Who Came Up With the 40-Times-Rent Income Requirement?

If you’ve rented an apartment in New York City, you’ve almost certainly come across this little sentence in the listing: Applicant needs 40x the rent in income. Despite being considerably higher than what tenants have to prove in other cities, the number is now ingrained in our rental market. The math can get funny: Let’s say you’re looking for a one-bedroom in Midtown East, where the median rent in October was $3,430 in a non-doorman building (for a doorman building, the median was $4,715). The income requirement for that place would be $137,200. The median salary in New York City is $76,607. If I had to move right now, I wouldn’t be able to meet the income requirement in my own neighborhood, even though I have a full-time job writing at this magazine. As a tenant, all of this can feel random, like the city’s landlords all got together one day and pulled “40” out of a hat. I decided to try and find out where it came from.

I started by asking a few veteran brokers in the city. They write the listings, right? “As long as I’ve been in this business it’s always been the standard,” Gary Malin, chief operating officer at Corcoran, who has worked as a broker for 26 years, told me. He didn’t know where the number originated from, but agreed the requirement is higher here than most other places because New York is more expensive than most other places. Barbara Ireland, a broker at Sotheby’s who’s been in the business for more than a decade, was also stumped. Distressingly, she also pointed out that it’s sometimes even higher than 40: She’s seen 45. (And 96 times for guarantors.) This seemed to be a pattern in my conversations with brokers: No one knew exactly where it came from, it had always just sort of been that way.

I turned to Jonathan Miller, who co-founded the real-estate appraisal firm Miller Samuel almost 30 years ago and seems to know basically everything about the many eccentricities of our city’s housing market. “I always thought of it as something created by the landlord community in New York City after the financial crisis to reflect the tighter credit environment,” he wrote in an email. “The court system is more pro-tenant than other housing markets I am familiar with, so the additional precaution before giving the tenant access seems to be the rationale.” He guessed that the number originated in the city, but he also lives here and conducts most of his research on city markets, he told me, so that might just be his own “location bias.”

The financial crash of 2008 seemed like a plausible theory, so I started looking at newspaper archives to see if I could find early mentions of the income requirement. After a little poking around, I found a New York Times piece from 1997 in which a broker told the paper that “strict” buildings require up to 50 times the monthly rent while a more “liberal” landlord accepts 40 times. A piece published a few years later, in 2000, about college graduates searching for housing, noted that 40 to 52 times the monthly rent was typical. Another Times article from 2006 mentions the “standard annual income threshold of 40 to 45 times the monthly rent,” noting even then that many tenants were having trouble meeting this and that it was much more than the “36 times the monthly rent required in the rest of the country.”

If tenants had been struggling with the 40-times-income requirement for at least 30 years, I figured I’d ask some tenant lawyers about it. Edward Josephson, supervising attorney in the Civil Law Reform Unit of the Legal Aid Society, pointed out the simplest and perhaps most obvious explanation: If your income is 40 times the rent, then you’re spending 30 percent of your income on housing — the metric that most government housing policies use to calculate how much someone should spend on rent. For example, if someone is spending more than 30 percent of their income on rent, the Department of Housing and Urban Development considers that person “rent-burdened.”

But where did this rule come from? Why 30 percent? It seems to have come from the turn of the century, when a “week’s wages for a month’s rent” — or 25 percent — was considered standard. Matthew Lasner, housing historian and co-editor of the book Affordable Housing in New York, said that this was first articulated as an economic formula by housing activists in the 1900s. Edith Elmer Wood, a housing economist, wrote in 1919 that housing should be obtainable at “a rental not exceeding 20 percent of the family income.” The concept stuck.

When the Section 8 program started in the 1970s, it was considered standard that households would only pay 25 percent of their income, which under Reagan was later raised to 30 percent, and today, that number pops up in all kinds of housing policies. NYCHA sets rent at 30 percent of a household’s income; owners who get a Low-Income Housing Tax Credit must not charge more than 30 percent of an area median income in rent for income-restricted units. That number as the norm of what a renter should pay has long been “questionable,” Josephson told me, because of how much a household’s financial needs vary.

As for when it entered the realm of standard landlord requirements, Lasner guessed that it probably started in the ’50s and ’60s with the “growth of larger-scale owners who needed to process lots of applications.” Likely somewhere along the way a big landlord did the math and decided to just stick a number on all of his listings as a way to ensure a tenant could cover the rent. Which makes sense from a business perspective.

But what began as a protection to limit the amount of their income a tenant would spend on housing has warped into a cudgel for landlords. Wages haven’t risen alongside rents, so a good number of people — especially those with nontraditional income sources — are struggling with it. (A recent court case had to rule that landlords couldn’t apply minimum income requirements as a way to screen voucher holders, for example.) A big problem is that rents are simply too high — a recent report found that between 2019 and 2023, median rents rose by 18 percent while incomes grew by just 11.5 percent. Today, a fifth of New Yorkers now pay 50 percent of their income on rent. Add in credit scores and up-front payments, and renting an apartment in New York City can feel like you are on trial for needing a place to live. Which is maybe why millionaires are moving in while everyone else is leaving.

The threshold has started to feel impossible. Which is wild when you consider that the requirement used to be higher — Lasner said that the 40-times-income requirement is actually kind of an improvement over previous eras. “The rule of thumb in the ’80s was typically an annual income of 45 to 60 times a month’s rent, and often 48 times; by the ’90s it began to shift to 40 to 50 times.” So as bad as it seems now, it’s been worse. “One thing I know with a bit more certainty is that the threshold in NYC has gradually relaxed, if only slightly, in recent decades.”