NYC rental broker fee killed by city council
The NYC rental broker fee is dead. The New York City Council voted Wednesday afternoon to enact the Fairness in Apartment Rentals Act (FARE) Act, a bill that would end tenant-paid rental broker fees when brokers are exclusively representing landlords, as part of a broader effort to address the city’s housing affordability crisis.
Upon signing a lease in New York City, tenants typically pay the broker 15% of the annual rent to brokers, adding thousands of dollars to the costs associated with moving. The bill is proposed to “prohibit brokers from passing their fee onto tenants where the broker is exclusively representing the landlord’s interests.”
New York is unique in how its rental market functions. Because of a combination of chronically low supply of apartments and strong desirability, landlords have made it customary to charge renters for their own broker’s services — which typically involve running a credit check and application, opening the doors and answering questions.
The legislation — introduced by Council Member Chi Ossé — will take effect in 180 days, giving renters relief from the costly one-time payments, which often total more than $10,000. In virtually every other city, landlords typically cover agent commissions for leasing, as reported by the Associated Press.
The New York State Association of Realtors has fought vigorously against the legislation, arguing that eliminating broker fees “threatens brokers’ livelihoods, could lead to higher rents, and may limit housing access.”
Another powerful trade organization, the Real Estate Board of New York (REBNY), even proposed its own version of the bill, which would increase disclosures made to tenants rather than change how brokers are paid. The group argues that under Ossé’s bill, landlords will pass the cost of broker fees onto tenants by increasing rents.
New York City Mayor Eric Adams, a Democrat with strong connections to real estate leaders, formerly expressed concerns about the bill at his weekly news conference on Tuesday, stating that he doesn’t want it to negatively impact small property owners.