New York City is about to re-legalize shared housing for the first time since 1955

Issue #002 | Monday, April13, 2026 | thecolivinginsider.com

New York City's shared housing bill could open the biggest co-living market in the U.S.

New York City hasn't legally allowed new single-room occupancy housing to be built since 1955. That may be about to change. Council Member Erik Bottcher introduced Int. 1475 in November 2025, and the city's Department of Housing Preservation and Development testified in support of it at a February 9, 2026 City Council hearing. The bill is currently in the Committee on Housing and Buildings — which is further along than most co-living legislation gets in New York City.

What the bill actually does: it modifies the Housing Maintenance Code, Building Code, and Fire Code to make new construction of shared housing legal "as-of-right" — meaning no special permit or variance required. It applies to buildings constructed or converted after January 1, 2027. Crucially, it also requires individual leases for each tenant, rather than the current setup where one operator holds the master lease and tenants hold subleases without full tenant protections. That individual lease requirement is a meaningful shift — it brings co-living tenants under Good Cause eviction protections and gives them standing to bring housing court actions against landlords.

The safety standards built into the bill are specific and worth knowing: shared kitchens or bathrooms can serve no more than three units, sprinklers are required, and each room must have adequate electrical capacity for small appliances. These aren't arbitrary — they directly address the complaints that led New York to ban SROs in the first place.

HPD's Shared Housing Roadmap, released alongside the bill, lays out a pathway for legalizing the existing unregulated co-living market that has already grown in the city. Thousands of New Yorkers currently live in informal shared housing arrangements without tenant protections. The roadmap signals the city intends to bring that market into compliance rather than shut it down.

If you operate in New York City now: the bill has not passed. Do not structure new leases on the assumption it will — the Committee on Housing and Buildings has not yet voted. Track Int. 1475 at legistar.council.nyc.gov.

If you're considering entering the NYC market: the individual lease requirement in this bill sets a higher standard than what most co-living operators currently use. Build that into your lease structure now regardless of what the bill does — it's better tenant protection and better legal protection for you.

Outside New York: this bill is being watched nationally. If it passes, expect other major cities with informal co-living markets to pursue similar legalization frameworks. The 1:3 bathroom-to-unit ratio will likely become the model standard.

Operators should verify local legal requirements with a licensed attorney before acting on any legislative development.

Source: NYC City Council / NYC HPD Shared Housing Roadmap https://www.nyc.gov/site/hpd/services-and-information/hpd-shared-housing-roadmap.page

The tenant screening error that's slowing down co-living move-ins

Most co-living operators screen the first adult who applies for a room and assume that covers them. It doesn't. Every adult occupant needs to be screened individually — and in a co-living home where rooms turn over independently, this is more complex than in a single-family rental.

The practical issue: when you have a five-room property and room three turns over, you're bringing a new tenant into an existing house dynamic. Screening only the incoming tenant misses the legal exposure. Failure to screen all adult occupants leaves you exposed to lease violations, property damage, and eviction costs that can run $5,800 or more per incident — not counting time.

The co-living-specific wrinkle: income verification needs to be calibrated to room-level rent, not whole-unit rent. The standard 3x income benchmark applies to the individual room rate, not what the whole house generates. A tenant applying for a $900/month room needs to demonstrate $2,700/month income — not $6,000 based on the house's total rent roll. Getting this wrong in either direction creates problems: too loose and you increase default risk, too tight and you're screening out qualified tenants unnecessarily.

One more flag worth noting: Colorado's HB25-1236 (effective January 1, 2026) now requires operators to accept Portable Tenant Screening Reports from applicants. If you operate in Colorado, you cannot reject a PTSR from a recognized provider like TransUnion SmartMove. Update your application materials to reflect this or you risk fair housing complaints.

What operators are learning about private bathrooms and lease flexibility — the hard way

Two trends from operator forums and the 2026 co-living industry data are converging in a way that's reshaping how successful operators set up new properties. The first: shared bathrooms are losing. Industry data shows 50–60% of the organized co-living market has shifted to single-occupancy rooms with private bathrooms. Operators who built shared-bath properties two years ago are now seeing higher vacancy and more conflict — and they're talking about it openly in operator communities.

The second: operators who haven't moved to flexible lease structures are getting out-competed on occupancy. The remote worker demographic — which represents a significant and growing share of co-living demand — expects lease flexibility. Properties that offer only 12-month leases are losing these tenants to properties offering 3-month minimums with month-to-month extensions.

The operator insight that keeps surfacing: the combination of private bathrooms and flexible leases increases your tenant acquisition cost slightly (more turnover) but dramatically reduces conflict, vacancy duration, and lease break costs. Operators running the numbers consistently report that the math favors private bath / flexible term over shared bath / long term — particularly in markets with strong mid-term rental demand from remote workers and travel nurses.

If you're setting up a new property or doing a renovation: wire for private bathrooms even if you don't build them out immediately. The retrofit cost later is significantly higher than rough plumbing during initial construction.

Rentec Direct: the property management platform with built-in co-living room grouping

Category: Property management software

What it does: Rentec Direct is a full property management platform — lease management, rent collection, tenant communication, maintenance tracking, and accounting. What makes it specifically relevant to co-living operators is the "Add to Group" feature, which links roommates on a shared ledger while keeping each tenant's individual contact record and payment history separate. This is the functionality gap that causes most generic property management platforms to fail for room-by-room operators: they treat a property as one unit, one lease, one tenant. Rentec Direct's grouping allows you to track each room's occupancy and payment independently within the same property.

Why it matters for co-living specifically: when room three turns over in a five-room property, you're not dealing with a full-unit vacancy. You need to update one tenant's record, track that room's individual rent, and maintain continuity for the other four tenants. Rentec Direct handles this without requiring you to close and reopen the entire property record each time.

Pricing: Starts at $45/month for up to 10 units. For operators running three to five co-living homes with five to eight rooms each, the cost-per-room is typically under $2/month. No per-tenant fees on top of the base rate.
We may earn a commission if you sign up through our link.

Colorado: Portable Tenant Screening Reports now mandatory — operators must comply

Jurisdiction: Colorado statewide

Status: In effect as of January 1, 2026

What changed: Colorado's HB25-1236 took effect January 1, 2026. It requires residential landlords — including co-living operators — to accept Portable Tenant Screening Reports (PTSRs) from applicants. A PTSR is a background and credit report the applicant pays for once and can reuse across multiple applications. If an applicant presents a valid, recent PTSR from a recognized provider (TransUnion SmartMove, RentPrep, or similar), you must accept it. You cannot require the applicant to pay for a new screening report.

Urgent for Colorado operators:

Update your application materials to explicitly state you accept PTSRs. Reports must generally be within 30 days and from a recognized provider. Refusing a valid PTSR exposes you to fair housing complaints. This applies to every room you fill in Colorado — not just new properties.

Outside Colorado: Oregon, Washington, and Minnesota have similar provisions in various stages. If you operate in those states, verify your current screening process with a local attorney.

The co-living tax deduction most operators skip: the One Big Beautiful Bill Act changed the math

If you operate co-living properties through an LLC or S-corp and you're not tracking every insurance premium as a business deduction, you're leaving money on the table. Rental property insurance — hazard, liability, and flood — is 100% deductible as a business expense. This isn't new, but what changed in 2026 matters: the One Big Beautiful Bill Act signed in July 2025 permanently reinstated the mortgage insurance premium (PMI/MIP) deduction starting with tax year 2026. It had expired after 2021.

What this means for co-living operators specifically: if you financed a property with an FHA loan or conventional loan with PMI, those premiums are now deductible again — permanently. For operators who bought properties in 2022–2024 at higher rates with PMI, this is a recurring annual deduction that wasn't available last filing season. The deduction phases out above $100,000 AGI ($50,000 married filing separately), so if your portfolio income is substantial, verify with your CPA whether you're in the phase-out range.

The standard deduction for 2025 returns (filed this year) is $15,750 for single filers and $31,500 for married filing jointly. If you're operating through a pass-through entity, the deductions hit your personal return. Run the numbers with your CPA on whether itemizing beats the standard deduction given your portfolio size — the answer is often yes for operators with three or more properties.

One more item worth checking: the SALT deduction cap was raised to $40,000 per household under the same legislation. For operators in high-property-tax states — California, New York, New Jersey, Illinois — this matters and may change your itemized vs. standard calculation for this filing year. Verify with a licensed CPA; this is not tax advice.

If you operate in New York City or are watching it as a market, the HPD Shared Housing Roadmap is 20 minutes of required reading — it lays out exactly what the city intends to allow, require, and enforce.

The Co-Living Insider | thecolivinginsider.com | Issue #002 | Monday, April 13, 2026