New York City Council introduces a bill that will require landlords to pay broker fees

It is not an easy time to be a New York City renter. New Yorkers looking to sign leases in the city must battle rising rents, fierce competition, and limited inventory. In addition, NYC renters also need to include additional expenses in their budget, such as broker fees and security deposit, apart from the monthly rent. However, the costs associated with signing a lease may soon go down for prospective tenants. 

The New York City Council unveiled a new bill requiring those who hire real estate agents to pay broker fees. Currently, NYC renters are responsible for paying a one-time broker fee that typically ranges from one month’s rent to 15 percent of the annual rent. This bill would provide substantial financial relief to tenants since, in most cases, landlords and building management companies are the ones who hire real estate agents. 

“The bill is fair and simple: whichever party hires the broker will have to pay the broker fee,” Council member and co-sponsor of the bill, Chi Ossé, said in a tweet. “Far too often, tenants are paying fees to a broker that their landlord or building’s management company have hired. This makes the already-stressful NYC housing process even more expensive and difficult than it already is.”

This piece of legislation, known as the Fairness in Apartment Rental Expenses Act, would not cap broker fees in any way. However, real estate agents warn that it may negatively impact brokers' commissions and push rents up. Those who oppose this legislation argue that NYC building owners will raise rents to pay broker fees. If the bill passes, it will take effect 60 days after it becomes law. 

“Instead of dealing with the housing crisis, this bill is a wasteful distraction that does far more harm than good,” the REBNY said in the email sent to Commercial Observer. “The legislation wrongly punishes real estate agents for a housing shortage and rising rents they did not create, while falsely claiming it will also improve the home search process for renters.”

New York City has tried to change its broker fee rules multiple times. For a brief moment in 2020, NY renters were no longer required to pay broker fees. In January 2020, the New York Department of State issued new guidance that banned the collection of broker fees. In response, the real estate brokerage filed a lawsuit. A year later, an Albany County judge ruled against this guidance.

Resources:

“NYC Council bill would require broker fees be paid by ‘hiring party’,” by Devin Gannon (6sqft, 2023)

“City Lawmakers to Try to Make Landlords Pay Residential Broker Fees,” by Mark Hallum (Commercial Observer, 2023)

“You will still have to pay broker fees in NYC,” by  Shaye Weaver (Time Out, 2021)

“New York officially gives real estate agents the go-ahead to collect broker fees,” by Devin Gannon (6sqft, 2021)