What Is an ADU in NYC? A Beginner’s Guide to Accessory Dwelling Units
You've likely heard the buzz about ADUs. Maybe you've heard your neighbor discussing plans for a basement conversion, or your cousin in Brooklyn bragging about side rental income. Or perhaps you caught a headline about New York City's new ADU laws and thought, “Wait… can I actually build one of those in New York City?”
Whatever brought you here, this guide will give you a clear, up-to-date picture of what ADUs are, what's now legal in NYC, and how to find out if your property qualifies.
What is an ADU?
An ADU — Accessory Dwelling Unit — is a fully independent living space built on the same property as a primary home. It has its own entrance, kitchen, bathroom, and sleeping area. In New York City, they're officially called Ancillary Dwelling Units, but the terms are interchangeable.
ADUs are sometimes called granny flats, in-law suites, backyard cottages, carriage houses, or basement apartments. They've been common in California, Oregon, and other Western states for years — and as of 2025, they're fully legal in New York City.
Why New York City Suddenly Cares About ADUs
NYC’s housing situation can be unpredictable. Rent keeps rising, families are crowding together, older residents can’t stay in their homes, and younger New Yorkers are packing up and leaving. Legalizing ADUs could help:
Create affordable housing
Help homeowners earn extra income
Support multigenerational living and housing for extended family
Reduce urban sprawl by using existing lots more efficiently
Are ADUs Legal in NYC Now?
Yes — as of late 2025, the NYC Department of Buildings began accepting permit applications for new ADUs under Local Law 127 of 2024.
This is a big deal. For decades, informal basement apartments existed across the outer boroughs in a legal gray area. The City of Yes for Housing Opportunity, passed in December 2024, created a clear legal framework: homeowners on eligible one- and two-family lots can now build, permit, and legally rent an ADU.
Additionally, Local Law 126 provides a pathway to legalize existing basement and cellar apartments that were previously unpermitted.
What Types of ADUs Can You Build?
Under NYC's new rules, there are five main types:
Basement or cellar conversion — The most common in Brooklyn and Queens row houses
Attached addition — An addition to the rear or side of the main home
Detached backyard cottage — A freestanding structure in the rear yard
Garage conversion — Converting an existing garage into a living unit
Attic conversion — Converting usable attic space into a dwelling unit
Each type has its own design requirements and cost profile. The right choice depends on your specific property, lot size, and existing structure.
Who Is Eligible?
The key eligibility criteria under Local Law 127:
You own a one- or two-family home
Your property is in an eligible zoning district (most R1–R6 districts)
Your lot has sufficient space for the ADU type you want to build
Your existing home is not already at maximum allowable floor area ratio (FAR)
Approximately 68,000 lots across the five boroughs are estimated to be ADU-eligible. The highest concentrations are in Queens, Staten Island, Brooklyn, and the Bronx.
The fastest way to check your eligibility is by typing your address in the city's ADU for You platform, NYC Zoning AI’s ADU platform, or by requesting a free ADU assessment from Second Key.
Pro Tip: Instant eligibility tools have limitations and should be used as an initial screening tool only. Further research must. be performed by qualified professionals to confirm ADU eligibility.
How Much Does an ADU Cost?
Costs vary significantly by ADU type and site conditions. Here are some realistic ranges:
Want to run the numbers on your specific project? Use the NYC ADU ROI Calculator to estimate monthly cash flow, cash-on-cash return, and payoff timeline before you commit.
Second Key's typical detached ADU builds range from $300–$400 per square foot, with final pricing confirmed after plans are approved by the city.
Financing Options
Most NYC homeowners don’t have cash available to fund their ADU project, so we’ve compiled a list of recommended financing and financial assistance options:
Plus One ADU Program (HPD/HCR): Up to $395,000 in low- or no-interest loans and grants for eligible homeowners
HELOCs or HELOANs: Many homeowners use home equity lines of credit, which offer relatively low interest rates for established homeowners
Renovation loans: FHA 203(k) and similar products can be used for ADU construction
The Process: From Idea to Certificate of Occupancy
Here's how an ADU project works with Second Key:
Free feasibility assessment — We review your property's zoning, lot, and existing structure to screen for eligibility and explain your options
Feasibility and design study — This paid study combines comprehensive regulatory review, assessment of site and building conditions, and conceptual design to definitively confirm what you’re allowed to build, how it will be designed, and how much it will cost. ($4,500 - $7,500 flat fee, credited toward design and construction contracts)
Pre-construction advisory — Project team assembly and coordination during pre-construction phase ($2,500 - $5,000 flat fee, credited toward construction)
Construction — Full build managed by Second Key as licensed general contractor, using transparent cost-plus or lump-sum pricing. Includes inspections and final sign-offs.
Total timeline is typically 10–18 months from first conversation to finished ADU, with the permitting phase (3–6 months) being the largest variable.
Why Build an ADU?
The three most common reasons NYC homeowners build ADUs:
Rental income. A well-built ADU in Queens or Brooklyn generates $2,000–$3,500/month. That's $24,000–$42,000 per year — a meaningful contribution to a mortgage or retirement income.
Multigenerational living. An ADU provides independent living space for a parent, adult child, or other family member while keeping them close. It's privacy and proximity at the same time.
Property value. An income-producing ADU adds measurable value to your home. As ADU legalization becomes more widely understood, ADU-eligible and ADU-equipped properties will increasingly command a premium.
The Bottom Line
Yes, building an ADU takes planning, but the payoff can be huge. You’re not just creating extra space, you’re unlocking new income, boosting your home’s value, and building something that supports your family and community for years to come.
With the city finally on board and new programs paving the way, there’s never been a better time to add an ADU in NYC.
Ready to Find Out If Your Property Qualifies?
Second Key offers a free ADU feasibility assessment for NYC homeowners. We'll review your property, confirm your eligibility, explain what you can build, and give you a real cost range — no obligation, no pressure.