Proposed Reforms Could Mean Big Housing Boom for Small Lots in NYC

This blog was prepared with the assistance of Gwendolyn Goodyear, a law clerk at Cole Schotz.

The New York City Council has announced proposed reforms to the City’s Construction Codes to encourage the development of small, underutilized lots across the five boroughs. As noted by Council Speaker Julie Menin, these lots “have the potential to deliver tens of thousands of new homes, but outdated rules and unnecessary red tape are standing in the way.”

Through targeted reforms to the City’s Construction Codes, the Council projects that as many as 35,000 new housing units could be created on nearly 3,000 small lots, all without the need for burdensome zoning changes. In support of these efforts, the Council has formed a new Advisory Group on Housing Affordability to guide broader policy efforts to counter the City’s housing crisis.

Implications for Owners, Developers and Investors

The proposed reforms focus on small lots, generally between 15 and 27 feet wide, currently constrained by safety standards that render residential development difficult and/or cost prohibitive.

Key elements of the reform framework include:

• New as-of-right development paths for mid-rise developments (up to 8 stories);
• Lower construction costs relative to high rise buildings; and
• Reduced delays in development timelines by eliminating certain technical barriers.

These reforms are intended to complement, rather than replace, existing zoning by addressing technical constraints that have historically limited the development of small lots.

New Advisory Group to Shape Policy

To support these reforms, the Council has established a new Advisory Group on Housing Affordability, co-chaired by Barika Williams, Gary LaBarbera, and James H. Simmons III.[1] The group is expected to shape how the reforms are drafted, implemented, and ultimately integrated into the City’s broader housing strategy.

As emphasized by Gary LaBarbera, “[e]xpanding housing supply and strengthening our workforce go hand in hand, and this initiative is a meaningful step forward on both fronts.”

Why Small Lot Reform Matters

The urgency behind these reforms is underscored by current market conditions. The City’s housing vacancy rate is 1.88%, coupled with median rents of $5,000, as of March 2026. Active listings have also fallen for nearly two years.

Unlocking new housing on small lots would repurpose underutilized, often trash-filled, sites while generating new jobs and adding tax revenue for the City. These reforms offer a path to add housing in neighborhoods where larger rezonings are unlikely.

Implementation and Next Steps

While no single initiative will likely solve New York City’s housing crisis, the Council’s proposed reforms represent a targeted effort to expand development opportunities on lots that have long been overlooked. The effectiveness of the reforms will turn on how the reforms are drafted, how safety standards are integrated, and how the market responds.

The Council has signaled its willingness to pursue nontraditional avenues to increase housing – and small lots are now firmly part of that conversation.

Sources:

New York City Council, Small Lots, Big Impact, Speaker Menin Proposes Reforms to Unlock Up To 35,000 Units of Housing On Small Lots Across New York City (April 24, 2026)

Council Julie Menin, American Institute of Architects (AIA) New York’s 2026 Honors and Awards Luncheon Remarks (April 24, 2026)

NYC Residential Rental Market Report: March 2026, inhabit (April 9, 2026)

The Corcoran Report Manhattan Rental Market (March 2026)

The Corcoran Report Brooklyn Rental Market (March 2026)

[1] Barika Williams is the Executive Director of the Association for Neighborhood and Housing Development. Gary LaBarbera is the President of the Building and Construction Trades Council of Greater New York. James H. Simmons III is the CEO and Founder of Asland Capital Partners.