A turning point has emerged in New York City's residential rental market as the controversial broker fee is set to be eliminated for most tenants. Commencing this Wednesday, a newly enacted law is poised to take effect, abolishing the upfront costs tenants have been traditionally saddled with when securing apartments—fees that can range from one month's rent to an eye-watering 15% of the annual rent. This development follows a City Council decision from last year, which endorsed the measure with the intention of easing significant financial barriers facing city renters, according to a Gothamist report.
In a recent move, the Real Estate Board of New York (REBNY) has launched an 11th-hour attempt to delay the law's implementation through a court motion, elaborated in a New York Post article. The FARE Act, or Fairness in Apartment Rental Expenses Act, was passed with a substantial majority and, while facing REBNY's challenge, will alter the landscape of rental costs, barring any intervention by a federal judge ahead of its slated commencement date the second week of June. Under the act, prospective renters will not be charged a "broker fee" by agents representing property owners, and all tenant-owed fees must be transparently reflected in rental agreements and listings.
The Department of Consumer and Worker Protection will be responsible for managing complaints, investigating claims, and fining brokers and property owners who violate the law by illegally charging fees. As stated on Gothamist, agents are liable to fines starting at $750 for a first offense, with subsequent offenses attracting heightened penalties. The new mandate is expected to save tenants considerable sums of money on upfront costs, potentially stimulating moving activity within the city as forecasted by analysis from real estate platform StreetEasy.
However, vocal opposition has persisted, with critics suggesting that the phasing out of tenant-paid broker fees could indirectly contribute to higher monthly rents, as landlords may seek to recoup losses through rent escalation. Despite the uncertainty of the new law's broader ramifications on rental prices, Gothamist identifies industry participants who believe the shift will not dramatically influence the current trends, boasting a gradual rise in no-fee listings. REBNY, while initially resistant, now advises its membership to adapt to these forthcoming changes.
Expressions of support and skepticism alike about the law have bubbled up among New York City residents, with tenants generally favoring the reduction of upfront costs, while others brace for the potential for landlords to finagle ways of transferring the costs back to occupants. As the New York Post coverage relays, the city's Department of Consumer Protection will enforce the new rules with a budget specifically allotted for outreach and education. Post-June 11, any violations of the new law will result in a series of fines, starting at $1,000 per infringement. For those encountering a breach, complaints can be registered after the law goes into effect via the city’s website or by calling 311.
