Most New York renters will no longer be responsible for paying hefty fees to real estate brokers they did not hire.
On Nov. 13, the City Council overwhelmingly voted in favor of a bill that would make landlords responsible for broker fees for most leases, ending an unusual system that has been common practice in New York for decades.
Many renters and tenant-rights groups have criticized broker fees as unfair, and celebrated the bill’s passage. Brokers, landlords and real estate interest groups opposed the measure and say that it could lead to higher rents.
Here’s what else to know about broker fees.
What are broker fees?
Broker fees are upfront, one-time payments that are typically one month’s rent or up to 15 percent of the annual rent. Those fees, coupled with a security deposit and first month’s rent, mean that the cost of getting into a new apartment can be $10,000 — a heavy burden for new tenants and an unwelcome surprise for renters who are moving to New York City for the first time.
In the age before online rental listing sites like StreetEasy and Zillow, brokers played an important role in connecting prospective tenants to landlords with available apartments by listing units in publications, answering inquiries, setting up tours and filling out leasing paperwork. The fees compensated them for that work.
But now, many tenants never meet the brokers they are responsible for paying and do much of the work themselves, browsing the internet or finding places by word of mouth.
Who was behind the bill?
Chi Ossé, a progressive City Council member who represents parts of Brooklyn, struggled to find an apartment himself after he was elected to the Council in 2021. He was one of the bill’s 33 sponsors and said that its passage represented the end of a “cruel and unfair system that has persisted for decades.”
Brad Lander, the city’s Democratic comptroller who is also running for mayor, celebrated the bill’s passage as a step toward putting “power back in the hands of working families and tenants.”
Social justice and progressive housing groups like Make the Road New York and Housing Works supported the measure, which they say will make housing more affordable and accessible.
Felipe Idrovo, who rents a room in Queens, said in an interview in Spanish that he started to look for an apartment with family members after his landlord raised his rent.
“I realized that the burden of the broker’s fee was taking away the little money I had to make that move,” said Mr. Idrovo, who is a member of Make the Road New York.
Now that the measure has passed the Council, Mr. Idrovo said, he feels like he has more freedom to look for an apartment in his price range.
What happens next?
The bill passed, 42 to 8, and will head to the desk of Mayor Eric Adams. Mr. Adams has been critical of the bill, and has not said whether he will sign it into law.
But even if he tries to veto it, the Council could override his decision if two-thirds of its members vote to do so. Since more than two-thirds of the members voted for the bill in the first place, it seems likely that they would be able to overcome a veto, too.
After the bill becomes law, it will take 180 days to go into effect. Landlords will also be required to tell tenants the cost of the fee in apartment listings and lease agreements. Violating the law could result in a $2,000 fine.
Will rents go up?
The Real Estate Board of New York, an influential industry lobbying group, opposed the bill and warned that landlords would pass the cost of the broker fees on to tenants by increasing monthly rents.
Mr. Adams, a longtime industry ally who once worked as a broker himself, said at a news conference that the bill “has the right intentions” but cautioned that it could lead to “permanent” rent increases.
While landlords could bump up the cost of market-rate apartments, they wouldn’t be able to do so for the roughly one million rent-stabilized apartments in New York, which are also covered by the bill and account for almost half of all rental units in the city.
Mr. Ossé told CBS News that he doubted landlords could get away with raising rents because of market forces.
“If your landlord could increase your rent tomorrow, they would have done so yesterday,” he said. “They’re not holding back. Who are we kidding?”
Does every apartment have a broker fee?
Some landlords already take responsibility for paying the broker fee, advertising units as “no fee” to entice prospective tenants. Property owners could pay that cost themselves or pass it on to tenants through higher monthly rents.
Offering no-fee apartments became more popular during the Covid-19 pandemic, when the number of tenants seeking apartments in New York City dropped and rent prices plummeted.
For a very short period in 2020, state regulators blocked brokers from charging the fees to renters, expanding on tenant protections passed the year before. But the Real Estate Board of New York sued, and the fees returned.