Broker fee bill passes with strong support in NYC Council vote
- The bill requires a landlord to pay the broker they hire instead of charging the renter
- The Fare Act passed with more than enough votes to override a mayoral veto
Council member Chi Ossé speaks to a crowd of supporters of the FARE Act on the steps of the City Hall on Wednesday, Nov. 13th.
Celia Young for Brick Underground
A big shakeup is in store for broker fees in New York City.
A controversial bill that would force a landlord who hires a rental agent to pay for their services passed in a long-awaited New York City Council vote this afternoon.
The FARE Act, introduced by City Council member Chi Ossé, eliminates a major financial hurdle for many renters. Typically, a renter would be on the hook for a broker fee of around 10 to 15 percent of the annual rent, even if they didn’t hire the broker themselves.
“I believe that this bill will give tenants bargaining power,” Ossé said at a rally prior to the vote. “It will give them more mobility to move from one apartment to another.”
More than 100 New Yorkers came out in support of the bill, including Council member Keith Powers, who previously tried (and failed) to regulate broker fees in 2019. He likened a rental market search to the “Hunger Games.”
“I fought hard to bring this into the conversation in New York City just a few years ago,” Powers said. “Council member Ossé is getting this across the finish line today.”
The bill passed with 42 Council members in favor, more than enough support to override a mayoral veto—if Mayor Eric Adams decides to nix the FARE Act. The new law will take effect in the summer of next year.
If the landlord hires, the landlord pays
The bill survived a fiery hearing in June and underwent significant revisions following that six-hour-plus debate. Dubbed the Fairness in Apartment Rentals (FARE) Act, the original version of the bill required whoever hires a broker to pay for their services.
The version that passed Wednesday bars a landlord’s broker, or a broker who lists a landlord’s apartment, from collecting a fee from the renter. (It does not mandate that a tenant pay their own broker.)
The bill also requires all fees to be disclosed in listings and before a prospective renter signs a lease. If a broker violates the law, they could see fines ranging from $500 to $2,000, plus renters could sue that broker in civil court for damages.
Renters and brokers alike should expect to hear about the law (even if they missed Brick Underground’s coverage.) The bill requires the commissioner of the Department of Consumer and Worker Protection to establish a public outreach campaign to let New Yorkers know about the new law.
Money, money, money
It’s well known that renters strongly dislike paying broker fees. An October StreetEasy poll found that 81 percent of renters thought that landlords should pay broker fees, rather than prospective renters. Another 78 percent of the roughly 500 New Yorkers surveyed said they felt they had no choice but to pay a broker fee to secure an apartment.
For rent-stabilized renters, broker fees can present a significant barrier to landing an apartment. In a handful of cases, brokers have charged sky-high fees for rent-stabilized units—apartments where rents are capped each year by the Rent Guidelines Board.
Under the new law, landlord’s brokers would be barred from charging fees to renters, and would have to disclose any fees up front.
“Landlords would be prohibited from baking the fee into the rent in those cases,” Ossé said at a rally before the vote.
The bill, however, does not cap how much a renter’s broker could charge the renter who hired them.
Agents sound the alarm
Agents have warned that the broker fee bill would raise rents, by incentivizing landlords to include the fee in the apartment’s annual rent, and that it would lower the number of listings on platforms like StreetEasy.
"Wednesday's vote is yet another instance of prioritizing ideology over economic and practical reality,” James Whelan, president of the Real Estate Board of New York trade association, said in a statement. “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.”
A few Council members voiced similar opposition. Vickie Paladino, who represents parts of queens, said the act would only “make things worse” and hoped that the real estate industry “sues to have this law stopped.” Whelan promised to “pursue all options to fight” the legislation.
But one broker in support of the bill, Anna Klenkar, a broker at Sotheby's, said that some rental agents do want landlords to pay for their services. And Ossé has argued that landlords already raise rents as much as they think the market will bear.
“If your landlord could have increased your rent tomorrow they would have done so yesterday,” Ossé said at the rally.
A long battle over broker fees
Wednesday’s vote marked the end in a long battle over broker fees. Ossé, who represents Bedford-Stuyvesant and North Crown Heights in Brooklyn, first introduced the FARE Act in June last year, though it faced significant opposition from real estate agents and ultimately failed to pass.
After reintroducing the bill in February, Ossé took his campaign for the bill online to platforms like X (Twitter) and TikTok, where he has around 31,600 followers. He credited some of his success to his social media presence.
“We are low key about to pass this bill because of TikTok,” Ossé said at a rally.
He also scored support for the bill from notable New Yorkers including actress Illana Glazer and venture capitalist Bradley Tusk, who called broker fees “legalized theft” ahead of the vote. (Tusk said he spent around $25,000 on digital ads in support of the bill.)
While past attempts to curb fees have failed, Ossé landed 33 co-sponsors from other city Council members ahead of the Wednesday vote—one shy of a veto-proof majority. He left the vote with 42 Council members voting in favor of the bill.
“Today is a win for the people of New York, as we make official what has long been common sense,” Ossé said during the vote. “You get what you pay for, and you pay for what you get.”
