It’s no secret that New York City is one of the most expensive cities in the world. The average rent for a studio apartment is over $3,000 per month. The minimum wage is $15 an hour in New York. You would need to work 200 hours each month just to afford rent for an average studio. The need for affordable housing in New York City is more important than ever, but anyone who has searched for affordable real estate in NYC knows that it can be tough to find, and even harder to secure. Income-restricted apartments offer the opportunity to tenants with low income – in these apartments, rent is capped at a fixed rate.
What is an income-restricted apartment?
The New York City Housing and Development Corporation (HDC) funds affordable rental properties “reserved for households that meet certain income restrictions, commonly referred to as either low-income or middle-income.” These buildings can be owned by the city or private owners who receive government subsidies in exchange for offering income-restricted housing. Some buildings can be entirely income-restricted, while others may have a mix of income-restricted units and non-income-restricted units. These income-restricted apartments have rent capped at a fixed rate based on the median income of the area.
Income-restricted vs. income-based
Though these two terms are similar, they have slightly different meanings.
- Income-restricted housing refers to rent prices that are based on the median income of the local area. Rent prices vary based on location and apartment size, but are at a fixed rate for all tenants.
- Income-based housing is based on the rent of the individual tenant, with tenants paying no more than 30% of their monthly income toward their rent, regardless of the overall rent price.
The history behind income-restricted housing
Income-restricted housing has a long history that begins with the housing crisis created by the Great Depression. As many Americans faced financial hardship, the government sought to lessen the cost of real estate for low-income Americans. This type of housing became a triumph of the progressive movement, and affordable housing has remained a staple of American real estate through the past century. The federal efforts that began during the Great Depression developed into what is today known as the Housing and Urban Development Agency (HUD).
The Affordable Housing Act
In 1937, the Affordable Housing Act (now developed into the Affordable Housing Corporation) was passed. It created homeownership opportunities for low and moderate-income families by giving grants to governmental, nonprofit, and charitable organizations. These organizations will help cover some of the cost of newly built houses and the renovations of already existing houses. These affordable housing options continued for the next three decades before financial hardship once again struck the city. In the 1970s, New York City lost nearly 800,000 residents. Population loss, rising maintenance costs, and stagnant tenant incomes led to the foreclosure of over 60,000 units. The New York Housing Preservation Department quickly became the “second largest landlord in the city” after buying the foreclosed properties. This crisis led to the further codification of affordable housing infrastructure and the development of income-restricted housing for low-income households.
Section 8 Creation
In 1978, Section 8 Housing was created by The Housing And Community Development Act of 1978. It made families eligible based on annual income and family size. With Section 8 housing, eligible families pay no more than 40% of their monthly income toward their rent. The rest of the monthly rent that is left unpaid is paid by the government. Section 8 Housing participants must complete an annual certification, be subject to inspections, and adhere to all of the terms of their lease. Section 8 Housing is different from Section 42 Housing. This is a newer program that the IRS offers, where rent and utilities are capped at a fixed rate. Since Section 42 isn’t a subsidy, you won’t receive any vouchers.
Benefits for developers
Income-restricted housing benefits not only the tenants living in the units but also the developers and owners of said units. If they provide affordable housing units in their buildings to low-income residents and their families, they can receive tax benefits or payments from the government (as long as they keep the units in good condition!).
Types of apartments
While both government-owned and privately-owned buildings can offer income-restricted housing, they have slightly different functions. When living in a government-owned, income-restricted apartment, the government is your landlord. It handles all repairs and maintenance on the property. In privately-owned income-restricted apartments (often called subsidized complexes), a management company takes care of the building. The company will receive tax benefits or subsidy payments in exchange for them providing income-restricted housing. Some management companies function like a owner, while others just represent the owner.
Who is eligible for income-restricted housing?
NYC HDC divides household incomes into middle, moderate, low, very low, and extremely low incomes, with extremely low-income residents receiving priority. These labels are based on household size as well as annual income.
- Low-income households earn 80% of the median income level
- Very low-income households earn 50% of the median income level
- Extremely low-income households earn 30% of the median income level
To check your eligibility, visit the HDC website here. For any questions, you can find contact information on the HUD website.
Though the specific income range is adjusted yearly, you must be 18 years old to apply for income-restricted housing regardless of income. Students are not eligible for this type of housing, and if the sole residents of Section 42 housing become full-time students while living in the income-restricted property, they must vacate the property. Applicants usually have to comply with a credit check and background check, but the credit check can be avoided by paying 12 months of rent payments.
How to find income-restricted housing
Finding income-restricted housing is slightly different for government-owned buildings and privately-owned properties. Regardless of the type of property you apply for, you must provide government identification for all the adults living in the unit during the application process. This type of housing can be very popular, so there may be a waitlist that you have to join. The more flexible you can be with the size of the apartment, the easier it will be to find income-restricted housing.
The HUD website
The first step in finding income-restricted housing is to visit the HUD website to check your eligibility. There, you can input your income and household size and determine if you will qualify for income-restricted housing.
Public Housing Authority
Once you’ve determined that you qualify, you can reach out to your Public Housing Authority, who will help you determine rent costs and availability in your area.
Government-owned properties
For units owned by the government, you can fill out an application directly through the Public Housing Authority.
Privately-owned properties
For units that are owned by private parties, you will need to fill out an application with the owner. Some private owners will have more restrictive guidelines about who can reside in income-restricted housing, and these rules vary from owner to owner.
As New York City becomes more expensive due to inflation and rising housing costs, affordable housing is more necessary than ever. Though affordable housing has a long and complicated history in NYC, there are now multiple agencies and pathways available to find apartments for low-income households. Though extremely low-income households are given priority for income-restricted housing, it’s still worth looking at options for affordable housing if your household income falls within the low-income range. Income-restricted housing can be very competitive, but the long waitlists and applications are worth it to secure affordable rent.
