Understanding Single-room Occupancies (SRO) In New York

 Single-room occupancies (SRO) have existed and have been used for centuries. Yet, they have a complicated history!

Today many Americans are facing a home affordability crisis as a result of the rising cost of housing in cities like New York. In such high-cost markets, SROs, generally boost the supply of affordable housing and decrease homelessness.

On the other hand, there’s a common trend that people are purchasing these types of properties and converting them into single or multi-family residential to gain better profits.

So, let’s find out more by taking a closer look and understanding single-room occupancies (SROs) in New York.

What Is A Single-room Occupancy (SRO)?

A furnished single room that can be rented on a monthly basis or for an extended period is called an SRO.

Generally speaking, SROs are multi-tenant houses or apartment buildings with small individual rooms that share a kitchen and a bathroom in common areas. This type of housing is usually targeted at people with low incomes or single adults who prefer a minimalist lifestyle.

SROs are similar to low-end hotels, commonly huge buildings located in big cities. In fact, a lot of them feel more like hotels but with fewer amenities.

Modern SROs today are marketed as co-living spaces or micro-apartments. A co-living space is a form of communal living in which you get a private bedroom and the rest of the rooms or common areas are shared. A micro-apartment is a tiny studio which is a small, two-room flat with a kitchen or bedroom combo and a bathroom.

Classification in SROs

SROs are usually classified as “Class B” residences in New York City.

A “Class A” residence is regarded as a proper apartment rented on a monthly basis or more. A “Class B” residence is a multiple dwelling that is rented out on a temporary basis to individuals or families who are lodged with or without meals.

Class B properties are a level below Class A properties and are typically older, with renters who have lower income, and may or may not be professionally managed. Commonly, rental income under Class B is less than Class A.

For SROs, a Certificate of Occupancy will say “Class B,” “Rooming Units,” or occasionally just “Rooms” or “Furnished Rooms.”

Background Of SROs

SROs were there for a long time, but they peaked in the late 1800s when a large number of workers from the West and Europe arrived in NYC and other major eastern US cities in search of work in the rapidly industrializing eastern region.

Many of these workers were single and sought out single rooms; female SROs had curfews to keep residents safe, and hot meals were usually served in the common areas.

Men’s SROs, on the other hand, quickly became a magnet for vagrants and criminals. Further, SROs began to decline by the mid-20th century, primarily because the majority of urban residents wanted them gone.

Though SRO housing initially emerged as an economical alternative for urban migrant workers, they later saw restrictions and declines as a result of changes in housing laws.
Many were destroyed or converted midway through the 20th century as a result of urban redevelopment initiatives.

Current Status Of SROs In New York

Today, single-room occupancies have once more gained attention real estate pricing keep rising. In fact, they are beginning to draw in a younger, up-and-coming demographic.

There are about 210,000 small units that are currently available in NYC but they are unlikely to satisfy the potential demand for a cheaper renting choice, given that there are about 1.2 million single adult renters in the city.

This is why renters are drawn to SROs because they offer more privacy, independence, and affordability, which can potentially raise demand for such affordable residences.

Also, SRO-designated properties often entice investors with reduced prices and revenue potential. However, due to restrictive rental policies and limited financing alternatives, these properties are ending up being an operational burden rather than a profitable investment.

As a result, standard multifamily residential apartments are what most of the SRO-designated property owners are constantly trying to convert such SROs to.

Converting Single-room Occupancies SRO

SROs mostly emerged after the Great Depression, when owners started turning their residences, such as townhouses and brownstones, into SROs. Because these SRO rooming units can no longer build for profit in NYC.  The property owners are constantly converting them into regular multi-family residential or Class A apartments.

However, if documentation can verify the legal status of any existing units, they grandfather them.

Multifamily residential buildings in New York City register with the Housing Preservation and Development Office (HPD).

An architect will apply to the New York City Department of Buildings (NYC DOB) for a new Certificate of Occupancy and do all the required alterations to bring the property up to code in order to convert SROs into Class A apartments. The application also require a copy of HPD’s Certificate of No Harassment.

What Is A Certificate Of No Harassment (CONH)?

To convert a property out of the SRO category or to conduct any significant changes to an SRO. The owner must get a CONH from HPD.

This certificate serves as proof that the owner did not harass any of the SRO unit tenants. This aimed at persuading them to vacate the building for improvements.

Common Uses For SRO

Those in need of affordable accommodation benefit most from SROs. They’re an excellent option for those on fixed incomes, low-wage workers, and students.

SROs are also a great choice for those who require temporary housing. Temporary employees and recently divorced individuals can also easily reside without signing a long-term lease.

That is it!

We hope this blog has helped you gain better insights into SROs.

If you want to make informed decisions while dealing in real estate, professional guidance is the key. You can get in touch with Elite Properties’ experts now!