What to Know
- The New York City Council voted on Wednesday in favor of the Fairness in Apartment Rentals Act, a bill that would end forcing tenants to pay broker fees.
- The legislation, which cannot be vetoed by the mayor, would require the person who hires a broker to pay their fees.
- New York is one of the only places in the country where renters often have to pay thousands of dollars in a brokers fee … to pay for a broker the landlord hired.
The New York City Council passed, in a 42-8 vote, a bill that will put an end to forcing tenant-paid brokers fees, as the city looks for strategies to tackle the housing affordability crisis. Now, whoever hires the broker will have to pay their fees.
The Fairness in Apartment Rental Expenses, or FARE, Act will "prohibit brokers from passing their fee onto tenants where the broker is exclusively representing the landlord’s interests."
In a statement after the passage of the bill, the Legal Aid Society welcomed the protections and urged Mayor Eric Adams to sign the bill into law "without any delay."
"Today marks a welcomed step towards reforming New York City’s long-standing system that has forced tenants to pay exorbitant broker fees that can cost as much as 20 percent of a year’s rent. For our clients and all low-income New Yorkers, these fees often serve as financial barriers and limit tenant’s housing options," said a spokesperson in a written statement.
A StreetEasy analysis found that in 2023, the average New Yorker spent more than $10,000 in upfront costs for rental, a 7.1% increase from the 2022 data. It also pointed out that the largest upfront expense was the broker fee.
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"The FARE Act is a major step forward for housing affordability in NYC and a change renters want and need. I applaud Speaker Adams and the City Council on this meaningful milestone and urge the Mayor to sign the bill," said StreetEasy general manager and Zillow vice president Caroline Burton after the NYC Council passed the initiative.
News
The hefty one-time payments, known as broker fees, are ubiquitous in New York but nearly unheard of anywhere else. In most other cities, landlords cover the commission of agents working on their behalf, according to the Associated Press.
New York’s broker fee arrangement dates back nearly a century to a time when agents played an active role in publishing listings in newspapers and working directly with would-be tenants. The commission structure is also found in Boston, but few other parts of the country.
But with most listings now published online, and virtual or self-guided tours gaining popularity since the COVID-19 pandemic, many New Yorkers have grown increasingly frustrated by the fees.
"When you add on security deposit. first months rent and a broker fee our families are drowning," said Councilman Shaun Abreu.
“They spent hundreds of thousands of dollars to lobby our politicians to try to kill this bill and try to force you to pay broker fees,” Councilmember Chi Ossé, a Democrat who sponsored the the FARE Act, said at a rally Wednesday. “But you know what we did: We beat them.”
The New York State Association of Realtors has voiced opposition to the measure. They argue the elimination of broker fees "threatens brokers' livelihoods, lead to increased rents, and limit housing access."
In a statement, the association reaffirmed their opposition to the bill and vowed to "continue to fight this ill-conceived legislation on behalf of its REALTOR members across all five boroughs."
Opponents argue the bill will end up hurting brokers and tenants. Councilwoman Vickie Paladino, who was against the bill, asked during the vote "At one point will we realize we're only going to make things worse?"
🚨LEGISLATIVE UPDATE: It’s official! By a vote of 42-8, the FARE Act passed the @NYCCouncil with a veto-proof supermajority ending forced broker fees. Thank you. pic.twitter.com/PFOenhpNhS
— Council Member Chi Ossé (@CMChiOsse) November 13, 2024
Adams has not committed to signing the Democratic-led effort but does not have veto power.
In an unrelated press conference on Tuesday, Adams said the bill could make the broker fee into "a permanent fee that's built into your rent."
"So we just gotta get it right, make sure we reach the goals that we're looking for and at the same time, don't hurt small property owners and try to give some relief to those who are trying to live in the city.," Adams said. "So that's the question that we need to look at and I think the bill has the right intention but sometimes good intentions do not get the results you're looking for."
