On average, New Yorkers shell out 15% of their annual rent on broker fees, and now those broker fees will be shifted to landlords.
The Fairness in Apartment Rentals Act says whoever hires the broker, either the renter or landlord, would be on the hook to pay the fee.
Landlords and their agents will disclose the fees in listings and rental agreements. In most cities, landlords pay broker fees for rentals.
The legislation, which passed in a 42-8 vote, could take effect in just 180 days.
Opponents of the legislation say the measure could lead to higher rents and argue that landlords could put broker fees into monthly rents except in rent-stabilized apartments, where a panel of mayoral appointees sets increases.
The vote came as rents in New York City continue to soar, adding strain to the pockets of the average person.
Mayor Adams, who was previously a real estate broker, says there is nothing in the bill that will stop landlords from rolling the cost of the broker fee into a tenant's monthly base rent.
"We need to find ways of ensuring that we get that affordability, but we can't do it with just a knee-jerk reaction," he said. "Think for a moment: if you pass the cost on to the small property owners, nothing in that law stops them from building it into their rent, so it goes from a one-time fee to a permanent fee."
The Real Estate Board of New York is against the bill and released the following statement:
"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. The FARE Act will make it harder for tenants to find housing, raise rents, and make the hard work of real estate agents even more difficult. REBNY will continue to pursue all options to fight against this harmful legislation on behalf of our members and the renters they serve."
According to Street Easy, the upfront cost of a rental apartment with the broker fee is at an all time high at $12,951 -- that's 47% more than the equivalent for a no-fee rental which could be around $8,769.
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