NYC council to vote today on whether to end broker fees for tenants – NBC New York

NEW YORK – A bill to make landlords pay broker fees, rather than tenants, will come up for a vote Wednesday before the New York City Council.

The Housing Fairness in Rental Fees Act, or FARE, has 33 provisions, which is more than most would need to pass, but not enough to be veto-proof.

According to the bill, anyone who hires a real estate agent must pay him. In most cases, that is the owner.

The bill would ease the financial burden on those looking for an apartment who often pay thousands of dollars in taxes before signing a lease.

New York City is in the midst of a housing and affordability crisis, with working- and middle-class residents struggling to keep up with high rents and other rising costs. More than half of New York City households are considered rent-burdened, meaning they spend more than 30% of their income on rent.

Moving costs add to growth costs. Tenants already have a number of upfront costs, including first month’s rent, security deposit, credit report fees, background checks, and often a fee for a real estate broker hired by the landlord

Broker fees can range from one month’s rent to 15% of the annual rent. In 2023, the average New Yorker moving into a new apartment spent more than $10,000 in start-up costs.

Councilor Chi Ossé, who introduced the legislation, has promised that it will cost renters more and that most cities across the country will follow this payment structure as- Yes.

It’s a familiar and harrowing experience for legions of New York City renters: Before moving into a new apartment, a tenant must first shell out thousands of dollars in taxes to real estate broker, even if that person is employed by the tenant.

Large one-time payments, known as broker fees, are ubiquitous in New York but almost unheard of elsewhere. In most other cities, property owners cover the commission for agents acting on their behalf.

But legislation supported by a majority of the New York City Council would require homeowners who hire real estate agents to pay their fees, marking a potential sea change in one of the most expensive real estate markets in the country.

Tenants, who make up more than two-thirds of the city’s households, applaud the latest reform effort. At a hearing in June, many New Yorkers recalled paying exorbitant fees to brokers who seemed to do little more than open an apartment door or direct them to a safe deposit box.

“In most businesses, the person who hires the person pays the person,” said Agustina Velez, a Queen’s house cleaner who said she paid $6,000 from recently to move flats. “Enough of these injustices. “The owners have to pay for the services they use. “

But the proposal has given New York’s real estate industry a strong boost.

Before the hearing, hundreds of brokers gathered to voice their objections at a rally organized by the Real Estate Board of New York, the powerful industry group.

During hours of testimony, they warned that the legislation would wreak havoc on the rental market and erode the livelihoods of approximately 25,000 real estate agents in the city. Many landlords expected to pass on the costs of paying brokers to tenants through rent increases or to keep apartments off the market altogether.

“This is the beginning of a housing system that is controlled by the government from the top,” said Jordan Silver, a broker at the firm Brown Harris Stevens. “The language is so vague that we don’t know what this would look like in the world.”

The bill’s sponsor, Ossé, has said he was moved to action after a recent apartment search that was “grim, fraudulent and competitive.” Another local official, Brooklyn Borough President Antonio Reynoso, said he once paid a $2,500 fee to a broker he had never met.