The NYC real estate market is undergoing significant legal and regulatory changes that impact investment strategies, rental operations, and property valuations. Here's what you need to know:

1. Zoning Changes to Increase Housing Density

The “City of Yes: Housing Opportunity” (COYHO) initiative introduces comprehensive zoning amendments aimed at increasing the housing supply. 1 Key changes include:

Eased Parking Requirements: Reducing or eliminating parking minimums to facilitate more housing development.

Accessory Dwelling Units (ADUs): Legalizing small accessory units for one- and two-family homes, except in specific areas with environmental concerns.

Office-to-Residential Conversions: Expanding opportunities for converting underutilized office spaces into residential units.

What it means for investors & landlords: These changes present new development opportunities, particularly in areas previously restricted by zoning laws. However, an expanded housing supply could increase competition in the rental market.

2. The Fair Chance for Housing Act: Tenant Screening Restrictions

Effective January 1, 2025, the Fair Chance for Housing Act prohibits housing providers from discriminating against applicants based on arrest records, convictions, or other criminal history. 2

Scope: Applies to most NYC housing providers, including co-ops and condos.

Permissible Inquiries: Only limited types of convictions can be considered during the application process.

Key concern: Landlords must adjust their application processes to comply with the law, raising questions about how to ensure tenant safety and protect property investments without access to full background checks.

3. Broker Fee Reform: The FARE Act Shifts Costs to Landlords

The Fairness in Apartment Rentals Act (FARE) mandates that landlords must pay the broker’s fee if they engaged the broker, rather than shifting the cost to tenants. 3

Increased Costs: This law increases upfront leasing costs for property owners.

Legal Challenges: The Real Estate Board of New York (REBNY) has filed a federal lawsuit to block the FARE Act, claiming it violates state law and brokers' free speech rights. 4

Discussion point: Will landlords raise rents in response, or will this reform lead to a shift in how brokers operate in NYC?

4. Proposed Property Tax Overhaul: The “Five Borough Fair Property Tax Act”

A significant property tax reform bill, A10600, also known as the "Five Borough Fair Property Tax Act," is under consideration and could have substantial financial implications for NYC property owners. Key provisions include:

Eliminating the Current Tax Class Share System: Altering how different property types are assessed.

Introducing Class One-A: A new classification for certain residential properties, affecting tax rates.

Implementing a Homestead Exemption: Based on income, potentially shifting the tax burden to investment properties.

Repealing Section 581: Which could lead to higher tax liabilities for co-ops, condos, and rental properties.

Investor takeaway: If passed, this bill could redistribute the tax burden, potentially making rental properties less profitable.

5. Increased Enforcement Against Landlord Violations

NYC is intensifying enforcement against landlords who fail to maintain rental properties.

Recent Legal Actions: The city is aggressively prosecuting various violations. 6

Question for landlords: Are these enforcement actions necessary to improve housing conditions, or are they adding unnecessary pressure on property owners?

What This Means for Real Estate Investors & Landlords

Expect higher operating costs due to tax changes, broker fee reforms, and compliance enforcement.

Zoning changes could present new development opportunities but also increase competition.

Screening tenants will become more complex—landlords should revise leasing policies accordingly.

Monitor legal challenges to new regulations, particularly around broker fees and tax reforms, as these could shift again.

🚨 Discussion Starter: With these regulatory changes in play, do you think NYC real estate is becoming less investor-friendly, or do these reforms present new strategic opportunities? Drop your thoughts below! ⬇️

1 - City of Yes for Housing Opportunity - NYC.gov

2 - Fair Chance Act in Housing - NYC.gov

3 - New York City Council FARE Act Becomes Law, Reforming Broker Fees

4 - REBNY sues to block broker-fee bill

5 - The New York State - Assembly Bill A10600

6 - NYC Public Advocate Jumaane D. Williams Releases 2025 Worst Landlords Watchlist

Reviewed and Written by Paulina Baginska Esq. an attorney located in NYC.

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