are not priced by the market. AB 1751 requires an affordable housing cost as defined in Health and Safety Code section 50052.5. For an owner-occupied home, that standard caps the buyer’s total monthly housing cost, including the mortgage payment, property taxes, insurance, any association dues and utilities, at a share of area median income adjusted for household size.
The sale price follows from that payment cap and from current interest rates. When rates rise, the price that fits under the cap falls, so the affordable homes’ prices are typically set close to the time of sale.
The 45-Year Commitment
The law requires the city to ensure the homes stay affordable for at least 45 years. It does not prescribe the mechanism. Cities typically use recorded resale restrictions or equity-sharing agreements so that, when an affordable home is resold within the period, it goes to another qualifying buyer at a restricted price, or the city recaptures part of the gain. Expect each city to publish its own approach as it implements AB 1751.
How Local Rules Change the Answer
AB 1751 sets a floor, not a ceiling. Where a city’s inclusionary ordinance requires a higher percentage of affordable homes, that ordinance controls. Inclusionary rules differ widely across Los Angeles County in the share required, the income levels served and whether in-lieu fees are allowed, so the first step on any AB 1751 site is to check the local rule.
What It Means for a Project
- The 11th home matters. A ten-home project carries no AB 1751 affordability requirement. The requirement begins once a project reaches 11 homes.
- It is part of the underwriting from day one. The number of affordable homes, their restricted prices and the local rules all shape the site plan and the land price.
- Sales follow two tracks. Affordable homes are sold to income-qualified buyers through the city’s process, and market-rate homes are sold on the open market.
- Buyer programs may help. Proposition 37 offers down payment loans on newly built homes for households earning up to 200 percent of area median income. CalHFA has not yet said how its loans will interact with deed-restricted homes.
For how the requirement compares with SB 684, see AB 1751 or SB 684: which path fits your site. For how we approach these projects, see our AB 1751 townhome strategy.
Frequently Asked Questions
Does AB 1751 require affordable housing?
Yes, on projects of 11 or more homes. At least 10% of the total units must be sold to lower-income households at an affordable housing cost, and the city must ensure they stay affordable for at least 45 years. Projects of 10 or fewer homes are exempt.
Who counts as lower income under AB 1751?
Lower-income households as defined in Health and Safety Code section 50079.5, generally households earning no more than 80% of area median income, adjusted for household size.
How is the price of an AB 1751 affordable home set?
By the affordable housing cost standard in Health and Safety Code section 50052.5, which caps the buyer’s total monthly housing cost based on area median income and household size, rather than by the market.
What if the city has its own inclusionary housing rule?
If a local inclusionary requirement calls for a higher percentage of affordable homes than AB 1751’s 10%, the local rule applies instead.
How long do AB 1751 affordable homes stay affordable?
At least 45 years. The law requires the local agency to ensure continued affordability for that period; the specific resale controls are set locally.
Sources and Review
Summarized from the chaptered text of AB 1751 (Chapter 781, Statutes of 2026), which references Government Code §65915 and Health and Safety Code §§50079.5 and 50052.5. Income limits are published annually by the California Department of Housing and Community Development. AB 1751 applies from January 1, 2027, and cities will publish their own procedures; confirm current rules with the local agency before relying on them.
Important Disclaimer
This article is published by Assemble Capital for general informational and educational purposes only. It is not legal, tax, accounting, lending, appraisal, real estate brokerage or investment advice, and it is not an offer to sell or a solicitation of an offer to buy any security. Laws, regulations, government programs, lending practices, market conditions and local procedures change often and vary by jurisdiction and by property. The information here may be incomplete, out of date or not applicable to your situation, and we have no obligation to update it.
No one, including investors, lenders, property owners, buyers, sellers, agents, brokers, wholesalers or developers, should rely on this article in making any decision. Before acting on any topic discussed here, independently verify the information and conduct your own due diligence with qualified legal, tax, financial, lending, appraisal and real estate professionals and the applicable government agencies.
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