<PAGE>


                                 SECURITIES AND EXCHANGE COMMISSION
                                      WASHINGTON, DC 20549

                                           -------------

                                             FORM 10-Q


  (Mark One)

   X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
  --- EXCHANGE ACT OF 1934

  For the quarterly period ended March 31, 1997 OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
  --- EXCHANGE ACT OF 1934
      
  For the transition period from                         to                   
                                 ------------------------  -------------------
                                      Commission file number 0-12138

  New England Realty Associates Limited Partnership
  (Exact Name of Registrant as Specified in Its Charter)

  Massachusetts                                      04-2619298
  (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
   Incorporation or Organization)

  39 Brighton Avenue, Allston, Massachusetts            02134
  (Address of Principal Executive Offices)            (Zip Code)

  Registrant's Telephone Number, Including Area Code          (617)783-0039

  Not Applicable
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last 
   Report)


     Indicate by check /X/ whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes    X        No
                                                  ----------     ---------

<PAGE>

                                       INDEX
                            PART I-FINANCIAL INFORMATION

Item 1.                 Financial Statements                      Page No.

                        Balance Sheets-March 31, 1997
                        and March 31, 1996                           2

                        Statements of Operations-Three Months
                        Ended March 31, 1997 and March 31, 1996      3

                        Statements of Cash Flows-Three Months
                        Ended March 31, 1997 and March 31, 1996      4

                        Notes to Financial Statements                7

Item 2.                 Management's Discussion and Analysis of
                        Financial Condition and Results of 
                        Operations                                  14

SIGNATURES                                                          18

<PAGE>

       NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                 MARCH 31,
                                                   1997                      DECEMBER 31,
                                                (UNAUDITED)                       1996
                                            -------------------              -------------
<S>                                         <C>                               <C>         
ASSETS

Rental Properties......................             $52,102,570              $  52,293,981
Cash and Cash Equivalents..............               1,617,354                  1,830,605
Short-term Investments.................                       0                     51,528
Rents Receivable.......................                 551,475                    688,245
Real Estate Tax Escrows................                 504,394                    503,234
Prepaid Expenses and Other Assets......               1,672,463                  1,696,237
Investment in Joint Venture............                  89,619                     93,734
Financing and Leasing Fees.............               1,546,511                  1,631,375
                                            -------------------              -------------
  TOTAL ASSETS.........................             $58,084,386              $  58,788,939
                                            -------------------              -------------
                                            -------------------              -------------
LIABILITIES AND PARTNERS` CAPITAL
Mortgages Payable......................             $52,397,764              $  52,538,499
Accounts Payable and Accrued Expens....                 790,463                    684,626
Advance Rental Payments and Security                  
  Deposits.............................               1,720,262                  1,667,316
                                            -------------------              -------------
  Total Liabilities....................              54,908,489                 54,890,441

Commitments and Contingent Liabilities
  (Note 9)
                                           
Partners' Capital:           
  167,519 units outstanding in 1997 and                        
  175,163 in 1996.......................              3,175,897                  3,898,498
                                            -------------------              -------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL...          $58,084,386              $  58,788,939
                                            -------------------              -------------
                                            -------------------              -------------

</TABLE>
 
                           See notes to consolidated financial statements.
 

                                       2
<PAGE>
       NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                            MARCH 31,
                                                                           (UNAUDITED)
                                                                    --------------------------
<S>                                                                 <C>           <C>
                                                                        1997          1996
                                                                    ------------  ------------
Revenues:
 Rental income....................................................  $  4,220,254  $  4,174,415
 Laundry and sundry income........................................        52,576        61,049
                                                                    ------------  ------------
                                                                       4,272,830     4,235,464
                                                                    ------------  ------------
Expenses:
 Administrative...................................................       248,759       170,143
 Depreciation and amortization....................................       791,802       690,966
 Interest.........................................................     1,163,576     1,167,162
 Management fees..................................................       187,008       180,412
 Operating........................................................       628,525       651,582
 Renting..........................................................        38,937        14,933
 Repairs and maintenance..........................................       588,290       546,713
 Taxes and insurance..............................................       457,626       459,819
                                                                    ------------  ------------
                                                                       4,104,523     3,881,730
                                                                    ------------  ------------
Income from Operations............................................       168,307       353,734
                                                                    ------------  ------------
Other Income:
  Interest income.................................................        28,332        52,961
  Income from investments in partnership and joint venture........           965         6,307
                                                                    ------------  ------------
                                                                          29,297        59,268
                                                                    ------------  ------------
Net Income........................................................  $    197,604  $    413,002
                                                                    ------------  ------------
                                                                    ------------  ------------
Net Income per Unit...............................................  $       1.16  $       2.33
                                                                    ------------  ------------
                                                                    ------------  ------------
Weighted Average Number of Units Outstanding......................       169,812       177,152
                                                                    ------------  ------------
                                                                    ------------  ------------
</TABLE>
 
              See notes to consolidated financial statements.
 
                                       3
<PAGE>

       NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                            MARCH 31,
                                                                           (UNAUDITED)
                                                                      ----------------------
                                                                         1997        1996
                                                                      ----------  ----------
<S>                                                                   <C>         <C>
Cash Flows from Operating Activities:
  Net income........................................................  $  197,604  $  413,002
                                                                      ----------  ----------
Ajustments to reconcile net income to net cash provided by (used
  in) operating activities:
    Depreciation and amortization...................................     791,802     690,966
    (Income) from investments in partnerships and joint venture.....        (965)     (6,307)
    Decrease in rents receivable....................................     136,770         695
    (Increase) in financing and leasing fees........................      (4,808)     (9,467)
    Increase (Decrease) in accounts payable and accrued expenses....     105,837     (38,242)
    (Increase) Decrease in real estate tax escrows..................      (1,160)     68,810
    Decrease in prepaid expenses and other assets...................      23,774      53,158
    Increase (Decrease) in advance rental payments and security
      deposits......................................................      52,946     (14,823)
                                                                      ----------  ----------
    Total Adjustments...............................................   1,104,196     744,790
                                                                      ----------  ----------
    Net cash provided by operating activities.......................   1,301,800   1,157,792
                                                                      ----------  ----------
Cash Flows from Investing Activities: Distribution from joint
  venture...........................................................       5,080      11,367
Payment for purchase and improvement of rental properties...........    (510,719)   (207,393)
Maturity of short-term investments..................................      51,528      --
Purchase of short-term investments..................................      --            (706)
                                                                      ----------  ----------
Net cash (used in) investing activities...............................  (454,111)   (196,732)
                                                                      ----------  ----------
</TABLE>
 
    See notes to consolidated financial statements.
 
                                       4
<PAGE>

       NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                                                           MARCH 31,
                                                                          (UNAUDITED)
                                                                  ---------------------------
<S>                                                               <C>            <C>
                                                                      1997           1996
                                                                  -------------  ------------
Cash Flows from Financing Activities:
 Principal payments and early 
  repayment of mortgages payable.................................      (140,735)     (129,140)
 Distributions to partners.......................................      (853,222)     (601,366)
 Purchase of treasury units......................................       (66,983)       --
                                                                  -------------  ------------
    Net cash (used in) financing
     activities..................................................    (1,060,940)     (730,506)
                                                                  -------------  ------------
Net (Decrease) Increase in Cash and 
 Cash Equivalents................................................      (213,251)       230,554

Cash and Cash Equivalents, Beginning............................      1,830,605      2,706,124
                                                                  -------------   ------------
Cash and Cash Equivalents, Ending...............................  $   1,617,354   $  2,936,678
                                                                  -------------   ------------
                                                                  -------------   ------------
</TABLE>
 
See notes to consolidated financial statements.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(Unaudited)
 
<TABLE>
<CAPTION>
                                                                    UNITS
                                            ------------------------------------------------------
                                                     LIMITED              GENERAL
                                            --------------------------  PARTNERSHIP
                                              CLASS A       CLASS B       CLASS C        TOTAL
                                            ------------  ------------  ------------  ------------
<S>                                         <C>           <C>           <C>           <C>

Balance, January 1, 1996..................  $  3,455,787  $    824,206  $     43,409  $  4,323,402

Distributions to 
Partners..................................      (481,093)     (114,260)       (6,013)      601,366)

Net Income................................       330,402        78,470         4,130       413,002
                                            ------------  ------------  ------------  ------------
Balance, March 31, 1996...................  $  3,305,096  $    788,416  $     41,526  $  4,135,038
                                            ------------  ------------  ------------  ------------
                                            ------------  ------------  ------------  ------------
Units authorized and 
  issued, net of 3,073
  Treasury Units, at 
  March 31, 1996..........................       141,722        33,659         1,265       177,152
                                            ------------  ------------  ------------  ------------
                                            ------------  ------------  ------------  ------------
Balance, January 1, 1997..................  $  3,115,865  $    743,473  $     39,160  $  3,898,498
Unit Buyback..............................       (53,586)      (12,727)         (670)      (66,983)
Distributions to 
 Partners.................................      (682,578)     (162,112)       (8,532)     (853,222)
Net Income................................       158,083        37,545         1,976       197,604
                                            ------------  ------------  ------------  ------------
Balance, March 31, 1997...................  $  2,537,784  $    606,179  $     31,934  $  3,175,897
                                            ------------  ------------  ------------  ------------
                                            ------------  ------------  ------------  ------------
Units authorized and 
 issued, net of 12,706
 Treasury Units at 
 March 31, 1997...........................       133,980        31,866         1,673       167,519
                                            ------------  ------------  ------------  ------------
                                            ------------  ------------  ------------  ------------

</TABLE>
 
See notes to consolidated financial statements.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES

Line of Business: New England Realty Associates Limited Partnership ("NERA" 
or the "Partnership") was organized in Massachusetts during 1977. NERA and 
its subsidiaries own and operate various residential apartment buildings, 
condominium units, and commercial properties located in Massachusetts, 
Connecticut, New Hampshire, and Maine. NERA has an investment in a real 
estate partnership and a joint venture. In connection with the mortgages 
referred to in Note 5, a substantial number of NERA's properties were 
restructured into separate subsidiary limited partnerships. The financial 
statements for prior periods are unchanged.
 
Principles of Consolidation: The consolidated financial statements include 
the accounts of NERA and its subsidiary limited partnerships. NERA has a 
99.67% ownership interest in each of such subsidiary limited partnerships. 
The consolidated group is referred to as the "Partnerships." Minority 
interests are not recorded since they are insignificant. All significant 
intercompany accounts and transactions are eliminated in consolidation. The 
Partnership accounts for its investment in the joint venture on the equity 
method.
 
Accounting Estimates: The preparation of the financial statements is in 
accordance with generally accepted accounting principles (GAAP) requiring 
management to make estimates and assumptions that affect the reported amounts 
of assets and liabilities and disclosures of contingent assets and 
liabilities at the date of the financial statements and the reported amounts 
of revenues and expenses during the reported period. Accordingly, actual 
results could differ from those estimates.
 
Revenue Recognition: Rental income from residential and commercial properties 
is recognized ratably over the term of the related lease. Amounts sixty days 
in arrears are charged against income. Certain leases of the commercial 
properties provide for increasing stepped minimum rents, which are accounted 
for on a straight-line basis over the term of the lease.

Rental Properties: Rental properties are stated at cost less accumulated 
depreciation. Maintenance and repairs are charged to expense as incurred; 
improvements and additions are capitalized. When assets are retired or 
otherwise disposed of, the cost of the asset and related accumulated 
depreciation is eliminated from the accounts, and any gain or loss on such 
disposition is included in income. Rental properties are depreciated on the 
straight-line method over their estimated useful lives. In the event that 
facts and circumstances indicate that the carrying value of rental properties 
may be impaired, an analysis of recoverability is performed. The estimated 
future undiscounted cash flows are compared to the asset's carrying value to 
determine if a write-down to fair value or discounted cash flow value is 
required. This policy was adopted in 1995. Previously, impairment was 
considered on a case-by-case basis.
 
Financing and Leasing Fees: Financing fees are capitalized and amortized, 
using the interest method, over the life of the related mortgages. Leasing 
fees are capitalized and amortized on a straight-line basis over the life of 
the related lease.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes: The financial statements have been prepared under the basis 
that NERA and its subsidiaries are entitled to tax treatment as partnerships. 
Accordingly, no provision for income taxes on income has been recorded.
 
Cash Equivalents: The Partnerships consider cash equivalents to be all highly 
liquid instruments purchased with a maturity of three months or less.

Short-term Investments: The Partnerships consider short-term investments to 
be any bank certificates of deposit, Treasury obligations, or commercial 
paper with initial maturities between three and twelve months. These 
investments are considered to be trading account securities and are carried 
at fair value.

Concentration of Credit Risks and Financial Instruments: The Partnerships' 
tenants are located in New England, and the Partnerships are subject to the 
general economic risks related thereto. No single tenant accounted for more 
than 5% of the Partnerships' revenues in 1996, 1995, or 1994. The 
Partnerships make their temporary cash investments with high credit quality 
financial institutions or purchase money market accounts invested in U.S. 
Government securities. At March 31, 1997, approximately $805,000 of cash and 
cash equivalents exceeded federally insured amounts of which approximately 
$905,000 was held in a money market fund invested in U.S. Government 
securities.

NOTE 2--RENTAL PROPERTIES
 
RENTAL PROPERTIES CONSIST OF THE FOLLOWING:
 
<TABLE>
<CAPTION>
                                                                        MARCH 31,    DECEMBER 31,      USEFUL
                                                                          1997           1996           LIFE
                                                                      -------------  -------------  -------------
<S>                                                                   <C>            <C>            <C>
Land................................................................  $   9,710,733  $   9,710,733       --
Buildings...........................................................     43,622,868     43,622,868  25-31 years
Building improvements...............................................     10,892,800     10,648,403  15-31 years
Kitchen cabinets....................................................      1,033,315        940,870  5-10 years
Carpets.............................................................      1,070,915        977,574  5-10 years
Air conditioning....................................................        235,109        233,995  7-10 years
Land improvements...................................................        599,909        599,909  10-31 years
Laundry equipment...................................................         48,075         45,248  5-7 years
Elevators...........................................................         16,842         16,842  20 years
Swimming pools......................................................         42,450         42,450  10 years
Equipment...........................................................        361,581        311,809  5-7 years
Motor vehicles......................................................         49,852         49,852  5 years
Fences..............................................................         20,785         20,785  5-10 years
Furniture and fixtures..............................................        227,240        201,638  5-7 years
Smoke alarms........................................................          7,444          6,224  5-7 years
                                                                      -------------  -------------
                                                                         67,939,918     67,429,200
Less accumulated depreciation.......................................     15,837,348     15,135,219
                                                                      -------------  ------------- 
                                                                      $  52,102,570  $  52,293,981
                                                                      -------------  -------------  
                                                                      -------------  ------------- 
</TABLE>
 
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--RENTAL PROPERTIES (continued)

On December 11, 1996, the Partnership acquired a residential complex 
containing 36 apartment units in Lowell, Massachusetts for a purchase price 
of approximately $790,000. The purchase was paid from the Partnership's cash 
reserves and is unencumbered.

NOTE 3--RELATED PARTY TRANSACTIONS

    The Partnerships' properties are managed by an entity which is owned by 
the majority shareholder of the General Partner. The management fee is equal 
to 4% of rental revenue and laundry income. Total fees paid were $187,008 and 
$180,412 for the three months ended March 31, 1997 and 1996, respectively. 
Advance rental payments and security deposits are held in escrow by the 
management company (see Note 6). The management company also receives a 
mortgage servicing fee equal to an annual rate of 1/2% of the monthly 
outstanding balance of mortgages receivable resulting from the sale of 
property. There were no mortgage servicing fees paid in 1997 and 1996.
 
    The Partnership Agreement also permits the General Partner or a management
company to charge the costs of professional services (such as counsel, 
accountants, and contractors) to NERA. During the three months ended March 
31, 1997 and 1996, approximately $133,000 and $66,000 was charged to NERA for 
legal, maintenance, architectural services and supervision of capital 
improvements. Approximately $34,000 and $14,000 was capitalized during the 
three months ended March 31, 1997 and 1996 in leasehold improvements and the 
balance was included in administrative expense and repairs and maintenance 
expenses. In addition, the Partnership paid to the management company $12,500 
in each of the quarters ended March 31, 1997, and 1996 for accounting 
services previously provided by an outside company.
 
    The Partnership Agreement entitles the General Partner or a management 
company to receive certain commissions upon the sale of Partnership property 
only to the extent that total commissions do not exceed 3%. No such 
commissions were paid in 1997 or 1996.
 
    In 1997 and 1996, an unrelated individual that performed asset management 
consulting services to NERA and the management company was appointed 
President of the management company. This individual continues to receive 
asset management fees from NERA, receiving $10,800 during the three months 
ended March 31, 1997 and $28,800 during the year ended December 31, 1996.
 
    Included in prepaid expenses and other assets were amounts due from 
related parties of $436,917 at March 31, 1997 and $416,317 at December 31, 
1996 representing Massachusetts tenant security and prepaid rent deposits, 
which are held for the Partnerships by another entity also owned by one of 
the shareholders of the General Partner (see Note 6).

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--RELATED PARTY TRANSACTIONS (CONTINUED)

Also included in prepaid expenses and other assets is an insurance reserve 
account funded by the Partnerships and held by the management company. The 
insurance reserve includes funds from other properties which are also owned 
by the related parties. The balance in the reserve was $79,757 at March 31, 
1997 and $82,856 at December 31, 1996.
 
See Note 10 for rental arrangements with the Timpany Plaza joint venture.
 
As described in Note 4, the Partnership has interests in certain entities in 
which the majority shareholder of the General Partner is also involved.
 
NOTE 4--OTHER ASSETS
 
The short-term investment totalling $51,528 at December 31, 1996, is carried 
at cost, which approximates fair value. Such investment is a 5.07% 
certificate of deposit at Citizens Bank which matured in February 1997.
 
Included in prepaid expenses and other assets at March 31, 1997 and December 
31, 1996 is approximately $554,000 and $669,000 held in escrow to pay future 
capital improvements. Additional payments of approximately $34,000 are paid 
monthly. As the improvements are made, funds are used from these escrow 
accounts.

The carrying value of the Partnership's 50% interest in the Timpany Plaza 
joint venture, at equity, is $89,619 and $93,734 at March 31, 1997 and 
December 31, 1996 respectively.
 
The Partnership owns a 10% ownership interest in a real estate partnership 
which is accounted for by the equity method and reduced to a carrying value 
of zero. The loss in excess of cost in this limited partnership has not been 
recorded as the Partnership is not liable for such amounts. In 1996, $18,360 
was recorded in other income for the amount received from the disposition of 
limited partnership investments that had previously been reduced to a carrying 
value of zero.
 
The majority shareholder of the General Partner is also the majority owner of 
this Partnership. There can be no assurance that any of NERA's partnership 
investments will be realizable in the future in excess of their carrying 
value.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--MORTGAGES PAYABLE

At March 31, 1997 and December 31, 1996, the mortgages payable consisted of 
various loans, substantially all of which were secured by first mortgages on 
properties referred to in Note 2, with interest ranging from 8.25% to 10.99%, 
payable in monthly installments currently aggregating approximately $431,000 
including interest, to various dates through 2005. Although the loans mature 
within ten years, they are being amortized on a basis between 25 and 27.5 
years. The carrying amounts of the Partnerships' mortgages payable 
approximate their fair value.
 
The Partnerships have pledged tenant leases as additional collateral for 
certain of these mortgages.
 
APPROXIMATE ANNUAL MATURITIES ARE AS FOLLOWS:
 
<TABLE>
<S>                                      <C>

         1998--current maturities    $ 594,000
         1999                          648,000
         2000                        7,342,000
         2001                          697,000
         2002                          759,000
         Thereafter                 42,358,000
                                    ----------
                                  $ 52,398,000
                                    ----------
                                    ----------
</TABLE>
 
NOTE 6--ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
 
The lease agreements for certain properties require tenants to maintain a 
one-month advance rental payment plus security deposits. The funds are held 
in escrow by another entity owned by the majority shareholder of the General 
Partner (see Note 3).

NOTE 7--PARTNERS' CAPITAL
 
The Partnership has two categories of limited partners (Class A and B) and 
one category of General Partner (General Partner). Under the terms of the 
Partnership Agreement, Class B units and General Partnership units must 
represent 19% and 1% respectively of the total units outstanding. All classes 
have equal profit-sharing and distribution rights in proportion to their 
ownership interests.
 
    In March 1997, the Partnership declared a regular semi annual dividend of 
$3.90 and a special distribution of $1.00 per unit. In March 1996, the 
Partnership declared a distribution of $3.40 per unit.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--PARTNERS' CAPITAL (CONTINUED)
 
The Partnership has entered into a deposit agreement with an agent to 
facilitate public trading of limited partners' interests in Class A units.
 
Under the terms of this agreement, the holders of Class A units have the 
right to exchange each Class A unit for ten Depository Receipts. The 
following is information on the net income per Depository Receipt:

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                                MARCH 31,
                                                          --------------------
 
<S>                                                     <C>           <C>
                                                          1997          1996
                                                        ---------    ---------
 
Net Income per Depository Receipt.....................$     .12     $     .23
                                                        ---------    ---------
                                                        ---------    ---------

</TABLE>
 
NOTE 8--CAPITAL UNIT REPURCHASE PLAN
 
During the second quarter of 1996, the Partnership announced a plan to 
repurchase up to $500,000 of its Depository Receipts from existing holders of 
securities. The repurchase of Depository Receipts may take place over a 
period of a year or more. The purchase price would be equal to the price at 
which such securities are traded on the Nasdaq Stock Market at the time of 
the repurchase. In January 1997, the partnership repurchased 6,048 depository 
receipts for a total cost of $53,586 and repurchased Class B and General 
Partnership units for a total cost of $13,397. During the third and fourth 
quarters of 1996, the Partnership repurchased 15,915 depository receipts for 
a total cost of $110,060 and repurchased Class B and General Partnership 
units for a total cost of $27,517. The Class B and General Partnership units 
were repurchased to maintain the required ownership percentage (See note 7).

Treasury units at March 31, 1997 are as follows:
 
<TABLE>
<S>                    <C>

Class A                10,200
Class B                 2,377
General Partner           129 
                       -------
                       12,706
                       -------
                       -------

</TABLE>

NOTE 9--COMMITMENTS AND CONTINGENCIES
 
From time to time, the Partnerships are involved in various ordinary routine 
litigation incidental to their business. The Partnerships are not involved in 
any material pending legal proceedings.

<PAGE>
 
NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--RENTAL INCOME
 
During the three months ended March 31, 1997, approximately 85% of rental 
income is related to residential apartments and condominium units with leases 
of one year or less. The remaining 15% is related to commercial properties 
which have minimum future rental income on noncancellable operating leases as 
follows:
 
<TABLE>
<CAPTION>
                                 COMMERCIAL
                                  PROPERTY
                                   LEASES     LAND LEASES      TOTAL
                                ------------  ------------  ------------
<S>                          <C>             <C>           <C>

1998                           $  1,486,991  $    146,667   $  1,633,658
1999                              1,156,867       146,667      1,303,534
2000                                840,063       146,667        986,730
2001                                543,712       146,667        690,379
2002                                382,740       146,667        529,407
Thereafter                        1,132,781     1,063,336      2,196,117
                                ------------  ------------  ------------
                               $  5,543,154  $  1,796,671  $  7,339,825
                                ------------  ------------  ------------
                                ------------  ------------  ------------
</TABLE>
 
In August 1988, the Partnership entered into a land lease agreement with an 
existing tenant of the Timpany Plaza Shopping Center in Gardner, 
Massachusetts. As part of this lease, the tenant, at its cost, demolished 
approximately one-third of the mall and replaced it with a new store of 
comparable size. The minimum fixed term of this lease is for 20 years, which 
commenced with the opening of the new store in December 1989.
 
The minimum annual rents are $110,000 per year for the first five years, 
increasing each subsequent five-year period, with the average being $137,500 
per year for the minimum twenty-year term. Included in rents receivable at 
March 31, 1997 and December 1996 is $164,875 and $163,000 respectively, 
representing the deferred rental income from this lease. There are also 
contingent rents based upon sales volume, common area maintenance, and other 
charges. This lease also provides for six extension periods of five years 
each at increased rents. The minimum rents pertaining to this agreement are 
reflected in the foregoing table.
 
The ownership of this building addition transfers to the Partnership at the 
termination of the lease. Accordingly, the Partnership included in property 
assets approximately $1,400,000 of book value of the demolished building 
allocable to the Partnership leasehold interest and is depreciating this 
amount on a straight-line basis over a twenty-year period.
 
Concurrently, the Partnership entered into a joint venture with this same 
tenant relating to the space formerly leased by the tenant. Under this 
arrangement, the two parties have agreed to relet the space and divide the 
net income or loss after paying to the Partnership an annual minimum rent of 
$84,546. The Partnership's share of income was $965 and $6,307 for the three 
months ended March 31, 1997 and 1996 respectively.

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10--RENTAL INCOME (CONTINUED)

The aggregate minimum future rental income does not include contingent 
rentals which may be received under various leases in connection with 
percentage rents, common area charges, and real estate taxes. Aggregate 
contingent rentals were approximately $217,000, and $195,000 for the three 
months ended March 31, 1997 and 1996 respectively.

NOTE 11--CASH FLOW INFORMATION

    During the three months ended March 31, 1997 and 1996, cash paid for 
interest was $1,153,664 and $1,165,258 respectively.

NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS

The Partnership considers the fair value of its financial instruments to 
approximate their carrying values because conditions pertaining to the 
historic carrying values approximate those in the current market.

<PAGE>


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operation


Results of Operations

Income from operations for the three months ended March 31, 1997 was 
approximately $168,000, compared to approximately $354,000 for the same 
period in 1996, a decrease of approximately $186,000.  Net cash provided by 
operations for the three months ended March 31, 1997 was approximately 
$1,302,000 compared to approximately $1,158,000 during the same period in 
1996, an increase of approximately $144,000.  This increase is the result of 
a decrease in rents receivable, an increase in accounts payable, and an 
increase in advance rental payments and security deposits.

Rental income during the three months ended March 31, 1997 was approximately 
$4,220,000 compared to approximately $4,174,000 for the same period in 1996, 
an increase of approximately $46,000.  This increase is due to an increase in 
rental income from the residential properties as a result of increased rental 
rates.  The commercial properties saw a decrease in rental income due a 
settlement of $85,000 received in the first quarter of 1996 from an early 
termination of a lease at the Shopping Mall located in Lewiston, Maine. In 
addition, a major tenant in the Timpany Plaza Shopping Center filed for 
bankruptcy under Chapter 11 in March 1996.  The annual rent paid by this 
tenant was approximately $347,000.  To date this space remains vacant and the 
Partnership is actively marketing the space.

Expenses for the three months ended March 31, 1997 were approximately 
$4,105,000 compared to approximately $3,882,000 for the same period in 1996, 
an increase of approximately $223,000.  Administrative expenses increased 
approximately $79,000 due to an increase in staffing as well as an increase 
in consulting fees.  Depreciation and amortization increased approximately 
$101,000 due to ongoing capital improvements at the Partnership properties.

Interest income for the three months ended March 31, 1997 was approximately 
$28,000 compared to approximately $52,000 for the same period in 1996, a 
decrease of approximately $24,000.  This decrease is due to the receipt of 
$19,790 during the first quarter of 1996 from interest on the funds held in 
escrow related to properties acquired in 1995.  There was also a slight 
decrease in cash available for investment during the first quarter of 1997 
compared to 1996.

<PAGE>

The Partnership is a partner in a joint venture with a tenant at the Timpany 
Plaza Shopping Center in Gardner, Massachusetts.  Under the terms of the 
agreement, the parties have agreed to relet the space and divide the net 
income or loss after paying to the Partnership an annual minimum rent of 
approximately $84,000.  The Partnership's investment in the Timpany Plaza 
joint venture represents less than 1% of the Partnership's assets.

The Partnership's share of income in the joint venture at the Timpany Plaza 
Shopping Center was approximately $1,000 for the first quarter of 1997 
compared to approximately $6,300 for the first quarter of 1996.

As a result of the changes discussed above, net income for the three months 
ended March 31, 1997 was $197,604 compared to $413,002 for the same period in 
1996, a decrease of $215,398.

Liquidity and Capital Resources

The Partnership's principal source of cash during 1997 and 1996 was the 
collection of rents.  The majority of cash and cash equivalents of $1,617,354 
at March 31, 1997 and $1,830,605 at December 31, 1996 is invested in a U.S. 
government money market account.  Additionally, the Partnership purchased a 
short term investment valued at $51,528 at December 31, 1996.  This 
investment is a certificate of deposit which matured in February 1997.

In November 1996, the Partnership and its subsidiaries acquired a residential 
apartment complex consisting of 36 apartments in Lowell, Massachusetts.  The 
total purchase price of this property was approximately $790,000, and was 
funded from the Partnership's cash reserves.

In 1996, the Partnership announced a plan under which it may repurchase up to 
$500,000 of its Depository Receipts from existing holders of securities.  The 
repurchase plan may take place over a period of one year or more.  The 
purchase price will be equal to the price at which such securities are traded 
on the NASDAQ Stock Market at the time of the repurchase.  In 1997, the 
Partnership purchased 6,048 depository receipts for a total cost of $53,586, 
and purchased Class B and General Partnership units for a total cost of 
$13,397. In addition, during the second and third quarters of 1996, the 
Partnership purchased 15,915 depository receipts for a total cost of $110,060 
and Class B and General Partnership units for a total cost of $27,517.  The 
Class B and General Partnership units were purchased to maintain the required 
ownership percentages.

<PAGE>

During the first quarter of 1997, the Partnership and its Subsidiary 
Partnerships completed approximately $511,000 of capital improvements to 
their properties.  These improvements were funded from escrow accounts 
previously established for this purpose and from cash reserves.  The most 
significant improvements were made at the apartments located at 1144 
Commonwealth Avenue, in Allston, Massachusetts for a total cost of 
approximately $82,000. Significant improvements were also made at the 
Westgate Woburn Apartments in Woburn, Massachusetts for a total cost of 
approximately $66,000; approximately $50,000 at the Highland Street 
Apartments located in Lowell, Massachusetts; approximately $42,000 at the 
Shopping Mall in Lewiston, Maine; and approximately $40,000 at the Courtyard 
Apartments in Brighton, Massachusetts.

In keeping with its five year capital improvement program, the Partnership and 
its Subsidiary Partnerships plan to invest an additional $1,600,000 in 
capital improvements in 1997, of which $1,350,000 is designated for 
residential properties and $250,000 is designated for commercial properties. 
These improvements will be funded from escrow accounts as well as from cash 
reserves.

The Partnership anticipates that available cash and interest-bearing 
investments, collection of rents, and proceeds from the sale and refinancing 
of Partnership properties will be sufficient to finance current improvements 
to its properties.  The Partnership's net income and cash flow may fluctuate 
dramatically from year to year as a result of the sale of properties, 
unanticipated increases in expenses, or a loss of a significant tenant.

Since the Partnership's long term goals include the acquisition of additional 
properties, a portion of the proceeds from the refinancing and sale of 
properties is reserved for this purpose.  The Partnership will consider 
refinancing existing properties if either insufficient funds exist from cash 
reserves to repay existing mortgages or if funds required for future 
acquisitions are not available.

The Partnership paid a distribution of $3.90 per Partnership unit ($0.39 per 
depository receipt) during the first quarter of 1997 and $3.40 per 
Partnership unit ($0.34 per depository receipt) during the first quarter of 
1996.

Factors that may affect future results

The discussion above contains information based on management's belief and 
forward looking statements that involve a number of risks, uncertainties and 
assumptions. There can be no assurances that actual results will not differ 
materially as a result of various factors, including but not limited to the 
following:

<PAGE>


The Timpany Plaza Shopping Center in Gardner, Massachusetts is 47% vacant at 
May 15, 1997.  If the space remains unoccupied, the 1997 rental income would 
be approximately $200,000 less than 1996.  Should circumstances remain in 
1997, the Partnership may need to review the carrying value of this property 
for impairment in accordance with the Statement of Financial Accounting 
Standards No. 121 (FAS No. 121).

A major tenant of the Lewiston Mall in Lewiston, Maine, which paid 
approximately $240,000 in 1996, can terminate its lease with nine months 
notice effective January 1, 1997.  The Partnership is currently negotiating 
to obtain a long-term lease.  The Partnership, at this time, cannot make any 
assurances that the tenant will renew its lease for this space.

<PAGE>

                               SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

Date:  May 14, 1997


                                       NEW ENGLAND REALTY ASSOCIATES
                                       LIMITED PARTNERSHIP

                                       By:    NEWREAL, INC.,
                                              its General Partner*

                                       By: /s/ Ronald Brown
                                          -------------------------
                                          Ronald Brown, President

                                       *Functional equivalent of Chief
                                        Executive Officer, Principal
                                        Financial Officer and Principal
                                        Accounting Officer