New York City is introducing a significant financial incentive for homeowners to become small-scale landlords through the Plus One ADU Program. This initiative allows eligible owner-occupants to receive funding up to $395,000 for installing accessory dwelling units (ADUs) such as backyard cottages, basement apartments, or attic conversions. The program, which is a combination of grants and forgivable loans, aims to address the housing crisis by promoting additional rental income opportunities.
The city conducted a test run of the program in 2023-2024, which resulted in over 1,300 applications submitted in just two weeks. The recently relaunched fund is open to one-to-four-family homeowners who live in their properties, maintain current mortgage and tax obligations, and do not have open building code violations or properties located in FEMA flood zones.
Mayor Mamdani emphasized that transforming underutilized spaces within homes into ADUs could be a pivotal part of the city’s housing solution. To facilitate this process, the city has created a Pre-Approved Plan Library, offering designs that have already met Department of Buildings standards. The library includes various design options ranging from studio apartments to two-bedroom residences.
Similar ADU initiatives are emerging across the United States, with various states liberalizing zoning regulations to promote the construction of these units. Notably, California, Oregon, and Washington have enacted laws that simplify building approvals and relax ownership requirements.
While the focus of most ADU programs targets long-term rental housing, some locations are reassessing regulations for short-term rentals. In Washington, D.C., the introduction of legislation could allow tenants to operate short-term rentals under certain conditions, expanding income-generating opportunities for landlords.
Why this story matters
- It highlights innovative solutions to alleviate housing shortages in urban areas.
Key takeaway
- The Plus One ADU Program underscores a trend toward empowering homeowners to create additional rental units, thereby contributing to local housing supply.
Opposing viewpoint
- Critics argue that increased ADU construction may lead to potential challenges, including the risk of disrupting neighborhood character and raising property values, which could displace existing residents.
