Newly proposed legislation would do that legalize coexistence in new construction to offer more living options to one- and two-person households. The move would create stronger legal and security protections for cohabiting tenants.
If you’re not familiar with co-living, it’s similar to dorm living with nicer furniture and fixtures. In this turnkey approach to renting, a co-living company typically provides the roommates, furniture and even toilet paper. It is often touted as ideal for newcomers, thanks to a built-in community.
Brick Underground paid extensive attention to the growth of this new housing type in the pre-Covid heyday, for example here, here and here. Some co-living experiences weren’t so kumbaya, as companies flouted housing laws and regulations. Some tenants experienced frustrating, even dangerous experiences, which Brick described here, here and here.
But the CEO of Outpost Club, now the largest U.S. co-living company, says the concept has matured since its early days and the pandemic has driven bad apples out of the industry (more on that below).
More options for singles
The new legislation was sponsored by Council Member Erik Bottcher in November and would legalize shared housing units (including co-living) in new construction or redeveloped buildings built after January 1, 2027. Int. 1475, it didn’t work out Committee on Housing and Buildings. (Councilman Bottcher did not respond to media inquiries; Brick Underground will update this article when he does.)
The bill supports NYC’s Department of Housing Preservation and Development Roadmap for shared housing, which charts a path to reintroduce shared housing to create more options for single New Yorkers, and capitalizes on City of Yes for Housing Opportunity, which removed zoning barriers to shared housing.
“NYC has a growing number of single-person households. Many of them are newcomers to the city and many are doubling or tripling” for housing, Michael Sandler, deputy commissioner at the Office for Neighborhood Strategies at HPD, Brick said. These groups of roommates compete with families for a limited number of family homes in New York.
“This effort is focused on creating new opportunities for single adults,” Sandler said.
Only new development
The city’s goal is to create purpose-built, new shared housing, Sandler said. It is not a way to legalize units in existing shared housing, which is a “more challenging undertaking,” he said.
The legislation amends the Home Maintenance Act, the Construction Act and the Fire Act to make new construction and the conversion of non-residential floor space into shared housing legal. from right, in NYC. A range of shared housing layouts will be approved, including traditional single rooms and dormitory-style co-housing.
New shared housing built to these standards would be safer than what exists now, he said. It would include soundproofing, front door level security and increased privacy.
Currently, it is against the law to rent out individual bedrooms unless the building has an occupancy certificate allowing the occupancy of one room. This is important because SROs must implement additional fire safety measures, such as sprinklers, otherwise exterior bedroom locks would pose a major fire hazard.
Management guidelines will also be built into the housing code changes, Sandler added.
Individual rental agreements
Significantly, the legislation requires companies to offer individual rental agreements to cohabiting tenants. This protects cohabiting tenants when a roommate (who may be a stranger) does not pay the rent.
The Housing Act currently requires that all tenants of a unit must have the same lease and be jointly responsible for the apartment. If one roommate leaves or stops paying rent, the remaining roommates usually have to make up the difference, and a landlord has the right to sue all tenants with a lease.
Offering individual leases provides additional protection: where a cohabitation company is the primary leaseholder and tenants have subleases, the tenants do not benefit from the protections of the Charity Eviction Act. And if tenants have their own leases and a landlord violates the terms, a tenant can bring proceedings against them in housing court.
If they zone it, will they come?
But changing the city’s housing code isn’t enough to entice one developer back into co-housing.
Spencer Levine, President of RAL companies, previously developed a co-living property in Philadelphia with Common, once one of the largest co-living companies in the world.
“We were going through a co-living craze in the late teens. Everyone thought this was the solution and so did we,” says Levine. “We participated in the experiment. Co-living had to do something for housing to collaborate did for office space.”
Many of the big names in co-living no longer exist after fueling large amounts of venture capital funding unsustainable growth which was punctured by the Covid pandemic.
Founded in Brooklyn in 2015, Common had a portfolio of more than 5,000 units in 12 cities at its peak but subsequently filed Chapter 7 bankruptcy in 2024 and closed its doors. Thousands of units from Common were taken over by Outpost Club.
Broadridge, the Philadelphia development has 478 units, 158 of which are co-living, the rest are traditional rental properties. The urban location near universities is ideal, Levine said, “but we found pros and cons” when it came to running the co-living portion.
Levine said the co-housing model has aspects of hospitality and a transient demographic associated with short-term rentals, making it different from traditional rental properties.
“What we also found about co-living universally is that the cost per square foot is often higher for the consumer. It’s more expensive because you’re renting a furnished home, often with a certain level of service,” Levine said. “It’s more of a lifestyle experience.”
He checked off a list of other challenges, including utilities. “Owners ultimately include them in the rent, so they don’t have to account for them per room,” but that drives up operating costs.
Ultimately, he said, co-living is “a lot to figure out.” If the legislation passes, the challenges for developers building under the new model will be in implementation and detail.
The bad apples have left
Sergii Starostin, CEO of Outpost Club, said NYC’s co-living plan offers a way out of the housing crisis.
Outpost has acquired many units from other operators to become the largest co-living company in the US. Thanks to a December merger with June Homes, the company has more than 4,000 units across seven major U.S. cities, with 2,500 units in NYC.
In an interview with Brick, Starostin said co-living is viable and growing in places in American cities such as Miami And Colorado have passed new co-living laws that regulate square footage and loosen restrictions on unrelated people living together.
It’s a shift from the teenage years, Starostin said, when many co-living companies made “cuts,” such as in layouts. Some co-living apartments were divided to create additional bedrooms that were windowless or otherwise illegal.
Starostin described an industry that is now more advanced and knows the laws.
“It is our responsibility to comply with the law,” he said. Companies that took risks in illegal practices no longer exist, partly due to the pandemic.
“We’ve invested a lot in technology and people whose job it is to get tenants on board. As in any new sector, when things go wrong you try to learn from it,” he said.
Due to the consolidation, the sector is better prepared for the current economy. “The larger companies can better survive today’s higher inflation and mortgage rates. They have more power to negotiate,” he added.
There is one bottleneck for him: Int. 1475 only applies to shared housing in new construction, but Starostin said he is pushing for this legislation to be expanded. He has participated in shared housing discussions with HPD and Councilman Bottcher, he said.
“I understand where they’re coming from. They don’t want old inventory,” he said. It is too difficult to bring older buildings into compliance with the changes in the Housing Code. If passed, the law would apply to new units established after January 1, 2027.
That’s a long time off. “We are pushing for the legislation to include recent purpose-built co-living,” he said, adding that these properties could be brought up to date with the amended code.
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