NYC Council considers shifting broker fees to landlords

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Wednesday, June 12, 2024
NYC Council considers shifting broker fees to landlords
Lindsay Tuchman has more.

NEW YORK CITY (WABC) -- New York City Council appears poised to change the way landlords and tenants pay real estate broker fees, transferring the costs to the landlords, in what would be a major shift for the industry.

The so-called Fairness in Apartment Rental Expenses Act, or FARE Act, is sponsored by Councilmember Chi Osse

The bill would essentially transfer the burden of paying the fee from the tenant to the landlord who hired the broker.

A majority of council members appear to support the bill, which was discussed at a committee meeting Wednesday morning.

"New York City is currently going through an immense housing crisis," said Osse. "People are being priced out of their homes. People can't afford their rent. And people certainly can't pay an additional $2,000 or 3,000 to a broker that they never hired."

According to Street Easy, right now, the average New Yorker is paying a $3,474 broker's fee on top of the first month's rent and security deposit.

Eyewitness News spoke with some tenants who agree something needs to change.

"Often the brokers are not even returning my emails when I ask to take a tour," said renter Laura Thompson, who is currently looking for an apartment. "But we saw one recently that the apartment itself would have been $3300, but the broker's fee was over $6,000."

Claire Biging has a similar gripe. She paid a broker's fee when looking for an apartment in Brooklyn in 2016.

"Without the financial support of my family, we would not have been able to do that," she said.

Supporters of the FARE Act held a rally outside City Hall Wednesday alongside a rally held by opponents, led by the Real Estate Board of New York.

Demonstrators on that side of the issue claim the bill would end up hurting the tenant in the long run, and threatens the livelihood of agents, who don't see a dollar unless they make a deal.

"Immediately upon passing of this bill, rents could go up between 8% and 15% in the first week," said Douglas Wagner, of Bond Real Estate. "Open listings would be destroyed, and the transparency of the marketplace would be obliterated. Landlords just can't pay fees. They don't have it in their margins."

After Wednesday's committee hearing, the next steps would be to take the legislation to a vote, and eventually get Mayor Eric Adams to sign on.

So far, Adams has not taken a position on the legislation, but noted Tuesday that he once worked as a real estate agent, so he understands both sides.

"We're going to look at the legislation," Adams said. "No one wants to have tenants pay what they shouldn't have to pay. Real estate agents do a lot of work."

A spokesperson later noted that renters in city-financed affordable housing are already not required to pay broker fees.

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