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Know Your Rights
Source: The City
Subject: Housing & Environmental Justice

What to Know About New York’s Latest Attempt to End Forced Broker Fees for Renters

New York is one of the only U.S. cities where tenants have to pay for a broker they did not hire. Those fees can range from one month’s rent up to 20% of the annual rent depending on the market.

And in a rental market with a 1.4% vacancy rate, many people see broker fees as a barrier preventing people from moving.

City Councilmember Chi Ossé (D-Brooklyn) is trying for the second time to change the way broker fees work in the city. The FARE (Fairness in Apartment Rentals) Act would require the person who hires the broker to pay their fee.

Currently, tenants are often on the hook for paying the fee, even if the landlord hired the broker. Though the average rate is 15% of the annual rent, some broker fees have been as high as $20,000.

What is a broker fee?

A broker is typically a person who connects tenants and landlords in order to rent an apartment. In many cases, the landlord hires the broker to find potential tenants for the open apartment, though tenants can also hire brokers to help them find a home. It is standard in the city for broker fees to be included in the total cost of renting a new apartment.

Oftentimes, broker fees are still required even if the tenant finds the listing themselves.

In New York, the average upfront cost including broker fees to move into a rental was $10,454 in 2023, up 29% from 2019 before the pandemic disrupted the market, according to StreetEasy’s internal data.

Is that allowed? I thought this had already changed.

Yes, New York City is one of only two U.S. cities where tenants are expected to pay a broker fee, even if they did not hire a broker. Andrea Shapiro, director of programs and advocacy at the tenant advocacy group Metropolitan Council on Housing, says this issue comes up a lot on the organization’s Tenants’ Rights Telephone Hotline.

“Often, people who are from out of town call and ask ‘Are these real? Is this right?’” Shapiro said.

In 2020, interpreting a tenant protection law passed by the legislature, the New York Department of State issued guidance that prohibited brokers hired by landlords from charging tenants. The Real Estate Board of New York challenged the restriction in a lawsuit, resulting in a state court overturning the ban in 2021.

There was also a bill proposed in the City Council in 2019 to cap broker fees to no more than one month of rent, but that measure never made it out of committee.

In 2023, Ossé first proposed the FARE Act, which states that the person who hires the broker will pay the fee. The bill did not make it to a hearing and therefore never had a chance to come to a vote in the Council.

This year, Ossé reintroduced the bill in February, and the Council’s Committee on Consumer and Worker Protection is hosting a public hearing on the bill Wednesday. The hearing marks the farthest point this bill has gotten to date.

Who supports this bill?

The FARE Act, originally co-sponsored by Councilmembers Shaun Abreu (D-Manhattan) and Oswaldo Feliz (D-The Bronx), now has 31 co-sponsors in the Council, only three away from a veto-proof majority.

More than 30 advocacy groups have declared their support for the bill, including Make the Road New York, the Legal Aid Society and the New York Working Families Party.

“This legislation will be particularly critical for our clients and low-income families for whom an exorbitant broker fees can prohibit them from moving into a new home,” Judith Goldiner of the Legal Aid Society said in a statement.

Venture capitalist and political consultant Bradley Tusk has also spent $25,000 supporting the FARE Act, according to a recent report by Politico.

Beyond that, online housing advocates and even a few celebrities have chimed in to support. TikTok creators Jake Cornell and Alex Peter (@loloverruled) have made videos supporting the bill and encouraging followers to attend the City Hall hearing.

One video defending the current system, made by real estate broker Jordan Silver, was reposted by creator @lisagrrera, who posted a critical response to it that received almost 14,000 likes. Last week, Ossé posted a video with comedian Ilana Glazer calling on New Yorkers to attend the hearing.

Who opposes this bill?

The main opponent is the real estate industry, for the most part represented by the powerful Real Estate Board of New York (REBNY). Ryan Monnell, REBNY’s vice president of government affairs, raised concerns about the bill’s impact on New York’s real estate professionals, and contends the measure would lead to rent increases across the board as landlords absorb the cost into the total price of rent.

“What you’re doing is you’re eliminating the opportunity for New Yorkers to make the best choice for themselves and are looking for an apartment in regards to when they want to pay costs,” Monnell told THE CITY.

Opponents of the bill also argue that increased costs to landlords will incentivize them to take apartments off the market, especially landlords who cannot increase rates on rent-stabilized units to cover the broker fees.

Sarah Saltzberg, a real estate agent and co-owner of Bohemia Realty Group in Manhattan, says the legislation is more nuanced than how proponents portray it.

“Anything that is going to be a significant shift in the market deserves to be studied, to look at the economic impacts and how it’s going to affect the city as a whole,” Saltzberg said.

What happens next?

After Wednesday’s Council committee hearing, the committee chair Julia Menin will decide whether or not to bring the bill to a vote. If the vote passes in committee, the bill can move to the entire City Council for a vote.

How can I testify?

New Yorkers can register online to testify in person on Wednesday at City Hall. They can also submit written testimony up to 72 hours after the hearing ends on the council’s website. Both sides are expecting a large turnout, with rallies starting at 9 a.m., an hour before the scheduled start of the hearing. According to REBNY, over 1,800 members have registered to testify.