How NYC renters could begin saving thousands in fees

New York Post

a day ago

If a new New York City rental law goes through as expected, New Yorkers can expect to pay a lot less to rent an apartment.
Unless there is a last-minute reversal by a judge, the Fairness in Apartment Rental Expenses (FARE) Act is scheduled to take effect on Wednesday.
The law will end the process of passing along the broker's fee to tenants.
From now on, unless a tenant explicitly hires a broker to find an apartment, the landlord will have to eat this cost, which ranges from one month's rent to up to 15% of the annual cost of renting an apartment.
What brokers think about the new law
'There has been a lot of talk about this issue. As a broker, I am glad that there will be no commission charge by a landlord if someone wants to lease their apartment,' Sonia I. Christian-Bendt, a broker with Berkshire Hathaway HomeServices New York Properties, tells Realtor.com. 'I think this is a win-win move for both sides.'
4 It's forecasted that broker's fees will not longer be passed to tenants once this law goes into effect.
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She says the broker's fee was so onerous that even the wealthy weren't happy with it.
'In the past two rentals that an owner called me to represent, [the landlord] offered to pay the commission without even being asked,' says Christian-Bendt. 'It made it easier to lease her units—and attracted a lot of qualified renters who didn't mind paying a high rent, but who were relieved they didn't have to pay one month's rent commission or 15% of the annual rent as a broker's commission.'
Nor does she think landlords will raise the rent to regain the fee.
'They have to remain competitive,' she says.
But Douglas Elliman top 1% rental agent Keyan Sanai, who spoke in front of the City Council about the measure, disagrees.
He asserts that tenants will end up paying more in the long run than if they'd simply paid a one-time flat fee, because landlords will not only raise rents the first year to regain the fee, but also keep it higher.
4 Even wealthy apartment owners were unhappy with the excessive broker's fee.
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'If you stay in an apartment for more than a year, then you've just paid more in rents than if you'd paid that broker's fee,' he tells Realtor.com.
Couldn't landlords raise the rent for a year until the fee is repaid, then lower the rent?
'We're talking about landlords here,' he says.
Additionally, he says that while higher rents will affect all tenants, the broker's fee can be avoided, as only about half of the rentals in the city carry it.
'If you want to live on Perry Street in the West Village and have your 'Sex and the City' lifestyle, then that apartment probably has a broker's fee because the demand is higher to live in the West Village,' he says. 'But if you want to live in Hudson Yards, you probably won't have to pay a fee.'
He concludes: 'The law is a short-term gain for long-term pain.'
Danielle Nazinitsky, founder and CEO of Decode Real Estate, agrees the fallout won't be good for anyone.
'For landlords, there's now a new fixed expense in a declining-value market where they're already dealing with rising property taxes, wages, and insurance costs,' she tells Realtor.com.
4 Only about half of the rentals in New York City carry broker's fees.
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'For real estate agents and brokerages, this means lower margins in an already high-turnover, low-margin segment, and that means you will get lower quality agents over time. For tenants, the broker's fee cost doesn't disappear; it will get absorbed into upfront premiums and rent increases.'
The cost of the broker's fee for tenants
The broker's fee hit about half of the 2.3 million apartments in the city, including those units that are rent-stabilized.
When nonprofit attorney Elizabeth Gyori and her partner were apartment hunting in Brooklyn last year, they coughed up about $4,000 to a broker—or 12% of their annual rent.
'We could have used that money for other things,' Gyori tells Realtor.com. 'It could have gone toward savings to buy our own place, an emergency fund, or a higher general rent for a place that would have suited us better.
'I'm sad we don't get to take advantage of the change in law, but it will be really helpful for other people,' she says. 'I think it's fantastic that the law was passed.'
What New York City renters can expect
While the final word on the new law will be up to a judge overseeing the lawsuit filed by the Real Estate Board of New York and some brokerages, the board seems to expect the shift to happen.
On its website is a fact sheet preparing landlords for what appears to be the inevitable.
According to the new law, brokers representing a landlord can no longer charge tenants a fee in connection with a rental transaction. The exception is when the tenant specifically hires a broker to find them an apartment, and landlords are allowed to pay the tenant's broker.
4 The broker's fee hit about half of the 2.3 million apartments in the city, including those units that are rent-stabilized.
Christopher Sadowski
Additionally, rental listings must include all fees paid by the prospective tenant for the rental of the unit. This could include lost key, pet, first and last deposits, and move-in/move-out costs.
Violations of the FARE Act may result in financial penalties of up to $2,000 and will be enforced by the New YC Department of Consumer and Worker Protection. (Complaints can be filed at 311.)