Broker fees for tenants in New York City are about to go extinct.
In a sweeping 42-8 vote Wednesday, New York City officials passed legislation that bars landlords from getting prospective tenants to pay the real estate agent hired to shop out the apartment on behalf of the landlord.
Dozens of supporters rallied on the steps of City Hall ahead of the vote to show support for the bill before it heads to the 51-member body. Thirty-three city council members co-sponsored the bill, commonly known as the Fairness in Apartment Rental Expenses or F.A.R.E. Act.
Chi Ossé, the primary sponsor of the FARE Act, addresses media and supporters, ahead of the City Council vote. (Credit: Tyler Paz)
Council member Chi Ossé, the bill’s key sponsor, said the legislation was spurred by his struggle to find housing in his Bedford–Stuyvesant and North Crown Heights district.
“This is a real reality that so many New Yorkers are dealing with given the unaffordability crisis that is happening in New York City right now,” Ossé said in an interview.
“It was my goal to shift the broker responsibility on whoever hires the broker to save New Yorkers thousands of dollars,” Ossé said.
New York City is one of two cities nationwide where a broker fee is required from prospective renters. According to the real estate listing website StreetEasy, broker fees vary but can range from the cost of the first month’s rent of an apartment to 10-15% of the yearly rent.
At most buildings, tenants are also expected to pay upfront costs, including the security deposit and the first month’s rent, in addition to the broker fee. The city temporarily eliminated broker fees in 2020 but was sued by the Real Estate Board of New York, which has long opposed ending the broker fee requirement. Eventually, the mandate was reinstated after a state court ruled to support the board.
Comptroller Brad Lander reported in February that the vacancy rate in New York City is at an all-time low of 1.4%. And less than 1% of apartments cost $1,650 or less.
In a press conference on Tuesday, Mayor Eric Adams acknowledged that finding affordable housing is a struggle for many New Yorkers. He then declined to say if he planned to sign the legislation into law although the supermajority of Council Members who approved the bill can override his veto.
“Affordability’s a real issue in the city,” Adams said. “People are leaving the city because it’s just too expensive, and we need to find ways of ensuring we get that affordability, but we can’t do it with just a knee-jerk reaction.”
However, he argued that the fees could be carved out of tenants’ monthly rent.
“If you pass the course on to the small property owners, nothing stops them from building into the rent,” Adams said.
“So it goes from a one-time fee to a permanent fee that’s built into your rent, so some ideals collide with the reality of the operationalizing and implementation. I think the bill has the right intention, but sometimes good intentions don’t get the results you’re looking for.”
However, Ossé said he believes that if landlords were going to increase rent, they would do it regardless of whether the legislation passes. Moreover, he added that because almost half of all New York apartments are rent-stabilized, it would be illegal to absorb that cost.
“Most New Yorkers are living paycheck to paycheck and eliminating that upfront class will allow them to move into an apartment easier,” Ossé said.
Helen Dottener, 54, said she was charged roughly $1,500 in broker’s fees in 2021 when searching for a home in Little Haiti, Brooklyn.
She said not paying the broker’s fees means saving money for other costs like bills or buying groceries.
“No matter how much I get paid, I have to pay rent, I have to pay electricity, I have to pay gas, and then I have nothing left for food,” Dottener said. “I’m paying like almost $1,900 for rent. I can’t even eat.”
The bill now heads to the mayor’s office to be signed. It would take effect within 180 days after it officially becomes law.
