New York City Real Estate Regulations and Trends for 2025-2026

Key Changes Affecting Real Estate Professionals

In this section, we will explore the significant changes in regulations that will impact real estate professionals in New York City. These changes are crucial for understanding the evolving landscape of the market.

FARE ACT: FEE SHIFT

Effective June 11, 2025

Landlords and agents who hire brokers will pay the fee — not tenants. This shift is expected to have a significant impact on the rental market.

• Over 1,100 complaints have been filed, with only 3 settlements reached.

• Renters will save on upfront costs.

• Landlords may pass these costs through rent increases.

  
  

NYC.GOV

BUYER AGREEMENTS REQUIRED

Effective January 13, 2025

A written buyer agreement is now mandatory before touring any MLS-listed home.

• Compensation is negotiable and will no longer be posted on MLS.

• Agents must clearly disclose payment terms and services.

  
  

SOURCE: REBNY & NAR Settlement

GOOD CAUSE EVICTION

In Effect April 20, 2024

Rent hikes above 5% plus CPI or 10% (whichever is lower) are presumptively unreasonable.

• Landlords will need 'good cause' to evict tenants.

• This regulation is mandatory in NYC, while other localities may opt-in.

  
  

SOURCE: NYS HCR & NYC HPD

RENT-STABILIZED INCREASES

Oct 2025–Sept 2026

The following increases will apply to leases starting from October 1, 2025, through September 30, 2026:

• 1-year renewals: +3.0%

• 2-year renewals: +4.5%

  
  

SOURCE: NYC Rent Guidelines Board

LOCAL LAW 97: PENALTIES

First Reports Due May 1, 2025

Over 5,300 buildings filed GHG reports for 2024. Fines will be $268 per metric ton over the cap.

• Good-faith pathways can help reduce penalties.

• A 40% emissions reduction by 2030 is required.

  
  

SOURCE: NYC DOB & Urban Green Council

ALL-ELECTRIC NEW BUILDS

Local Law 154

All buildings of 7 stories or fewer must be all-electric as of January 1, 2024, with limited hot water exceptions until 2027.

• All new buildings must be all-electric by December 31, 2027.

• No new gas piping will be allowed.

  
  

SOURCE: NYC DOB & NYC Accelerator

CITY OF YES HOUSING

Passed December 5, 2024

This law reduces or eliminates parking mandates, enables accessory dwelling units (ADUs), and makes conversions easier.

• The Universal Affordability Preference unlocks more Floor Area Ratio (FAR) with affordable units.

  
  

SOURCE: NYC Council & DCP

485-x (ANNY) TAX EXEMPTION

New-Build Incentive

This exemption applies to new construction of 6 or more units that commenced after June 15, 2022, and by June 15, 2034.

• HPD rules will be effective from January 15, 2025.

• Long-term exemptions will be tied to affordability and wages.

  
  

SOURCE: NYC HPDP

467-m (AHCC) CONVERSIONS

Office-to-Residential Tax Breaks

Tax exemptions will be available for commercial-to-residential conversions that meet affordability requirements.

• The work must be completed between December 31, 2022, and June 30, 2031.

• Benefits will last for 25-35 years post-conversion.

  
  

SOURCE: NYC HPDP

421-a EXTENDED DEADLINE

Vested Projects Only

The completion deadline has been extended to June 15, 2031 (from 2026) if a Letter of Intent (LOI) is filed by September 12, 2024.

• This extension aims to help restart stalled sites, with thousands of units projected.

  
  

SOURCE: NYC HPDP

SHORT-TERM RENTAL CRACKDOWN

Local Law 18 Enforcement

Short-term rentals (STRs) must be registered, and platforms are required to verify registrations before bookings.

• Over 20,000 illegal listings have been removed.

• There has been a gradual rise in legal registrations.

• It is advisable to add STR clauses to leases.

  
  

SOURCE: NYC HPDP

LEAD PAINT XRF TESTING

Deadline: August 9, 2025

Pre-1960 (and some 1960-78) multiple dwellings must complete unit-by-unit XRF testing by August 9, 2025.

• Property owners must keep records and correct any hazards.

• Violations will result in penalties.

  
  

SOURCE: NYC HPD LL31

MANDATORY COMPOSTING

Fines Began April 1, 2025

Citywide organics separation is required for all residential buildings.

• The Department of Sanitation of New York (DSNY) has been issuing fines since April 1, 2025.

• Buildings must provide bins and train residents on proper composting practices.

  
  

SOURCE: NYC DSNY

CONGESTION PRICING LIVE

Since January 5, 2025

Tolling in the Manhattan Central Business District (below 60th St) is now active.

• Most cars will be charged once daily when entering.

• Rates will vary by time of day.

• Lawsuits are ongoing, but tolling remains in effect.

  
  

SOURCE: MTA & RPA

FAIR CHANCE FOR HOUSING

Effective January 1, 2025

Landlords cannot advertise or screen based on most criminal history.

• Background checks can only be conducted after conditional approval.

• This is limited to 'reviewable' convictions, with strict notice and appeal processes.

  
  

SOURCE: NYC Commission on Human Rights

OFFICE MARKET BOOM

23.2M Sq Ft Leased

Manhattan office leasing hit 23.2 million square feet in the first 9 months of 2024, the highest in 19 years.

• The financial sector is driving demand, leading to rising rents.

• Premium spaces are outperforming commodity spaces.

  
  

SOURCE: The Real Deal

99-UNIT BUILDING CAP TREND

Avoiding 485-x Wage Rules

Developers are limiting projects to 99 units to avoid wage rules that apply to projects of 100 units or more.

• 28 permits were filed in the past year, more than in the previous 16 years combined.

  
  

SOURCE: Industry Analysis

FED RATE CUTS EXPECTED

Mid-6% Range by Year-End

Two more Federal Reserve cuts are expected by the end of the year.

• Rates are projected to be in the mid-6% range.

• This could ease financing and boost sales under $4 million.

• However, stagflation risks should be monitored.

  
  

SOURCE: Industry Analysis

MULTIFAMILY TRANSACTIONS UP

Cap Rates 5.5-6%

Trade volume rose in 2024, with distressed sales possible as loans mature.

• Rents increased by 1.7%, and vacancies are low at 2.8%.

• There is strong rental demand.

  
  

SOURCE: Market Reports

SOCIAL MEDIA DRIVES DEALS

TikTok & Instagram Impact

Clients are increasingly sending reels and screenshots to agents.

• Agents with over 10,000 followers tend to close deals faster.

• While social media provides inspiration, it also comes with privacy risks and the potential for misleading posts.

  
  

SOURCE: Inman News

LUXURY MARKET SURGE

29 Contracts at $4M+ in One Week

In Q3, 29 luxury contracts (priced at $4 million or more) were signed in just one week, with the Upper East Side leading the charge.

• The Compass merger has created a network of over 340,000 agents.

• There is renewed energy among buyers.

  
  

SOURCE: Olshan Report

CO-OP COMEBACK

26% Cheaper Than Condos

There is a rising interest in co-ops as a more affordable alternative to condos.

• New co-op listings are down, creating a seller's market for this segment.

  
  

SOURCE: StreetEasy

BROOKLYN & QUEENS RISING

May Surpass Manhattan Rentals

The combined rental market in Brooklyn and Queens may soon overtake that of Manhattan.

• New developments are driving growth beyond the traditional Manhattan focus.

  
  

SOURCE: The Real Deal

FALL 2025: INVENTORY UP

Post-Labor Day Surge

Listings are expected to surge after Labor Day, although demand remains uncertain for properties priced under $4 million.

• The luxury market remains strong, particularly with cash buyers.

• Potential price cuts may occur, so it is advisable to act before the holiday season.

  
  

SOURCE: Market Analysis

In conclusion, the real estate landscape in New York City is evolving rapidly. Real estate professionals must stay informed about these changes to navigate the market effectively. Understanding these regulations and trends will be essential for success in the coming years.