As New York Nixes Broker Fees, Real Estate Industry Cries Foul
Newly passed City Council legislation unburdens tenants from paying for brokers that landlords hire
By Isabelle Durso November 13, 2024 3:06 pm
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If you’re a prospective renter in New York City, you can officially say goodbye to those pesky broker fees.
The New York City Council voted 42-8 Wednesday afternoon to approve a bill that would prohibit brokers from passing their fees onto renters in cases where the broker is “exclusively representing the landlord’s interests,” according to the legislation. Anyone who violates the new law would be subject to civil penalties and fines of up to $2,000.
In other words, the cost of broker fees — usually at least one month’s rent — would be shifted from renters to landlords in cases where the landlord hires the broker. If the renter hires the broker, the fees stay with them.
New Yorkers, on average, have to spend 15 percent of their annual rent on broker fees — and the median rent in the city is roughly $3,400 per month, The New York Times reported.
“It costs almost over $10,000 up front to move into a new apartment in the city, and over half of that is a broker fee,” Councilmember Chi Ossé, the bill’s sponsor, said during a council meeting before the vote Wednesday. “Changing this law or putting this law into action and requiring that whoever hires the broker pays a fee will put money back into the pockets of New Yorkers.”
A spokesperson for the City Council did not immediately respond to a request for further comment.
But several players in the city’s real estate industry — including the Real Estate Board of New York (REBNY) — opposed the bill, arguing the absorbed broker fees would translate into higher rents for tenants as landlords pass along the costs, according to the Times.
“Wednesday’s vote is yet another instance of prioritizing ideology over economic and practical reality when it comes to the city’s rental housing stock,” REBNY President James Whelan said in a statement to Commercial Observer. “REBNY will continue to pursue all options to fight against this harmful legislation on behalf of our members and the members they serve.”
Opponents of the bill also argued that when renters don’t pay broker fees directly, they lose access to broker services such as quality photos of apartments and in-person tours.
Mayor Eric Adams himself has expressed concern about the new law, saying it could lead to rent increases, will make it harder for tenants to find housing, and might harm property owners, the Times reported.
Nevertheless, Ossé has now gained enough support from the City Council — including from Speaker Adrienne Adams — for his bill, which will take effect in 180 days.
“Today is a win for the people of New York as we make official what has long been common sense: You get what you pay for, and you pay for what you get,” Ossé said Wednesday just before the vote.
Isabelle Durso can be reached at idurso@commercialobserver.com.
