New York City Council passes bill that would require landlords to pay for broker fees, not tenants
NEW YORK -- The New York City Council passed a bill Wednesday to have landlords pay for broker fees, instead of tenants.
The Fairness in Apartment Rental Expenses, or F.A.R.E., Act passed, getting 42 of 51 votes, a veto-proof majority.
Under the bill, whoever hires the broker would have to pay them. In most cases, that would be the landlord. The broker fee, as we know it, would end.
Debate over NYC broker fee law
The bill lifts the financial burden from apartment hunters who often pay thousands of dollars in fees before signing a lease.
Councilmember Chi Ossé, who introduced the legislation, has promised it will result in more affordability for tenants, and that most cities around the country already follow this payment structure. New York's system is unique - it's one of the only cities where the landlord hires the brokers to list and show the apartment and then the tenant has to pay for it. Typically, it's 12-15% of the annual rent, but there's no cap.
When you add on first month's rent and a security deposit, that means renters frequently have to spend $10,000 to secure a typical one bedroom.
"What other industry does that exist where someone else orders something, and then someone else has to pay for it," said Ossé.
Ossé has faced fierce opposition from real estate groups who say his proposal will have unintended consequences, including increasing rent because landlords will just back the cost of the fees into the rent.
"Forty seven percent of homes for tenants in New York City are rent stabilized, so it would be illegal for landlords to bake the fee into rent in that case. In addition to that, rents are set by market forces, not by what landlords could charge. If your landlord could increase your rent tomorrow, they would have done so yesterday. They're not holding back, who are we kidding," Ossé said.
"Almost 50% of the units are no-fee apartments. Nobody's forced to. This is all negotiable," Brown Harris Stevens CEO Bess Freedman said.
"New York is its own animal, right? And I think it's a misconception to think, if this bill would pass, it would just automatically become what the rest of the country has," Ryan Monell, with the Real Estate Board of New York, said.
New York City Mayor Eric Adams weighed in on proposed legislation Tuesday, saying the bill has the right intention, but sometimes good intentions do not yield the intended results. Adams expressed concern the proposal would transform a one-time cost into a permanent rent increase for tenants.
