Since the City of Yes (COY) passed on December 5, 2024, accessory dwelling units (also called "ancillary dwelling unit" or ADU) are now permitted under some conditions.

But how meaningful is this? Here, we try to parse these restrictions to find out how many ADUs are actually permitted in the city. 

We estimate that the law permits adding 150,000 to 290,000 ADUs of full size (800 sq ft) to existing buildings. However, it's currently impossible to gauge how many buildings can be profitably converted to host ADUs 

Warning (Jan 14, 2025): Results are tentative for now, as the code and restrictions are new and complex. Numbers will change as we learn more about legal and practical restrictions. We recommend reviewing our assumptions below. 

Context

But... what is an ADU? The image below gives you an idea of the options. The general idea is that, if you own a single or two-family building, you might now be allowed to construct such units or convert your garage into one. You can then rent this out and earn income. Before this change was passed, such ADUs were generally not legal, the most common reason is that the zoning code does not allow multiple structures.

There's also some high-level rules around them:

1. The residence for this must be either single-family or two-family
2. Must be 800sq ft or less
3. At most one story
4. At most one ADU per residence

The key thing to note is that this updated zoning code, by default, permits building these. There are plenty of limitations, but it's always good to start with allowing things.

Estimating the potential

Here, we provide a summary, with technical details in the appendix below. We try to be conservative as much as possible. Think of this as a funnel. There's a total of 856K zoning lots in NYC.

1. Total=856K: Zoning lots in NYC (from PLUTO, 2023)
2. Units=598K: Current building has 1-2 residential units
3. FAR=219K: Only including lots that has the FAR potential to add 800sq ft.

Now, we can layer on top the explicit restrictions from the zoning code (list in the appendix). Flooding data isn't yet available in a standardized form, but we  can crudely estimate it by looking at a few lots in each borough and checking if it falls within any of the flood zones. This is most likely in Brooklyn (think Rockaway Beach) and Staten Island, and removes the eligibility for basement ADUs and sometimes for backyard ADUs.

Estimated ADU potential:

1. Attic: 219K
2. Attached: 198K
3. Basement: 176K
4. Backyard: 119K

To us, these numbers are much higher than expected. What's going on here? A key driver is that  75% of all residential lots in NYC have less than three units in them. And all of those would thus pass the key condition to qualify. It turns out, the FAR restriction has a bigger impact: You can only build an ADU if your zoning allows you the square footage, and many buildings are at or above their limit.

We want to emphasize that we don't expect that this is the number that will get built, because you also need a structure (either existing or to be built) and it needs to be a good investment.

Let's dig into this a bit more. Our guess is that the real-world constraints below might matter more than the legal requirements. ADUs will only get built if they make economic sense.

1. Attic: Even though most 1-2 family buildings have an attic, this attic might never have been intended for being livable space, so making it habitable might be impossible or just very expensive.
2. Attached: This can get tricky because you might not have an attached structure already, and because that doesn't play so well with the limited garden space and the requirement to have a 30-feet back yard that's common throughout the city.
3. Backyard: If you have a garage already, you might not be allowed to convert it because of parking minimums. If you don't have a backyard structure, the back yard requirements might prevent building one.
4. Basement: You need to have a full-height basement, and presumably also a way to let in sunlight and a bunch of structural requirements.

Thus, we can't yet estimate how many ADUs are good investments, and how many we expect to get built. But we're just getting started. We'll look at maps, talk to home-owners and learn from builders. And then we'll post updates here!

How to find the lots where ADUs are allowed?

You can find it at zonedinsights.com, see an example below:

We also make the bulk data available for an additional charge. Just contact us to obtain it. As always, this is freely available for research or journalistic use.

Appendix

Calculation details

Restrictions

The zoning code gives us the key restrictions on page 54 and 55. To make it easier to talk about it, I'm structuring them a bit an naming them:

1. FLOODNOW = in the #high-risk flood zone#, as defined in Section 64-11, no ADU shall be permitted below the #flood-resistant construction elevation#;
2. FLOODFUTURE = in the areas included in maps promulgated by the Department of Environmental Protection (DEP) […]: No backyard or cellar
3. LOW = in R1-2A, R2A and R3A Districts, or portions thereof, located beyond the #Greater Transit Zone#: No backyard
4. HIST = in Historic Districts designated by the Landmarks Preservation Commission: No backyard
5. ACCESS = #backyard ancillary dwelling units# shall be accessible directly from a #side yard# or open area along a #side lot line# with a minimum width of five feet

FAR

We use the proprietary zoning code engine we have developed to calculate the FAR for the residential lots in the city, then use that to calculate the maximum building area and the potential for ADU area. You can access this data at zonedinsights.com.

Robustness Checks

We try to be conservative in our estimates. Here are some other assumptions we've used:

1. Assuming that an ADU requires only 500 sq ft, rather than the max of 800. This increases to 290K if we lower the potential to 500sq ft.

Sources

1. Zoning code: NYC zoning code with city of yes amendments, Dec 5, 2024. Excerpted below
2. City of Yes housing guide
3. Historic districts
4. Zoning districts: From Pluto
5. Transit zone: See here for the "inner transit zone", we combine with the distance to subway stops to obtain the "greater transit zone"

Regulation text excerpt

An “ancillary dwelling unit” is an additional #dwelling unit#, permitted on the same #zoning lot# as a #single-# or #two-family residence# that does not exceed eight hundred square feet of #floor area#. Only one #ancillary dwelling unit# shall be permitted per every #single-# or #two-family residence# on a #zoning lot#. #Ancillary dwelling units# shall be subject to the following limitations: (a) in the #high-risk flood zone#, as defined in Section 64-11, no #ancillary dwelling unit# shall be permitted below the #flood-resistant construction elevation#; (b) in the areas included in maps promulgated by the Department of Environmental Protection (DEP) designating the “10-year rainfall flood risk area” based on 2050 sea level rise projections by the New York City Panel on Climate Change (NPCC), and the “coastal flood risk area” where there is a 1 percent chance of flooding in any year based on 2080 sea level rise projections by the NPCC, including as such maps and baseline reference dates are updated by subsequent rulemaking by DEP: (1) no #ancillary dwelling units# shall be permitted in a #basement# or #cellar#; and (2) no #backyard ancillary dwelling units# shall be permitted; (c) (d) (e) (f) in R1-2A, R2A and R3A Districts, or portions thereof, located beyond the #Greater Transit Zone#, no #backyard ancillary dwelling units# shall be permitted; in Historic Districts designated by the Landmarks Preservation Commission, no #backyard ancillary dwelling units# shall be permitted; #backyard ancillary dwelling units# shall be accessible directly from a #side yard# or open area along a #side lot line# with a minimum width of five feet; and at the time of initial occupancy for an #ancillary dwelling unit#, the #zoning lot# on which the #ancillary dwelling unit# is located must be the primary residence of an owner of such #zoning lot#.

In areas where #backyard ancillary dwelling units# are prohibited, nothing herein shall permit the legalization of an #ancillary dwelling unit# in a #building or other structure# that prior to December 5, 2024, was #non-complying# as to its location within a required #yard# or #open space#.

Ancillary dwelling unit, backyard (12/5/24) A “backyard ancillary dwelling unit” is an #ancillary dwelling unit# that is located in a #detached# or #attached# #building# #developed# after December 5, 2024, where the only #dwelling unit# in such #building# is an #ancillary dwelling unit#.