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NYC Council weighs curbing broker fees for renting apartments. Brokers say 'no.'
By
David Brand
Published Jun 12, 2024
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David Brand / Gothamist
By
David Brand
Published Jun 12, 2024
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New York City lawmakers could be on the verge of curbing broker fees for renters — and hundreds of leasing agents and their real estate backers are slamming the plan.
A horde of local brokers jammed the sidewalk outside City Hall on Wednesday to protest legislation that would shift the thousands of dollars in fees they currently charge prospective tenants to the landlords who hire them. Steps away, tenants rallied to champion the measure, saying it could sharply reduce the high upfront costs they face before landing an apartment.
In New York City, unlike nearly every other place in the country, renters are often forced to work with a middleman broker hired by the landlord to access an apartment and sign a lease. Brokers usually charge the tenant a one-time upfront fee, ranging from a month's rent to around 15% of the annual rent, or $4,500 on a $2,500-a-month apartment.
A February report by listings site StreetEasy found that the average New York City renter pays nearly $10,500 in upfront costs to move into an apartment, including the broker fee, security deposit and first month’s rent.
The dual rallies were organized respectively by the Real Estate Board of New York, a deep-pocketed opponent of the legislation, and Councilmember Chi Ossé of Brooklyn, the bill's sponsor. They preceded a tense hearing where lawmakers clashed with real estate representatives as roughly 400 people signed up to testify on the latest effort to limit what critics say is a uniquely New York cost tacked on to rising rents.
“No one here is saying a broker should not make a broker’s fee, what we’re simply saying is if you hire the broker, you should pay for the broker’s fee,” said Councilmember Crystal Hudson, who represents parts of Brooklyn.
But brokers, landlords and REBNY officials have consistently panned the Fairness in Apartment Rental Expenses (FARE) Act and argued that it will lead to higher rents.
“The reality is, if this bill were to be passed into law, the fee still would be passed onto the renter,” said REBNY Vice President Ryan Monell.
While most prospective renters end up shouldering the cost of paying for a broker they didn’t hire, tenants can sometimes get lucky and find a “no-fee” apartment with no broker cost attached. Renters can also hire a broker to help them find an apartment, an expense Ossé said he accepted when his own housing search stalled last year.
He said his bill, by limiting the lump sum fee, would allow low- and middle-income renters to better manage moving homes, even if it does end up increasing the rent.
“If a landlord does bake it into the rent, many tenants would rather pay that over the span of 12 months or 24 months rather than saving multiple paychecks just to move into housing,” Ossé told WNYC on Monday. “This eliminates that expensive upfront cost and allows people to move into housing easier without having to save $10,000 just to move in.”
Outside City Hall, Brown Harris Stevens CEO Bess Freedman told brokers they would lose money if the measure passes. “For the agents, this bill threatens your livelihoods,” she said. “We all know how much hustle, muscle it takes to get a deal done.”
Brokers told Gothamist they fear losing money should the legislation become law.
“I think it'll affect real estate agents’ and brokers’ incomes,” said Eyal Adri, a broker focused on rentals in Manhattan and Brooklyn. “I think landlords will pay less commission, they'll try to do it themselves.”
His colleague Bradley Rhyins said tenants will end up paying more in the long run through higher rents instead of a one-time fee. “It's less expensive than if you're going to pay that year over year,” said Rhyins.
Tenants at City Hall Park said it’s well past time that the city axes a burdensome cost for renters who already face record-high rents.
Flushing tenant Jody Cross said she expects to have to pay around $10,000 in upfront costs as she looks for a new one-bedroom apartment. “It's a lot of money to output immediately, and especially since I didn't hire the person,” she said. “You do all the groundwork. You go on the website. You find the apartment, you schedule it, and then you get hit with a fee.”
Supporters of the FARE Act included a handful of labor unions and even some brokers.
“It feels less like we’re protecting ourselves and more like we’re protecting landlords,” broker Anna Klenkar told councilmembers.
Business investor Bradley Tusk, a former campaign manager for Mayor Michael Bloomberg who runs a political strategy firm, also backed the bill, saying it would remove a barrier for “the best and brightest” who are looking to move to the five boroughs. “From an economic standpoint, this bill is excellent for New York City,” he said.
It’s not the first time that lawmakers have attempted to limit or regulate broker fees. But previous efforts have died or been reversed by a judge.
With the current legislation gaining momentum, Mayor Eric Adams has so far declined to take a stance on the measure.
“No one wants to have tenants pay what they shouldn't have to pay,” Adams told reporters on Tuesday, before adding that “real estate agents do a lot of work.”
Adams said he was being cautious about a proposal that could “alter entire industries.”
Tagged
Politics
renters
new york city
housing
economy
City Council
eric adams
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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