Rents jump shocking 15% after NYC ditches broker fees
Rents shot up a shocking 15% in the week since the controversial FARE Act took effect, with the average rental in the Big Apple jumping from $4,750 to $5,500, according to an analysis by real estate analytics firm UrbanDigs.
6 New Yorkers have been sharing conversations with brokers like this one since the FARE Act was enacted on June 11.
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'The Manhattan rental market has seen a sharp reaction,' said John Walkup, UrbanDigs' co-founder.
The FARE Act, which prohibits agents representing property owners from charging renters a 'broker fee,' also requires that all fees a tenant owes be included in rental agreements and real estate listings.
But the rising rents 'suggests that landlords may be attempting to incorporate broker fees into the rent, which would transfer the cost to renters in a less direct, but very real way,' added Walkup.
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6 Walkup said the market reacted 'sharply' to the FARE Act.
UrbanDigs
The law change has created what insiders tell The Post is a 'shadow market' — apartments that aren't listed so landlords can still get tenants to cover the fee.
'We're going to be looking for apartments again like it's 1999 … where you have to know who to call and when to call,' said Jason Haber, co-founder of the American Real Estate Association and a broker at Compass.
'It's going to be an odyssey.'
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6 Ricciotti said tenants have been asking if they can just pay the broker fee instead of the higher rent, which works out to more money over the long-term.
BOND New York Real Estate
And listings dried up overnight with an estimated 2,000 vanishing from website StreetEasy on June 11 — the day the FARE Act took effect — while UrbanDigs found available apartments dropped by an eye popping 30%.
6 A renter posted this screenshot of the two different asking prices.
Renters meanwhile have been sharing horror stories online, with receipts — like screenshots of conversations with brokers flat out telling them they get one price if they pay the broker fee and another, much higher rate, if they don't.
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One New Yorker, for instance, was told by an agent the rent was going up $700.
6 Kebenae Tadesse said agents have still been trying to get tenants to pay the fee.
Helayne Seidman
Another said a landlord was asking $6,800 for a 3-bedroom with a broker fee — or $8,000 with no fee, which is illegal to advertise under the new law.
'We've been inundated with prospective tenants who have asked our agents for the option to pay our brokerage commission, directly and maintain the benefit of the lower pre-Fare Act rental terms, which unfortunately, we have to tell them is now illegal,' said Bruno Ricciotti, principal at Bond New York.
'It's so frustrating,' said Kebenae Tadesse, who had been trying to find a Brooklyn studio.
'Brokers have repeatedly said, 'Well, if I don't charge you this fee, the landlord is just going to put it into your rent,' she told The Post. 'It's discouraging.'
6 Rents went up by 15% on average since the FARE act went into effect.
goodmanphoto – stock.adobe.com
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When Tadesse called out a broker for trying to pass on the fee to her, the agent took down the listing, marking it as 'temporarily off market' on StreetEasy since June 11.
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