By Serj Markarian, Licensed Associate Real Estate Broker
New York’s 2026 state budget introduced a major shift for the city’s housing landscape—the Affordable Housing Retention Act(AHRA), a provision that reopens the door for rental-to-condo conversions under more flexible terms. While the bill is aimed at preserving affordable housing and expanding homeownership, it also holds interesting implications for today’s market dynamics.
At the heart of the AHRA is a return to the pre-2019 rule that allowed landlords to convert rental buildings to condominiums with just 15% tenant buy-in, down from the 51% threshold required in recent years. This shift could mean a surge in conversions—particularly in buildings constructed after 1996 that include affordable units through programs like 421-a or Low-Income Housing Tax Credits.
But unlike previous waves of conversions, the AHRA adds guardrails. For example, income-restricted units must remain permanently affordable, and in some cases may be transferred to nonprofit ownership. This hybrid approach attempts to strike a balance between opportunity and stability.
In a market where inventory has remained tight, even modest increases in for-sale units can shift the dynamic. If these conversions gain traction, buyers may benefit from:
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New listings from converted rentals would expand the pool of available homes—particularly appealing for middle-income buyers.
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A larger inventory could help temper some of the upward pricing pressure seen in competitive neighborhoods.
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A pathway to homeownership, particularly for renters in qualifying buildings, offering them the chance to purchase their unit and gain long-term financial security and stability.
For property owners and developers, this legislation could unlock new value:
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Selling individual units may offer a more lucrative path than maintaining a rental portfolio, particularly for aging buildings.
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Using proceeds from condo sales to fund capital improvements or reduce debt could also prove advantageous.
It’s worth noting though that qualifying under the AHRA involves collaboration with state housing agencies and nonprofit partners—something sellers should consider early in the planning phase.
While it's still too early to predict just how many buildings will take advantage of this provision, the AHRA is clearly designed to inject new energy into both the affordable and market-rate segments of NYC real estate. Whether you're a buyer seeking more options, a seller evaluating your possibilities, or a renter curious about a path to ownership, the ripple effects of this legislation may be worth watching closely in the months ahead.
