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Bye-bye broker fee: NYC Council approves bill to eliminate fee for most tenants
By
David Brand
Published Nov 13, 2024
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By
David Brand
Published Nov 13, 2024
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The New York City Council approved new legislation on Wednesday that will eliminate hefty upfront broker fees for most renters.
In New York City, unlike nearly every other place in the country, tenants are often forced to fork over a fee, on top of their rent, to a broker hired by the landlord before signing their new lease. This happens even to tenants who have never met the brokers. The fees typically equal around 15% of the yearly rent — $6,300 for a $3,500-per-month apartment, for example — and go to the broker who listed or showed the unit.
But the bill approved by the Council would upend this dynamic by requiring the party that hires the broker — usually the landlord or building manager — to pay the broker's fee. Tenants who hire a broker for assistance will still be responsible for their fee. The Council voted 42-8 in favor of the measure.
Tenant groups and elected officials have been trying to eliminate the fee for years. They nearly accomplished it before the Real Estate Board of New York successfully sued to block a state-level measure capping broker fees four years ago. REBNY, an industry trade group representing brokers and the large firms that employ them, has opposed the current legislation, arguing it will cost landlords more and compel them to raise rents to cover the fees.
Councilmember Chi Ossé, the bill’s sponsor, shot down that critique before the vote Wednesday.
“This bill is common sense,” he said. “It replicates how every other transaction exists in this country: Whatever you hire or order, you pay for.”
An analysis earlier this month by the real estate listings firm StreetEasy found tenants pay an average of nearly $13,000 in upfront costs for apartments subject to broker fees. That total includes the broker fee, security deposit and first month’s rent.
Councilmembers rallying outside City Hall ahead of the vote said the upfront fee can be prohibitive for many working-class and middle-income renters trying to move in the five boroughs.
“This bill is seismic,” said Councilmember Shaun Abreu of Manhattan. “It's going to be the difference between being able to have an apartment or not being able to have an apartment.”
But some of the councilmembers who voted against the measure said the move could backfire for renters.
“These fees aren’t going anywhere,” said Councilmember Vickie Paladino of Queens, who was among the eight Republicans and conservative Democrats who opposed the bill. “They’re just going to be built into rents and rents will go up as a result.”
The bill now goes to Mayor Eric Adams, who has yet to take a firm stance on the measure. He said Tuesday he had concerns over the consequences for smaller property owners and for tenants who may end up paying more in rent if the landlord factors the broker fee into the monthly cost.
“The bill has the right intentions,” the mayor said. “But sometimes good intentions do not get the results you’re looking for.”
Before the vote, Council Speaker Adrienne Adams said she was “surprised” by his concerns about the legislation.
“We worked together with the administration with this bill,” she said. “They raised no major issues.”
At least one influential strategist is now launching a campaign to pressure the mayor to not veto the bill.
Bradley Tusk, an investor and former campaign manager for former Mayor Michael Bloomberg, told Gothamist he will spend $10,000 on a digital ad campaign urging young people to contact Mayor Adams about the bill.
“New Yorkers have been getting ripped off for decades and decades,” Tusk said in a statement. “The more we can do to make it cheaper and easier for talented young people to come here and stay here, the better off we’ll be.”
Tagged
new york city
Mayor Eric Adams
housing
City Council
David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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