In New York City, apartment tenants usually need to pay 15% of the rent to the broker, while the landlord is not required to bear this brokerage fee. However, the New York City Council has recently passed a new law that prohibits transferring the brokerage fee to tenants, making it the responsibility of the landlord to pay. This move aims to ease the financial burden on tenants, but opponents argue that this “good deed” may not necessarily achieve positive results.
On November 13, the New York City Council passed the “Fairness in Apartment Rental Expenses Act” (F.A.R.E.) with a vote of 42 in favor and 8 against. This legislation prohibits real estate brokers from passing on their commission costs to tenants when representing landlords and requires the disclosure of this fee amount in lease agreements. In most cases, it is the landlord who hires the broker. The bill was introduced by Councilmember Chi Ossé and received majority support.
The new law will officially take effect within 180 days. Real estate brokerage firms estimate that currently, aside from rent-stabilized apartments, about half of the apartments in New York City require tenants to pay a brokerage fee.
On the day the law was passed, New York City resident Christian participated in a rally in front of City Hall. He told this newspaper that when he moved last year, he paid a $2,300 brokerage fee, and he may have to move again next year, which is a significant financial burden. He believes it is unfair for tenants to bear the brokerage fee and strongly supports the passage of the law.
According to data from the StreetEasy website, the initial cost for a New York City tenant to lease an apartment with a brokerage fee, including security deposit, brokerage fee, and one month’s rent, amounts to $12,951, reaching a historical high and exceeding apartments without a brokerage fee by 47%.
Brooklyn Borough President Antonio Reynoso also expressed support for the new law, telling this newspaper, “Currently, the average initial cost paid by tenants ranges from $7,500 to $15,000. The City Council’s decision to have landlords, rather than tenants, bear the brokerage fee can help tenants save about 33% of their initial expenses. This money stays in the pockets of tenants, making housing costs in New York City more affordable.”
City Councilmember representing the 1st District of Lower Manhattan, Christopher Marte, believes this is a win-win legislation. He points out that under the new law, landlords can attract high-quality tenants from different areas, increasing the success rate of rentals. Tenants can reduce expenses, thereby enhancing their ability to pay rent, while brokerage companies can still maintain their deserved compensation.
However, the Real Estate Board of New York opposes the measures in the law, arguing that landlords bearing the brokerage fee will lead to rent increases. Mayor Adams has also expressed similar concerns, stating that the law does not specify that landlords cannot include the brokerage fee in the monthly rent charged to tenants. If landlords spread the brokerage fee over the rent, it could raise rental prices, turning the original one-time cost into a long-term burden for tenants.