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ew York City's mandatory broker fees, a contentious aspect of apartment hunting, are set to be abolished after the City Council passed legislation on Wednesday. The bill aims to stop landlords from forcing tenants to pay brokers' commissions upfront, even if those agents represent only the landlord's interests.
Under the current system, which is unique in the US, tenants often pay up to 15% of their annual rent - around $7,000 for an average-priced apartment - as a commission to real estate agents. This fee can be steep and is typically paid before moving into an apartment.
The legislation has been widely popular among renters, who make up two-thirds of New York City households. It has also gained support from social media influencers on TikTok. However, the bill has faced fierce opposition from brokers and their representatives, who warn it could disrupt an industry that employs 25,000 agents.
Councilmember Chi Ossé, a Democrat who sponsored the FARE Act, said at a rally: "They spent hundreds of thousands of dollars to lobby our politicians to try to kill this bill and force you to pay broker fees. But we beat them."
The broker fee arrangement dates back nearly a century, when agents played an active role in publishing listings and working directly with tenants. However, with most listings now online and virtual tours gaining popularity since the pandemic, many New Yorkers have grown frustrated by the fees.
Brokers argue that they provide valuable services beyond just showing apartments, including background checks and communication with landlords. However, some tenants say they do little more than open doors or text them a code to access an apartment.
The bill's opponents, including the Real Estate Board of New York, warn that landlords will simply pass on the costs to tenants by increasing monthly rents. However, supporters argue that this would be preferable to the current system of high upfront fees that make it difficult for people to move.
Mayor Eric Adams has expressed concerns about the legislation and its potential unintended consequences. However, with a veto-proof margin of 42-8, the bill is set to take effect in six months.
