Tiny Homes Are Now Allowed in New York City Under ‘City of Yes’ Plan

States have been working diligently to boost housing supply and solve the affordability crisis, say experts. In New York City, tiny homes will be an important part of making housing more affordable.

As part of outgoing Mayor Eric Adams' "City of Yes" housing package—which will create more housing of all kinds by loosening the city's byzantine housing regulations—the Big Apple is on the verge of legalizing accessory dwelling units, or ADUs, in certain neighborhoods across the five boroughs.

The reform is expected to result in about 20,000 ADUs over 15 years in backyards, converted garages, basements, and attics.

"Many of our older adults are really struggling to meet the mortgage payment, they may have lost a loved one, they may be dealing with retirement and on a fixed income," said Adams at a press conference in 2024.

An ADU "is a way to use your No. 1 asset, for people in general, I believe, but specifically for Black and brown people—the home. That’s your asset. That is your foundation. That is what you build your entire financial stability after."

“Too many New Yorkers are forced to choose between having a roof over their heads in an Ancillary Dwelling Unit or living in safe, regulated housing. New Yorkers no longer have to choose,” Adolfo Carrion Jr., deputy mayor of Housing, Economic Development, and Workforce, added in a September press release.

"Now, ADUs and the ADU for You homeowner assistance program will create more housing opportunities, keep New Yorkers safe, and make it more affordable than ever to build ADUs."

"ADUs are a proven tool in cities across the country to support working families with extra space, additional income, and the opportunity to age in place," Dan Garodnick, director of the New York City Department of City Planning, told Business Insider.

The city has an ADU resource page for those interested in learning more about them. Rules include the following:

• You may be able to add an ADU if you own a one- or two-family home
• Your ADU may be built up to 800 square feet of floor area
• You do not have to add another parking spot for your ADU
• Your ADU may be either part of your existing home (basement or attic apartment or an addition), in your backyard, or in a converted garage  

Given the density of New York City housing, the ADUs would mostly be concentrated in neighborhoods dominated by single-family homes, such as in the outer boroughs of Queens and Staten Island.

Last year, the city rolled out a "Plus One ADU" pilot program that awarded 15 homeowners with up to $395,000 in funding per household to build an extra dwelling in their backyard, basement, or attic. The city received a slew of applications for these tiny amounts of slots available: 2,800 submissions, showing how desperately ADUs are wanted.

While $395,000 may seem extreme for an ADU, it's a lot cheaper than building a new single-family house, which would, on average, cost $1.3 million to $4.6 million in total, according to NYC Estimating Services. It's also cheaper than most one-bedroom condos in the city, and certainly cheaper than the $1 million-plus single-family homes that are usually available in the outer boroughs.

The current median home price in New York City is $750,000, according to Realtor.com data, far above the $415,000 national median for November.

How to get started

Don't think it will be as easy as ordering a tiny home from Amazon and plunking it in your backyard.

"That's the gut reaction a lot of people have," Wil Fisher, an ADU specialist and owner of Unit Two Development, tells Realtor.com. "We're not seeing that out-of-the-box homes from Amazon or Alibaba can support the requirements of building code."

To make certain that ADUs are safe, livable, and energy-efficient, they can require review by five or more government agencies and compliance with lengthy regulations, including the Zoning Resolution, Building Code, Fire Code, Plumbing Code, Mechanical Code, Energy Conservation Code, Housing Maintenance Code, and Multiple Dwelling Law.

The rules for ADUs cover everything from dimensional and setback requirements; limitations in flood risk areas; means of egress; water sensors and fire alarms; and even "allowable levels of radon" found in basement apartments.

"It is possible to purchase a modular home that is manufactured offsite and have it shipped to your property for an ADU project," Andrew Rudansky, press secretary with the New York City Department of Buildings, tells Realtor.com.

The regulations for modular construction projects in the city can be found here.

Fisher's company is a "one-stop shop" that can guide those interested in adding an ADU and set up homeowners with architects or engineers, contractors, surveyors, permits, licenses, and all else that is needed.

Fisher says he's received around 120 inquiries since the summer, many from families who have an elderly or disabled relative or college student for whom they'd like to build a housing alternative.

"Instead of moving out of the city, to Long Island, Pennsylvania, Connecticut, or Florida, this is a real option for them," he says.

He notes that many families whose homes have highly appreciated over the years can use home equity lines of credit to pay for the ADU.

"The answer to meeting your housing needs could be right in your backyard," he says.

The opposition

While the new law seems like a no-brainer in terms of helping ease the housing crunch, there are those who don't support ADUs, concerned that they can negatively affect a property's value and a neighborhood's character.

"This kind of housing has long been outlawed by local governments for a variety of reasons, primarily because they were viewed as difficult to regulate, not fairly contributing their share of property taxes, and discouraging new development," Larry R. Samuel, author of "Home Ownership in America" and "Queens: A History of the Most Diverse Place on Earth," tells Realtor.com.

City Council member Vickie Paladino, a Republican who represents District 19 in Queens, is decidedly anti-ADU.

"My constituents, and I feel confident to say a majority of my colleagues’ constituents, are vehemently against Accessory Dwelling Units," she wrote on Facebook.

"The infrastructure in our city can barely handle the buildings that exist now. To add on an undetermined number of new builds on top of it with no upgrades to our infrastructure is at best irresponsible and at worst complete negligence of our government. I will continue to stand in total opposition to the City of Yes for Housing Opportunity and to ADUs in our neighborhoods."

But Beth Finkel, the state director of AARP, urged those opposing ADUs to think of their mothers: "I ask you to think if this was your own mother, if this was your mother, and she was struggling and wanted to make sure she could stay in her own community, and there was a way to do this by building an accessory dwelling unit," she said, according to City Limits.

"Maybe it's your mother who has the home and then is able to put an accessory dwelling unit in there so that you are there, you’re there when she needs you."

Added Mayor Adams: "This is not going to change a neighborhood. You’re not going to see a 14-story building in someone's backyard."