New York City is currently promoting a policy to legalize basements, allowing small landlords the opportunity to convert unused spaces into legally rentable units. This initiative not only increases income for homeowners but also improves the housing supply. But do you know the conditions, costs, and potential risks of legalization?
On August 16, Ryan Chavez, the director of the Cypress Hills Local Development Cooperation’s small housing project in the Baishan area, held a briefing on Eighth Avenue in Brooklyn to introduce this policy to more than forty Chinese small landlords. He explained the stories behind the loosening of the policy, the “three major obstacles” hindering progress, and the latest updates on policy regulations.
Chavez pointed out that there are currently an estimated 50,000 illegal basement apartments in New York City, mainly located in eastern Brooklyn (such as Flatbush, East New York) and Queens (such as Jackson Heights, Jamaica). Despite being illegal, these units have long played a “buffer role”: providing housing for low-income tenants, preventing homelessness, and helping small landlords cope with heavy mortgage payments.
For decades, this “open secret” has been ignored by the city government until 2019 when the basement legalization pilot program was first launched in East New York. The program was originally intended to legalize 40 basement units.
However, implementation has faced significant challenges. Due to zoning regulations, one-third of cases were eliminated because they could not meet the requirements for additional parking spaces and density. Additionally, around 90% of basements did not meet the height requirements according to New York City’s building and fire codes. Furthermore, under New York State Law, if a two-family residence adds an additional unit, it is upgraded to a “three-family” residence, requiring full compliance with multi-unit housing regulations, which can be very costly.
The pilot program only successfully legalized one unit, demonstrating that unless reforms are synchronized at both the city and state levels, basement legalization is essentially unresolved.
Hurricane Ida in 2021 brought record rainfall, resulting in the deaths of 11 basement residents in Brooklyn and Queens, prompting accelerated policy discussions. Subsequently, New York City proposed the “City of Yes for Housing Opportunity” reform package, which took effect in 2024, and eliminated some parking and density requirements.
The City Council then passed the Accessory Dwelling Unit Law, setting clear legalization standards for basement and cellar apartments for the first time, including ceiling height, window area, emergency exits, and ventilation requirements.
For basements: at least half of the height must be above ground to be eligible for legalization. For cellars: entirely below ground or more than half below ground, with either no windows or very small windows, historically entirely illegal. The new law provides a potential loophole.
The third major obstacle is the state’s Multiple Dwelling Law. Previously, the state law stipulated that adding a basement rental unit to a “two-family residence” automatically upgrades it to a “three-family residence,” requiring full compliance with stringent multi-unit housing standards, which was nearly impossible to meet.
Currently, the state council has partially relaxed regulations, allowing 15 community boards in New York City to conduct pilot programs in their respective areas, including Brooklyn (CB4, CB10, CB11, CB17), Manhattan (CB2, CB3, CB9, CB10, CB11, CB12), The Bronx (CB9, CB10, CB11, CB12), and Queens’ CB2 (Long Island City, Sunnyside, Woodside). Flood-prone areas such as Flushing, East Elmhurst, and Corona are not included.
Brooklyn’s CB10 and CB11, which include the predominantly Chinese neighborhoods of Bay Ridge, Dyker Heights, and Bensonhurst, are part of the pilot program, while Sunset Park and Bath Beach are excluded. To view the boundary maps of each community board, visit: [link to map].
Outside of the pilot areas, a single-family home can still attempt to convert to a duplex without triggering the state’s requirement for “three or more units.” However, converting a duplex to a triplex would violate state law. Additionally, these “outside pilot area attempts” do not receive financial support from the city government, and landlords must bear the risks and costs themselves.
In flood-prone areas, legalizing basements is generally difficult because the city is developing new flood maps and safety guidelines.
The “New York City Basement Legalization Pilot” bill came into effect on June 16, but the city has not yet released complete guidelines and application platforms. The known requirements include: dual exits, a minimum ceiling height of seven feet, and compliance with the Americans with Disabilities Act (ADA). Converting from one unit to two typically does not involve ADA requirements, but converting to three units would trigger ADA compliance.
In terms of costs and return on investment, estimates for legalization expenses range from $20,000 to $200,000, depending on the building conditions, and may lead to future increases in property taxes and insurance premiums. Even if the city provides loans, there may be accompanying rent control conditions, which may not be attractive to most small landlords. Some believe that rather than relying on government loans, it may be preferable to use banks, such as through a home equity loan, but banks have strict inspections for basement use.
Chinese small landlords present generally expressed that they would consider renovations if the costs were reasonable. Wang Di, a coordinator from the Chinatown Land Trust, reminded that although complete guidelines have not been issued, landlords can evaluate whether their homes meet the conditions in advance and incorporate renovations into their plans. Remember, “safety first” is the bottom line for legalization.
Councilwoman Jane Zhuang also stated that legalization not only improves housing supply but, more importantly, enhances the safety and security of both landlords and tenants. If basement tenants are not legalized, evictions can be difficult; however, legalization can provide legal protection for landlords.
The City Council is responsible for promoting regulatory changes, while the Buildings Department is responsible for enforcement. Homeowners should actively follow policy updates and contact their city councilors for resources. In addition, the Buildings Department will be holding an online public hearing at 11 a.m. today to discuss rules related to accessory dwelling units (ADUs) for one and two-family homes. Residents can register online and voice their opinions at the following link: [link to online registration].