Game-changing broker fee bill moves forward in NYC Council
- The bill would require whoever hires a real estate agent to pay for their services
- Broker fees generally range from 10 to 15 percent of the annual rent
New York City Council Member Chi Ossé, who introduced the broker fee bill, presides over a contentious city council meeting on June 12th, 2024.
Photo courtesy: Emil Cohen/NYC Council Media Unit
The broker fee bill is making headlines once again.
A bill that would require whoever hires a real estate agent to pay for their service is moving forward in the New York City Council, months after a fiery hearing where hundreds of brokers testified against the proposed legislation, Crain’s New York Business reported on Friday.
Crain’s reported that the bill was on the agenda of a meeting of the City Council’s Democratic conference, an indication that it could pass this year. The bill also includes new protections for tenants.
The updated version would require an apartment listing to describe the “fees and commissions” the tenant is expected to pay, and would allow the city to enforce civil penalties against anyone who misrepresents those fees, Crain’s reported.
As it stands, the bill has 33 voting city council sponsors and is one vote shy of a veto-proof majority. But it’s yet unclear if City Council Speaker Adrienne Adams will bring it to a vote, which would be required for the bill to become a law.
A representative for Chi Ossé, the city council member who authored the bill, did not immediately respond to a request for comment.
The bill’s backstory
If you’re new here, the bill, dubbed the Fairness in Apartment Rental Expenses (FARE) Act, would require whoever hires a broker to pay for their services. That’s not currently the norm in NYC, where tenants are often stuck shelling out the broker fee even when a landlord hires a broker, an amount equivalent to 10 to 15 percent of the annual rent.
Ossé first introduced the bill in June last year, though it never received a hearing and did not pass. He brought it back this year, and 33 city council members have pledged their report as sponsored, compared to 30 during Ossé’s initial attempt. After a social media campaign, the bill was debated in an explosive, six-and-a-half hour hearing on June 12th.
The Real Estate Board of New York, a trade association of agents and landlords, organized thousands of its members against the bill in a rally ahead of that hearing on June 12th. It has also “shared ideas with the city council” to come up with a “thoughtful approach for tenants looking to rent apartments and hard-working brokers who deserve to be compensated,” said REBNY spokesperson Christopher Santarelli in a statement.
A new fee regime
Renters and advocates have argued that the “common sense” bill would make it clear when a renter needs to pay a fee and when they don’t. Meanwhile, brokers argued that landlords would simply raise a tenant’s rent to cover the fee.
That’s a concern shared by Sarah Saltzberg, the CEO of Bohemia Realty. She also argued that if a landlord raises the rent, it may be more difficult for a tenant to meet a landlord’s income requirements for an apartment. (In NYC, most landlords require a renter to make 40 times the monthly rent.)
“The rents will rise,” Saltzberg said. “And a lot of renters that could qualify at a lower price point, when they pay the fee, can't qualify once the fee is added to the rents because they don’t make the minimum requirement.”
In the meantime, renters should know that while there’s no legal limit on what a broker can charge as a fee for their services, these fees are negotiable and traditionally range between 10 and 15 percent of the apartment’s annual rent. If you come across an exorbitant fee, you can complain to the New York Department of State, which may impose fines on the brokerage (though this won’t help you secure the apartment).
