Goodbye broker fees? Bill shifting costs from NYC renters could get November vote

The New York City Council is poised to pass a law that would allow most tenants to avoid paying thousands of dollars in broker fees when renting a home, according to the bill’s sponsor.

The proposed measure, which the Council could vote on as soon as Nov. 13, would shift broker fees to the party that hires the broker, which is nearly always the landlord. The Fairness in Apartment Rental Expenses, or FARE, Act now has 33 sponsors, seven more than the majority needed to pass in the 51-member Legislature.

The measure would lift a huge upfront financial obligation from apartment hunters who are often forced to pay a broker hired by the landlord before signing a lease. The bill’s opponents in the real estate industry say landlords could pass broker costs onto tenants anyway through higher rents. But that would not be the case for about 1 million rent-stabilized apartments where rent increases are capped.

Councilmember Chi Ossé of Brooklyn, who introduced the bill, told Gothamist the legislation is a common-sense measure to shift payment to whomever enlists the broker. That’s almost always the landlord, though in some cases prospective tenants hire brokers to assist in their apartment search.

“The bill simply requires that the hiring party in a rental transaction, whether landlord or tenant, pays the broker fee,” he said. “Tenants in New York City have suffered for too many decades under a system of forced broker fees.”

Tenant-paid broker fees are a uniquely New York arrangement, dating back to the days where agents were tasked with listing apartments in newspapers like the Village Voice and coordinating with prospective tenants by phone or in-person to show off the units. Unlike most other cities in the United States, tenants in New York City foot the bill even if a landlord hired the broker.

Ossé announced the City Council’s intention to vote on the measure in an Instagram post last week. A Council spokesperson said the bill is still undergoing revisions and review. Speaker Adrienne Adams is not among the sponsors.

The cost of broker fees has surged as rents have risen. New York City brokers typically charge tenants a one-time fee ranging from the equivalent of a month’s rent to around 15% of the yearly total — an extra $5,400 for a $3,000-a-month apartment. In some cases, especially with low-cost rent-stabilized apartments, brokers tack on even more exorbitant fees in exchange for unlocking the front door and coordinating lease-signing with the landlord or management company.

A February report from listings site StreetEasy found the average New York City renter forks over nearly $10,500 — including the broker fee, first-month’s rent and security deposit — to secure an apartment. Those fees can prevent tenants from moving or force them to turn to corporate loan or guarantor services that tack on yet more costs.

The latest version of Ossé’s bill states that landlords who hire brokers could face a $1,000 fine the first time they force the tenant to pay the fee and up to $2,000 for every subsequent offense.

Brokers and the Real Estate Board of New York, a trade group, say the bill will make the rental process more complicated and drive landlords to pass the broker fee onto tenants in the form of higher monthly rents under their leases.

“This legislation will make it much harder for tenants to rent apartments and put the jobs of many brokers at risk,” REBNY President James Whelan said in a statement. An analysis by the Real Deal found nearly 40,000 licensed real estate agents and brokers in Manhattan, Brooklyn and Queens last year.

Thousands of brokers rallied with their bosses to oppose the FARE Act outside of City Hall in June. Some said landlords would probably pay them less than they earn through the current system.

Mayor Eric Adams has not taken a public stance on the FARE Act. City Hall spokesperson Amaris Cockfield on Monday said the mayor is "closely watching this bill."