New York City is considering eliminating broker’s fees for apartment rentals. Those in favor as well as those opposed to the bill gathered on the sidewalk outside City Hall earlier this week to make their voices heard.
In most parts of the country, a tenant pays a broker fee only if they hire a broker themselves regardless of the apartment they are moving into. A broker fee in New York City is often tacked on to the price of moving in the way a security deposit is, not matter if a tenant hired the broker or not.
The fee is typically 15% of the annual rent; for example. This results in tenants having to pay approximately $10,500 in fees when moving, according to StreetEasy’s listing site, including the broker fee, security deposit, and first and last month’s rent. The city is now looking to eliminate the broker fee to better facilitate tenants moving, a move that could significantly ease the financial burden on them.
Councilmember Chi Ossé of Brooklyn, who proposed the bill, helped organize the group championing the measure that gathered outside City Hall on Wednesday. The Real Estate Board of New York organized the opposing group, which argued that passing the bill, known as the Fairness in Apartment Rental Expenses Act, would lead to higher rents. “The reality is, if this bill were to be passed into law, the fee still would be passed onto the renter,” said REBNY Vice President Ryan Monell, asserting that landlords would add the lost broker fee into tenant’s rent.
Ossé countered this, saying the FARE Act would help tenants move even if rents were raised. “If a landlord does bake it into the rent, many tenants would rather pay that over the span of 12 months or 24 months rather than saving multiple paychecks just to move into housing,” he told WNYC on Monday. “This eliminates that expensive upfront cost and allows people to move into housing easier without having to save $10,000 just to move in.”
For brokers worried that the bill will affect their incomes, the answer is that it most likely would. “I think it’ll affect real estate agents’ and brokers’ incomes,” said Eyal Adri, a broker focused on rentals in Manhattan and Brooklyn. “I think landlords will pay less commission, they’ll try to do it themselves.” However, the bill would allow tenants to hire a broker of their own volition, as renters do across the rest of the country. “No one here is saying a broker should not make a broker’s fee, what we’re simply saying is if you hire the broker, you should pay for the broker’s fee,” said Councilmember Crystal Hudson of Brooklyn in support of the bill. This shows that the bill is not aimed at undermining the role of brokers, but rather at ensuring a fair distribution of costs in the rental process.
Attempts have been made to get rid of broker fees in New York City in the past, but a judge has either fizzled out or reversed the efforts. Former Mayor Michael Bloomberg backed the bill, saying, “From an economic standpoint, this bill is excellent for New York City,” he said. Mayor Eric Adams was more hesitant to take a stance. “No one wants to have tenants pay what they shouldn’t have to pay,” Adams told reporters on Tuesday, before adding that “real estate agents do a lot of work.”
