<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 September 30, 1996 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
Incorporation or Organization)                                Identification No.

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


                                                                       Page No.

Item 1.    Financial Statements.

           Balance Sheets - September 30, 1996
           and September 30, 1995                                         3

           Statements of Operations - Three and Nine Months
           Ended September 30, 1996
           and September 30, 1995                                         4

           Statements of Cash Flows - Nine Months
           Ended September 30, 1996 and
           September 30, 1995                                             5

           Notes to Financial Statements                                  8


Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of
           Operations                                                     17


                          PART II - OTHER INFORMATION


Item 6.    Exhibits and Reports on Form 8-K                               __


SIGNATURES                                                                22

EXHIBIT 27 Financial Data Schedule

                                       2
<PAGE>

CONSOLIDATED BALANCE SHEETS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES


                                              September 30,  December 31,
                                                  1996           1995
                                               (Unaudited)
                                              ------------   ------------
ASSETS

Rental Properties                             $ 51,437,551   $ 51,688,269
Cash and Cash Equivalents                        2,614,550      2,706,124
Short-term Investments                              50,874         48,877
Rents Receivable                                   719,044        684,409
Real Estate Tax Escrows                            484,903        538,945
Prepaid Expenses and Other Assets                1,851,926      1,933,472
Investment in Joint Venture                        109,384        129,989
Financing and Leasing Fees                       1,738,012      2,020,885
                                              ------------   ------------
  TOTAL ASSETS                                $ 59,006,244   $ 59,750,970
                                              ------------   ------------
                                              ------------   ------------

LIABILITIES AND PARTNERS' CAPITAL

Mortgages Payable                             $ 52,676,231   $ 53,072,037
Accounts Payable and Accrued
  Expenses                                         651,967        804,865
Advance Rental Payments and Security
  Deposits                                       1,575,470      1,550,666
                                              ------------   ------------
  Total Liabilities                             54,903,668     55,427,568

Commitments and Contingent
  Liabilities (Notes 9 and 12)

Partners' Capital:
  176,452 units outstanding in 1996
  and 177,152 in 1995                            4,102,576      4,323,402
                                              ------------   ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL       $ 59,006,244   $ 59,750,970
                                              ------------   ------------
                                              ------------   ------------


See notes to consolidated financial statements.

                                       3

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

                            Three Months Ended         Nine Months Ended
                               September 30,             September 30,
                             1996        1995          1996         1995
                                (Unaudited)               (Unaudited)
                          -----------------------   ------------------------
Revenues:
 Rental income            $4,056,357   $3,816,626   $12,370,471   $8,335,633
 Laundry & sundry income      45,373       45,227       154,394      113,753
                          ----------   ----------   -----------   ----------
                           4,101,730    3,861,853    12,524,865    8,449,386
                          ----------   ----------   -----------   ----------
Expenses:
 Administrative              232,979      164,961       632,764      479,650
 Depreciation and
  amortization               697,471      659,008     2,071,258    1,512,122
 Interest                  1,162,115    1,069,833     3,541,724    2,130,615
 Management fees             171,193      172,759       524,214      371,612
 Operating                   356,004      327,862     1,417,133      798,669
 Renting                     108,365      193,041       170,574      265,230
 Repairs & maintenance       687,992      757,377     1,920,601    1,502,389
 Taxes & insurance           437,867      434,684     1,362,418      975,003
                          ----------   ----------   -----------   ----------
                           3,853,986    3,779,525    11,640,686    8,035,290
                          ----------   ----------   -----------   ----------
Income from Operations       247,744       82,328       884,179      414,096
                          ----------   ----------   -----------   ----------
 Other income:
  Interest income             36,594        7,166       124,938       32,189
  Income from investment
   in the joint venture        5,531        6,914        17,066       15,766
  Gain on the sale of
   property                     -          69,064          -          69,064
                          ----------   ----------   -----------   ----------
                              42,125       83,144       142,004      117,019
                          ----------   ----------   -----------   ----------
Net Income                $  289,869   $  165,472   $ 1,026,183   $  531,115
                          ----------   ----------   -----------   ----------
                          ----------   ----------   -----------   ----------


Net Income per
 Unit                     $     1.64   $      .93   $      5.80   $     3.00
                          ----------   ----------   -----------   ----------
                          ----------   ----------   -----------   ----------

Weighted Average Number
  of Units Outstanding       176,475      177,152       176,925      177,152
                          ----------   ----------   -----------   ----------
                          ----------   ----------   -----------   ----------


See notes to consolidated financial statements.


                                       4
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

                                                       Nine Months Ended
                                                          September 30,
                                                           (Unaudited)
                                                        1996         1995*
                                                    -----------  -----------
Cash Flows from Operating Activities:
 Net income                                         $ 1,026,183  $   531,115
                                                    -----------  -----------
 Adjustments to reconcile net income
   to net cash provided by
  (used in) operating activities:
   Depreciation and amortization                      2,071,258    1,512,122
   (Income) on investments in
    partnerships and joint venture                      (17,066)     (15,766)
   (Gain) on the sale of property                          -         (69,064)
   (Increase) in rents receivable                       (34,635)    (144,185)
   (Increase) in financing and
    leasing fees                                        (35,680)  (1,344,556)
   (Decrease) Increase in accounts payable
    and accrued expenses                               (152,898)     124,281
   Decrease(Increase) in real estate
    tax escrows                                          54,042     (416,584)
   Decrease(Increase)in prepaid
    expenses and other assets                            81,546   (2,032,053)
   Increase in advance rental payments
    and security deposits                                24,804    1,084,988
                                                    -----------  -----------

   Total Adjustments                                  1,991,371  ( 1,300,817)
                                                    -----------  -----------
   Net cash provided by (used in)
    operating activities                              3,017,554     (769,702)
                                                    -----------  -----------

Cash Flows from Investing Activities:
 Distribution from the joint venture                     37,671       41,866
 Payment for purchase and improvement
  of rental properties                               (1,501,987) (30,808,861)
 Purchase of short-term investments                      (1,997)      (1,560)
                                                    -----------  -----------
Net cash (used in)
    investing activities                             (1,466,313) (30,768,555)
                                                    -----------  -----------


See notes to consolidated financial statements.

*Certain items have been re-classified for comparative purposes.

                                       5

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

                                                      Nine Months Ended
                                                         September 30,
                                                          (Unaudited)
                                                       1996         1995
                                                    -----------  -----------
Cash Flows from Financing Activities:
 Principal payments and early
  repayment of mortgages payable                      (395,806)  (8,299,631)
 Distributions to partners                          (1,199,757)  (1,202,734)
 Proceeds from refinancing of
  Partnership properties                                  -      20,214,000
 Decrease in notes payable to related party               -      (1,175,000)
 Increase in mortgages payable                            -      22,627,000
 (Payments on) proceeds from stock
  buyback                                              (47,252)       7,920
 Proceeds from the sale of property                       -          98,127
                                                    -----------  -----------
   Net cash (used in) provided by
     financing activities                           (1,642,815)  32,269,682
                                                    -----------  -----------
Net (Decrease)Increase in Cash and
  Cash Equivalents                                     (91,574)     731,425

Cash and Cash Equivalents, Beginning                 2,706,124      996,353
                                                    -----------  -----------
Cash and Cash Equivalents, Ending                   $2,614,550   $1,727,778
                                                    -----------  -----------
                                                    -----------  -----------


See notes to consolidated financial statements.


                                       6
<PAGE>

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

(Unaudited)

                                          Partners' Capital
                            ------------------------------------------------
                                   Limited           General
                           -----------------------  ---------
                            Class A      Class B     Class C       Total
                           ----------  ----------   ---------  -----------
Balance, January 1, 1995   $6,717,849   $1,598,946   $ 84,184  $ 8,400,979

Distributions to
 Partners                    (962,188)    (228,519)   (12,027)  (1,202,734)

Net Income                    424,892      100,912      5,311      531,115

Stock buyback                    -           7,920       -           7,920
                           ----------   ----------   --------  -----------
Balance, Sept. 30, 1995    $6,180,553   $1,479,259   $ 77,468  $ 7,737,280
                           ----------   ----------   --------  -----------
                           ----------   ----------   --------  -----------
Units authorized and
 issued, net of 3,073
 Treasury Units, at
 September 30, 1995           141,722       33,659      1,771      177,152
                              -------       ------      -----      -------
                              -------       ------      -----      -------
Balance, January 1, 1996    $3,455,787  $  824,206   $ 43,409  $ 4,323,402

Distributions to
 Partners                     (959,806)   (227,954)   (11,997)  (1,199,757)

Net Income                     820,946     194,975     10,262    1,026,183

Stock buyback                  (47,252)       -          -         (47,252)
                           ----------   ----------   --------  -----------
Balance, Sept. 30, 1996     $3,269,675  $ 791,227    $ 41,674  $ 4,102,576
                           ----------   ----------   --------  -----------
                           ----------   ----------   --------  -----------
Units authorized and
 issued, net of 3,073
 Treasury Units at
 September 30, 1996            141,022     33,659       1,771      176,452
                               -------     ------       -----      -------
                               -------     ------       -----      -------

See notes to consolidated financial statements.

                                       7
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES


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 subsidiary partnerships own and operate various residential apartment 
buildings, condominium units, and commercial properties located in 
Massachusetts, Connecticut, New Hampshire, and Maine.  NERA has also made 
investments in other real estate partnerships and has participated in other 
real estate-related activities, primarily located in Massachusetts.  In 
connection with the new 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.

Revenue Recognition: 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.  See Note 2 for the effect of this 
accounting change.

Financing and Leasing Fees:  Financing fees are capitalized and amortized 
using the interest method over the life of the related mortages.  Leasing 
fees are capitalized and amortized on a straight line basis over the life of 
the related lease.


                                       8
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes:  The financial statements have been prepared under the basis 
that NERA and its subsidiary limited partnerships are entitled to tax 
treatment as partnerships.  Accordingly, no provision for income taxes on 
income has been recorded.

Cash Equivalents:  The Partnerships consider all highly liquid instruments 
purchased with a maturity of three months or less to be cash equivalents.

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 or 1995.  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 September 30, 1996, approximately $2,250,000 of cash and cash 
equivalents exceeded federally insured amounts of which approximately 
$1,972,000 was invested in a money market fund invested in U.S. Government 
securities.

NOTE 2--RENTAL PROPERTIES

Rental properties consist of the following:
                         September 30,          December 31,      Useful
                             1996                  1995            Life
                         -------------          ------------      ------

Land                    $  9,554,732           $  9,554,732        --
Buildings                 42,988,784             42,988,784     25-31 years
Building improvements     10,534,778              9,437,144     15-31 years
Kitchen cabinets           1,256,652              1,089,407      5-10 years
Carpets                    1,171,893              1,028,473      5-10 years
Air conditioning              99,591                 87,745      7-10 years
Land improvements            434,382                422,646     10-31 years
Laundry equipment             57,840                 46,994       5-7 years
Elevators                     16,842                 16,842        20 years
Swimming pools                42,450                 42,450        10 years
Equipment                    190,140                166,132       5-7 years
Motor vehicles                46,704                 46,704         5 years
Fences                        25,778                 22,229      5-10 years
Furniture and fixtures       125,602                 95,793       5-7 years
Smoke alarms                   6,224                  6,224       5-7 years
                        ------------           ------------
                          66,552,392             65,052,299
Less accumulated
 depreciation             15,114,841             13,364,030
                        ------------           ------------
                        $ 51,437,551           $ 51,688,269
                        ------------           ------------
                        ------------           ------------

                                       9
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 2--RENTAL PROPERTIES (CONTINUED)

On June 30, 1995, the Partnerships purchased for $30,198,000 five properties 
containing an aggregate of 809 residential apartments and 18,400 square feet 
of commercial space.  The purchase was paid for in part with the proceeds of 
the refinancing of thirteen of the Partnerships' properties and the issuance 
of new mortgage notes payable aggregating $22,627,000 and maturing in ten 
years.  The properties were acquired from a trust owned nominally by the 
majority shareholder of NERA's general partner.  In substance, the properties 
were owned by the trust's secured lender under a previous restructuring 
agreement whereby the lender received all of the operating income from the 
properties as well as the proceeds from the sale to NERA.  The Partnerships 
have recorded the purchase at the amount paid for the properties and have 
allocated the amounts to the individual properties acquired. An entity owned 
by the majority shareholder of the Partnership's general partner received a 
fee of $300,000 from the trust's secured lender.

Included in rental properties at September 30, 1996 is a building in Newton, 
Massachusetts acquired by the Partnership on January 25, 1995.  The building 
consists of 21,223 square feet of commercial space, 9 residential units and 
29 parking spaces for a total purchase price of $1,925,000.  This building 
was acquired from an entity in which the majority shareholder of NERA's 
general partner had a substantial ownership interest.  The Partnership's 
management company received a fee of approximately $11,000 from the seller in 
this transaction.  To facilitate this acquisition, the Partnership's 
management company, an entity owned by the majority shareholder of NERA's 
general partner, loaned the Partnership $1,175,000 in December 1994.  In May 
1995, the Partnership refinanced this property and obtained a $1,329,000 
mortgage payable in 10 years with interest at 9.25%, and paid off the 
existing loan of $1,175,000 to the management company.  Total interest paid 
on this loan was $38,073.

In 1995, the Partnership sold two condominiums located in Stoneham and 
Boston, Massachusetts.  The gain of $152,463 is included in net income for 
the year ended December 31, 1995.

In the fourth quarter of 1995, the Partnerships recorded a special charge of 
$3,250,000 relating to the early adoption of Statement of Financial 
Accounting Standards No. 121 (FAS 121) on accounting for the impairment of 
long-lived assets effective for fiscal years beginning after December 15, 
1995.  This statement requires that long-lived assets held and used by the 
entity be reviewed for impairment whenever events or changes in circumstances 
indicate that the carrying amount of the asset may not be recoverable. During 
1995, the Lewiston Mall with a carrying value of approximately $8,200,000 was 
remortgaged for $2,933,000.  As part of this refinancing, the lender obtained 
an appraisal of $5,000,000.  A further analysis of estimated future cash 
flows as required by FAS 121 indicated an impairment.  The carrying value of 
the Lewiston Mall has been reduced to the net present value of expected 
future cash flows, which approximates the aforementioned appraisal.  Similiar 
analysis of the other properties did not result in impairment.


                                       10
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 3--RELATED PARTY TRANSACTIONS

The Partnerships' properties are managed by an entity which is owned by the 
majority shareholder of the General Partner (see Note 12).  The management 
fee is equal to 4% of rental revenue and laundry income.  Total fees paid 
were $524,214, and $371,612 for the nine months ended September 30, 1996 and 
1995, 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 1996 and 1995.

The Partnership Agreement also permits the General Partner or management 
company to charge the costs of professional services (such as counsel, 
accountants, contractors) to NERA.  During the nine months ended September 
30, 1996 and 1995 approximately $221,000, and $145,000 was charged to NERA 
for legal, maintenance, and architectural services, and supervision of 
capital improvements.  Approximately $57,000 was capitalized in leasehold 
improvements, approximately $111,000 is included in administrative expenses, 
and approximately $53,000 is included in repairs and maintenance expense 
during the nine months ended September 30, 1996.  In addition, the 
Partnership paid the management company $30,000 during the year ended 
December 31, 1995 and and have accrued $37,500 for the nine months ended 
September 30, 1996 for accounting services previously provided by an outside 
company.

The Partnership Agreement entitles the General Partner or the 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 1996 or 1995.

Included in prepaid expenses and other assets were amounts due from related 
parties of $399,047 at September 30, 1996 and $366,258 at December 31, 1995, 
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).

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 $129,378 at September 
30, 1996 and $105,924 at December 31, 1995.

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.

See Note 2 for fees paid to related parties by the sellers of the 
Partnerships' 1995 acquisitions.


                                       11
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 4--OTHER ASSETS

The short term investment totalling $50,874 at September 30, 1996 and $48,877 
at December 31, 1995 is carried at cost which approximates fair value.  Such 
investment at September 30, 1996 is a 5.07% certificate of deposit maturing 
in February 1997.  The issuer and amount of this investment is as follows:

                                                September 30,   December 31,
                                                    1996            1995
                                                 ----------     ----------
Citizens Bank - Certificate of deposit           $   50,874     $   48,877
                                                 ----------     ----------
                                                 ----------     ----------

The carrying value of the Partnership's 50% interest in the Timpany Plaza 
Joint Venture, at equity, is $109,384 at September 30, 1996 and $129,989 at 
December 31, 1995.

The Partnership owns a 10% ownership interest in three real estate 
partnerships accounted for by the equity method and reduced to a carrying 
value of zero.  Losses in excess of cost in limited partnerships have not 
been recorded as the Partnership is not liable for such amounts.  During the 
fourth quarter of 1995 the real estate owned by another partnership in which 
NERA had a 10% ownership interest was sold for less than the mortgage debt. 
Accordingly, NERA did not receive proceeds from this sale.

The majority shareholder of the General Partner is also the majority owner of 
these partnerships (see Note 12).  There can be no assurance that any of 
NERA's partnership investments will be realizable in the future in excess of 
their carrying value.

NOTE 5--MORTGAGES PAYABLE

At September 30, 1996 and December 31, 1995 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.

                                       12
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 5--MORTGAGES PAYABLE (CONTINUED)

The Partnerships have pledged tenant leases as additional collateral for 
certain of their mortgages.

Approximate annual maturities are as follows:

                 1997 - current maturities     $   569,200
                 1998                              620,700
                 1999                              676,800
                 2000                              738,100
                 2001                              805,000
                 Thereafter                     49,266,400
                                               -----------
                                               $52,676,200
                                               -----------
                                               -----------

NOTE 6--ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The lease agreements for certain properties require tenants to maintain a 
one-month advance rental payment and security deposits.  The funds are held 
in escrow by another entity owned by the majority shareholder of the General 
Partner (see Notes 3 and 12).

NOTE 7--PARTNERS' CAPITAL

The Partnership has two categories of limited partners (Classes 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 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.

The Partnership declared distributions of $3.40 unit in the first and third 
quarters of 1996 and 1995 for a total distribution of $6.80 for the nine 
months ended September 30, 1996 and 1995.

The Partnership has entered into a deposit agreement with a bank 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 Depositary Receipts.  The 
following is information of the net income per Depositary Receipt:

                                                      Nine Months Ended
                                                        September 30,
                                                        1996     1995
                                                        ----     ----
  Net Income Per Depositary Receipt                     $.58     $.30
                                                        ----     ----
                                                        ----     ----

                                       13
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 8--STOCK REPURCHASE PLAN

During the second quarter of 1996, the Partnership announced a plan to 
repurchase up to $500,000 of its Depositary Receipts from existing holders of 
securities.  The repurchase of Depositary 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 Nasdaq at the time of the repurchase.  
During the third quarter of 1996, the Partnership repurchased 7,000 
depositary receipts for a total cost of approximately $47,000.  On October 
17, 1996, the Partnership repurchased 3,670 shares for a total purchase price 
of $25,412.

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.

NOTE 10--RENTAL INCOME

In 1996, approximately 83% of rental income is related to residential 
apartment and condominium units with leases of one year or less.  The 
remaining 17% is related to commercial properties which have minimum future 
rental income on noncancellable operating leases as follows:

              Commercial
               Property
                Leases           Land Leases             Total
             -----------         -----------           -----------
1997         $ 1,631,528          $  146,667           $ 1,778,195
1998           1,478,740             146,667             1,625,407
1999           1,123,447             146,667             1,270,114
2000             834,477             146,667               981,144
2001             609,013             146,667               755,680
Thereafter     1,853,122           1,136,669             2,989,791
             -----------          ----------           -----------
             $ 7,530,327          $1,870,004           $ 9,400,331
             -----------          ----------           -----------
             -----------          ----------           -----------

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.

                                       14
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE-10--RENTAL INCOME (CONTINUED)

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 
September 30, 1996 and December 31, 1995 is $186,125 and $158,000 
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 new 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 approximately $17,000 and 
$16,000, for the nine months ended September 30, 1996 and 1995 respectively.

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 $722,108, and $589,000 for the nine 
months ended September 30, 1996 and 1995 respectively.

NOTE 11--CASH FLOW INFORMATION

During the nine months ended September 30, 1996 and 1995, cash paid for 
interest on debt was $3,487,392, and $2,166,095 respectively.

NOTE 12--BANKRUPTCY OF RELATED PARTIES

As described in Notes 3, 4 and 6, the Partnerships had transactions with and 
have interests in certain entities in which the majority shareholder of the 
General Partner is involved.  Such shareholder had guaranteed certain notes 
receivable and had agreed to indemnify the Partnerships for losses incurred 
from certain partnerships in which NERA is a General Partner.  During March 
1991, this shareholder, the Partnerships' management company, and other 
related entities filed for protection from their creditors under Chapter 11 
of the Federal Bankruptcy Code.

                                       15
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTE 12--BANKRUPTCY OF RELATED PARTIES (CONTINUED)

In September 1992, the U.S. Bankruptcy Court confirmed a reorganization plan 
pursuant to which this shareholder was discharged of all liabilities 
including all guarantees and indemnifications.

The management of the Partnership believes that the proceedings described 
above will not adversely affect the Partnerships' properties or operations.

In August 1996, the U.S. Bankruptcy Court approved a settlement resulting in 
the final implementation of that reorganization plan, which occurred in 
September 1996.


                                       16
<PAGE>

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

Results of Operations

     Income from operations for the third quarter of 1996 was approximately 
$248,000, compared to approximately $82,000 for the same period in 1995, an 
increase of approximately $166,000. For the nine months ended September 30, 
1996, income from operations was approximately $884,000 compared to 
approximately $414,000 for the same period in 1995, an increase of 
approximately $470,000.  These increases in income are due primarily to the 
properties acquired in June of 1995.  Net cash provided by operations during 
the nine months ended September 30, 1996 was approximately $3,018,000 
compared to cash used in operations of approximately $770,000 during the same 
period in 1995, a fluctuation of approximately $3,788,000.  This increase in 
funds is due to an increase in net income during the nine months ended 
September 30, 1995 as well as the acquisition of six properties as of June 
30, 1995.  In connection with these 1995 acquisitions, the bank required that 
the Partnership fund real estate tax escrow accounts, insurance reserves, and 
reserves for capital improvements for the newly acquired properties.  In 
addition, nine properties were refinanced during the second quarter of 1995 
and the prepaid financing fees, related to the refinancing also affected the 
Partnerships cash flow.

     Rental income during the third quarter of 1996 was approximately 
$4,056,000 compared with approximately $3,817,000, for the same period in 
1995, an increase of approximately $239,000.  Increased rental rates at three 
of the properties acquired in June 1995 represent approximately $227,000 of 
this increase.  A reduction in the vacancy rate accompanied by an increase in 
rental rates at Westgate Woburn contributed to a rental income increase of 
approximately $36,000.  These increases are offset by a $45,000 decrease in 
percentage rents at the Timpany Plaza Shopping Mall.  The Partnership 
attributes this to a decline in sales at the retail locations.  For the nine 
months ended September 30, 1996, rental income was approximately $12,370,000 
compared with approximately $8,336,000 for the same period in 1995, an 
increase of approximately $4,034,000.  Rental income from the properties 
acquired in June 1995 represent approximately $3,918,000 of this increase.

     Expenses for the third quarter of 1996 were approximately $3,854,000 
compared to approximately $3,780,000 for the same period in 1995, an increase 
of approximately $74,000.  The increases of approximately $68,000 in 
professional fees and $92,00 in interest expense result


                                       17
<PAGE>


from the acquisition and refinancing which occurred during June and July of 
1995. These increases are offset by an $85,000 reduction in rental 
commissions due to reduced tenant turnover and a lower commission rate; and a 
$69,000 reduction in repairs and maintenance resulting from significant 
repairs and maintenance performed on acquired properties in 1995.

     Expenses for the first nine months of 1996 were approximately 
$11,641,000 compared with approximately $8,035,000 for the same period in 
1995, an increase of approximately $3,606,000. The properties acquired in 
June 1995 accounted for $3,061,000 of the increase. The year-to-date 1995 
operating results included only three months of the acquired properties 
operating activity and nine months in 1996. Other increases related to the 
acquisition include an increase of approximately $463,000 in interest expense 
due to the refinancing of existing Partnership properties. Expense increases 
unrelated to the acquired properties include an $83,000 increase in repairs 
and maintenance, and a $45,000 increase in professional fees. The increases 
are offset by a $95,000 reduction in rental commissions due to reduced tenant 
turnover and a lower commission rate.

     Interest income for the three months ended September 30, 1996 was 
approximately $37,000, compared to approximately $7,000 for the same period 
in 1995, an increase of approximately $30,000. Interest income for the nine 
months ended September 30, 1996 was approximately $125,000, compared to 
approximately $32,000 for the same period in 1995, an increase of 
approximately $93,000. These increases are due to the increase in cash 
available for investment as well as a slight increase in the interest rate.

     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 NERA's assets.

     The Partnership's share of income in the joint venture at the Timpany 
Plaza Shopping Center was approximately $6,000 for the third quarter of 1996 
compared to approximately $7,000 for the third quarter of 1995, a decrease of 
approximately $1,000. For the nine months ended September 30, 1996, the 
Partnership's share of income from the joint venture at Timpany Plaza 
Shopping Center was approximately $17,000 compared to approximately $16,000 



                                       18
<PAGE>


for the same period in 1995, an increase of approximately $1,000. The income 
and expenses of the joint venture have remained relatively stable during the 
year.

     In March 1996, a major tenant in the Timpany Plaza Shopping Center filed 
for bankruptcy under Chapter 11. This tenant paid approximately $347,000 of 
rent in 1995 and was current through October 1996. The Partnership has no 
reason to believe that the tenant will stop making rental payments in the 
future. Although the tenant is current as of October 1996, the Partnership 
cannot guarantee that rental payments will continue in the future in light of 
the tenant's bankruptcy.

     As a result of the changes discussed above, net income for the three 
months ended September 30, 1996 was $289,869 compared to $165,472 for the 
same period in 1995, an increase of $124,397; and net income for the nine 
months ended September 30, 1996 was $1,026,183 compared to $531,115 for the 
same period in 1995, an increase of $495,068.

LIQUIDITY AND CAPITAL RESOURCES

     The Partnership's principal source of cash during 1996 and 1995 has been 
the collection of rents and the refinancing of Partnership properties. The 
majority of cash and cash equivalents of $2,614,550 at September 30, 1996 and 
$2,706,124 at December 31, 1995 is invested in commercial paper and 
certificates of deposit maturing in less than 90 days. Additionally, the 
Partnership purchased a short term investment valued at $50,874 at September 
30, 1996 and $48,877 at December 31, 1995. This investment is a certificate 
of deposit maturing in February 1997.

     The Partnership believes it strengthened its portfolio by making 
significant acquisitions of rental and mixed-use properties in 1995. During 
1995, the Partnership acquired six properties for a total purchase price of 
approximately $32,123,000. The acquisitions were financed by $23,956,000 of 
new mortgages on the acquired properties. Additional funds of $22,446,000 
were provided by obtaining 13 mortgages on refinanced or debt-free 
properties. Approximately $10,900,000 of this amount was used to repay 
existing mortgages and approximately $11,546,000 was used in the acquisition 
of the above properties. In connection with these mortgages, the lender 
required that separate escrow accounts totaling approximately $870,000 be 
established to fund capital improvements at the properties. The Partnership 
is also required by the lender to make additional monthly payments of 
approximately $34,000 to fund these escrow accounts. The monthly payments to 
these escrow accounts are in addition to the monthly mortgage payments. In 
connection with these new mortgages, a substantial number of the 
Partnership's properties were restructured into separate subsidiary 
Partnerships.


                                       19
<PAGE>


     During the second quarter of 1996, the Partnership announced a plan 
under which it may repurchase up to $500,000 of its Depositary 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 Nasdaq at the time of the repurchase. 
During the third quarter of 1996, the Partnership repurchased 7,000 shares 
for a total purchase price of approximately $47,000. In addition, on 
October 17, 1996, the Partnership repurchased 3,670 shares for a total 
purchase price of $25,412. The funds pursuant to this program have and will 
continue to come from cash reserves. Management believes this repurchase plan 
of up to $500,000 will not have a negative impact on cash reserves. Management 
believes it has adequate cash reserves to meet the Partnership's needs.

     During the third quarter of 1996, the Partnership completed 
approximately $885,000 of capital improvements to its properties. Many of 
these improvements were anticipated in connection with the acquisitions made 
in June 1995 and were funded from the previously established escrow accounts, 
as well as cash reserves. The most significant improvements were made at the 
Westgate Woburn Apartments in Woburn, Massachusetts for a total cost of 
approximately $133,000 as well as improvements of approximately $125,000 at 
the Lincoln Street Apartments in Newton, Massachusetts; approximately 
$100,000 at the apartments at 1144 Commonwealth Avenue in Brighton, 
Massachusetts; approximately $87,000 at the Redwood Hills Apartments in 
Worcester, Massachusetts; approximately $82,000 at the apartments at 62 
Boylston Street in Boston, Massachusetts; approximately $56,000 at the 
Executive apartments in Framingham, Massachusetts; approximately $54,000 at 
the Clovelly apartments in Nashua, New Hampshire; and approximately $54,000 
at the apartments at 1137 Commonwealth Avenue in Brighton, Massachusetts.

     The Partnership plans to invest an additional $500,000 in capital 
improvements in the residential and commercial properties during the fourth 
quarter of 1996. These improvements will be funded from cash reserves and 
escrow accounts previously established.

     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. As a result of the sale of properties, unanticipated 
increases in expenses, or a loss of a significant tenant, the Partnership's 
net income and cash flow may fluctuate dramatically from year to year.


                                       20
<PAGE>


     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 distributions totalling $6.80 per Partnership unit 
($0.68 per depositary receipt) during each of the nine months ended September 
30, 1996 and 1995.

     Statements made in this Quarterly Report may contain information about 
the Partnership's future business prospects. Some of these statements may be 
considered "forward looking". These statements are subject to risks and 
uncertainties that could cause actual results to differ materially from those 
set forth in or implied by such forward-looking statements. For further 
information regarding cautionary statements and factors affecting future 
operating results, please refer to the Partnership's annual report on 10-K 
dated December 31, 1995.


                                       21
<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:   November 13, 1996

                                       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.





                                       22