NYC Approves Bill Shifting Broker Fees to Landlords

The New York City Council has passed the Fairness in Apartment Rentals Act (FARE), shifting the responsibility of paying broker fees from tenants to landlords. The legislation, approved by a 42-8 vote, aims to alleviate the financial burden on renters by prohibiting brokers representing landlords from charging fees to tenants.

Traditionally, New York City has been one of the few U.S. cities where tenants are required to pay broker fees, often amounting to 15% of the annual rent. This practice has contributed to high upfront costs for renters, with recent analyses indicating that the average upfront cost, including broker fees, has reached nearly $13,000.

Supporters of the FARE Act argue that the legislation will help address the city's housing affordability crisis by reducing these initial expenses for renters. Councilmember Chi Ossé, the bill's sponsor, stated, "This bill is common sense. It replicates how every other transaction exists in this country."

However, opponents, including the Real Estate Board of New York (REBNY), express concerns that landlords may offset the additional costs by increasing rents, potentially exacerbating affordability issues. Mayor Eric Adams has also expressed skepticism, suggesting that property owners might pass on the expense to renters through higher lease agreements.

The legislation is set to take effect in 180 days, providing a transition period for landlords, brokers, and tenants to adjust to the new regulations. As the city moves forward with implementing the FARE Act, stakeholders will closely monitor its impact on the rental market and housing affordability in New York City.