The New York City Council’s recent passage of the Fairness in Apartment Rentals Act represents a significant shift in the city’s rental market.
This legislation mandates that landlords, rather than tenants, bear the cost of broker fees when brokers are hired to list and show apartments.
Traditionally, New York City renters have been responsible for these fees, which can amount to 15% or more of the annual rent, adding a substantial financial burden.
With median asking rents around $3,400, the average upfront cost for renting, including broker fees, first month’s rent, and security deposit, reached nearly US$13,000 in 2024.
Council member Chi Ossé, a sponsor of the bill, told The Wall Street Journal: “Today we end that cruel and archaic practice,” highlighting the legislation’s aim to alleviate financial pressures on renters. The bill is set to take effect in 180 days, pending mayoral approval.
Meanwhile, the real estate industry has expressed concerns regarding the potential consequences of this legislation.
The Real Estate Board of New York (REBNY) argues that shifting broker fees to landlords may lead to increased rents as landlords seek to offset the additional costs.
REBNY President James Whelan commented, “This legislation will harm renters by increasing rents, complicating real-estate transactions, and making it harder for tenants to find housing.”
Despite these concerns, City Council Speaker Adrienne Adams indicated that the council is prepared to override a potential mayoral veto, reflecting strong legislative support for the measure.
This legislative move aligns New York City with practices in other major cities where landlords typically cover broker fees, potentially easing the financial burden on renters and addressing housing affordability challenges.
However, the real estate industry’s opposition and the possibility of legal challenges suggest that the implementation and impact of this policy will require careful monitoring in the coming months.
