Last year, New Hampshire lawmakers passed a mandate: Starting July 1, 2026, cities and towns were to begin allowing multi-family residential housing developments in commercial zones. And Kingston, N.H., like many towns, moved to comply.
But the zoning code change passed by Kingston voters in March added a host of caveats. Commercial zone businesses could apply to the planning board to add multi-family housing, the new code stated. But they would have to do so through a special “conditional use permit.” And they would need to adhere to a number of density requirements: no more than 24 units per structure and no more than eight units per acre. Additionally, developers would need a 50-foot landscape buffer between the housing and any other commercial building, including at least 50% evergreen trees.
Other municipalities adopted similar approaches to the new law. Derry, N.H., imposed a density limit of 20 units per acre; Nashua explored a complicated localized density plan allowing more housing units in specific “corridors” and fewer everywhere else.
Then, lawmakers brought down a second hammer. On July 15, Gov. Kelly Ayotte signed House Bill 1588, a bill that changed the new requirements two weeks after they had taken effect.
Now, residential housing in commercial zones is allowed “by right.” And most of the density restrictions, landscaping requirements, and conditional use permits cities and towns had adopted are no longer allowed.
The 2026 law took effect retroactively on July 1 at 12:01, one minute after the 2025 law took effect. And it was paired with a second law signed by Ayotte, House Bill 1010, that gave cities and towns the explicit power to require studies proving that new housing developments in commercial zones will not negatively impact traffic or water and sewer access.
Together, the flurry of new laws seeks to accelerate an approach to housing growth that polls suggest is broadly popular: using existing downtown infrastructure to build new apartments.
“I really see these two bills as a win for the clearly stated goals of trying to get more housing options where there’s existing jobs, existing infrastructure, and existing buildings,” said Nick Taylor, director of Housing Action New Hampshire.
But the New Hampshire Municipal Association, which represents cities and towns, argues the new law is restrictive and difficult to comply with, and that the recent update throws local governments into flux.
‘It closes that local option’
Last year proved a prolific year for anti-regulatory housing bills. But on that long list, House Bill 631 was one of the most muscular.
The law prevented cities and towns from prohibiting housing developments in commercial zones outright, but allowed some exceptions. Municipalities could require adequate infrastructure; mandate that the ground floor of the buildings be reserved for retail; disallow housing in industrial areas or places with noise, odor, or safety concerns; and impose restrictions on newly constructed buildings.
To housing advocates, the idea was to encourage a type of housing that theoretically has low impact on a town’s land resources but high upside, allowing new residents to live in the downtown area and giving new life to abandoned commercial buildings.
A 2025 poll conducted by New Hampshire Housing Action and YouGov found that 88% of registered New Hampshire voters support allowing housing in commercial zones — the most popular of the housing solutions proposed to respondents.
New Hampshire Housing Action has also pointed to a 2026 Pew-funded study by the World Resources Institute and ECOnorthwest that found that “mixed-use” developments cost about $21,000 less per home in infrastructure upgrades than standalone developments, and generate 13% more property tax revenue to cities and towns.
But as municipalities began preparing for the law this spring, some of the proposed zoning changes began to worry housing supporters. Adding density caps, vegetation requirements, and even mandatory recreational space violated the spirit of the 2025 law, some lawmakers argued. HB 1588 was designed to close what its supporters viewed as loopholes and allow fewer avenues for a town to reject the housing.
The New Hampshire Municipal Association sees those zoning changes differently. The restrictions on factors such as density are examples of municipalities adapting to the new requirement in ways compatible with their communities, argues Brodie Deshaies, a legislative advocate at the association.
“By adding in this term ‘by right,’ it closes that local option, those additional guardrails that municipalities establish to preserve communities,” he said in an interview.
The House and Senate were not convinced, and passed a bill tightening the list of reasons that could be used to deny housing.
What’s in the new requirements
Cities and towns must continue to allow multi-family residential housing in commercial zones. But under HB 1588, they are allowed to limit only the physical dimensions of those developments: frontage, setbacks, and building height. Density caps are no longer allowed.
Additionally, any physical limitations on the new housing may not be any stricter than the limits in place for commercial buildings in that same zone. If stores are allowed to be two stories tall, the apartments may be too.
HB 1588 also restricts parking requirements to no more than one parking space per unit, following similar laws in recent years aimed at large developments. Cities and towns are not allowed to require developers to build enclosed garages.
And in its potentially highest-impact provision, the bill allows developers to seek reasonable attorney’s fees if they are wrongly blocked from developing housing in a commercial zone and win at the Housing Appeals Board or in court.
Taylor says the new restrictions are intended to clarify the intent of HB 631 and prevent workarounds.
“The developers win because it’s easier for them to know what’s allowed, what’s not allowed, what they can require, what they can’t require, and build the type of housing that is within the rules that makes sense,” he said. “Municipalities win when there’s clarity, because they know exactly what they can ask for. They know what they can regulate, what they can’t regulate, and it keeps everyone out of court, which no one wants.”
But Deshaies argues the new framework is confusing, and without the previous flexibility, it will be difficult to comply with.
For instance, if a city has multiple physical regulations for different types of commercial housing, the new law does not explicitly make clear which set might apply to new residential housing, Deshaies argued.
And he said the new law prevents cities and towns from imposing in commercial zones some of the same restrictions they may already require in residential zones.
To Taylor, the meaning of the law is clear. And, he argued: “It’s incumbent upon the municipalities and the policymakers to answer to the public support and figure out a way to make this work, as opposed to fighting every little sentence or every little interpretation.”
He noted that the new law establishes that cities and towns are allowed to use site plan review to identify any issues with a proposed development and work with a developer to require changes. That provides flexibility to address legitimate problems, he said.
Cities and towns have bristled at the possibility of paying attorney’s fees, reasoning that it could sway them to accept faulty development applications for fear of being financially liable.
“Municipalities are going to have to make a judgment call about the cost‑benefit analysis for trying to ensure ordinances that they believe are legal are abided by,” Deshaies said.
Housing advocates say they are more of a backstop to needless obstruction.
“If you’re in a situation where you’re not negotiating in good faith, then there will be and should be some consequences to that,” he said.
The infrastructure question
If HB 1588 tightens the mandate for municipalities to allow mixed-use development, HB 1010 sharpens one tool they have to stop untenable proposals: infrastructure studies.
The law, which lawmakers treated as part of a package deal with HB 1588, allows cities and towns to condition their approval of new housing in commercial zones on the viability of existing roads, water, and sewage.
It empowers them to request developers pay for studies into such infrastructure impacts.
Such studies have been the death knell of proposed housing developments for decades, and disagreements over the adequacy of water or the impact on traffic have been at the heart of many of the cases before the state Housing Appeals Board.
But HB 1010 provides a silver lining to developers: If the studies indicate a lack of sufficient infrastructure, they have a “right to remedy” the situation by paying for or providing the infrastructure themselves.
In an industry of watertight margins and precarious funding cycles, that might seem a high bar. For large developments, though, it’s a common occurrence, Taylor said. “It is fairly frequent that you see developers make road upgrades, make infrastructure upgrades, make safety upgrades if there are things that need to come into compliance,” he said.
Matters of interpretation
How New Hampshire cities and towns will react to the tighter requirements is unclear. But it doesn’t matter how quickly they respond. As of July 1, the new law supersedes any zoning code to the contrary, and planning boards must follow the state statute first when making their decisions.
But Deshaies predicts the uncertainty and scale of the new mandates — and the number of communities whose codes they will override — means the new law will likely be tested in the coming years, whether via the Housing Appeals Board, superior court, or the state Supreme Court.
“It will probably come down to the courts needing to interpret what is very confusing statutory language,” he said.
Taylor had a broader view.
“I think there are a lot of organizations that should remember that the intent is to help people have an attainable home so that they can live here, that they can work here, and that they can play here,” Taylor said.