There's a proposal to reform broker fees in NYC. Here's how the bill is trying to cut down costs for renters.
NEW YORK -- There's a new push to reform broker fees in New York City.
Many New Yorkers know when you move into a new apartment, you need to pay the first month's rent and security deposit, and then, quite often, you have to pay the broker fee for the landlord, resulting in a total of about three months' rent.
There's now a proposal to cut down those up-front costs.
What are broker fees?
A broker fee is a commission paid to an agent in return for assistance in the rental of a unit.
In New York City, landlords often hire a broker to fill a vacancy and pass the cost of the broker onto the new tenant.
Typically, a broker's fee will be 12-15% of the annual rent, but the state of New York does not cap fees.
While the city does not officially track the number of no-fee listings, the Real Estate Board of New York (REBNY) says right now, more than half -- 54% -- include a broker fee.
"This percentage fluctuates up and down throughout the year but demonstrates there is choice in the market," said a REBNY spokesman.
Some tenants also choose to hire a broker when looking for an apartment.
NYC Councilmember introduces Fairness in Apartment Rental Expenses Act
For the second year in a row, City Councilmember Chi Ossé has introduced the Fairness in Apartment Rental Expenses Act, or FARE Act.
The bill doesn't cap broker fees and it doesn't ban them. Instead, it requires whoever hires the broker to pay for the broker.
"What other industry does that exist where someone else orders something or hires something, and then someone else has to pay for it?" Ossé said. "Why are we so conditioned to think that this is OK?"
The bill has 26 co-sponsors -- support from the majority of the City Council. Consumer and Worker Protection Chair Julie Menin and six committee members will decide its fate.
A public hearing is set for June 12 at City Hall.
Ossé says Boston is one of the only other cities with this fee structure, and he wants New York to mimic the rest of the country.
Ryan Monell, with the Real Estate Board of New York, says brokers always add value because they simplify the process, regardless of who hires them. He believes this bill would lead to chaos in the market.
"New York is its own animal, right? And I think it's a misconception to assume, if this bill were to pass, it would just automatically become what the rest of the country has," he said.
He says if landlords have to pay the fee, they'll just spike your rent, but Ossé disagrees. He says the market sets rents, not landlords.
"If your landlord could have raised your rent by tomorrow, he would have yesterday," Ossé said.
"The cost isn't going to be dissolved into thin air, right?" Monell said.
When asked if he would support some sort of cap on broker fees, Monell said, "I think the market ... if you look at 99 percent of listings, are incredibly reasonable."
New Yorkers say broker fees make renting an apartment too costly
CBS New York's Mahsa Saeidi spoke to renter Annie Abreu, who was born in Sunset Park and isn't leaving.
In recent years, Abreu and her mom have struggled to find an affordable unit, so they're renting a room. Abreu showed it off in a TikTok video, writing, "So I decided to show you what it's like living in NYC if you're a low income resident rather than middle or upper class." It's garnered nearly 900,000 views.
"I should be able to find an apartment in my own neighborhood," she said.
Abreu says renting an apartment is just too much money.
"Low-income people do not have the ability to pay three fees in one go," she said.
Saeidi searched for rentals in Abreu's Sunset Park neighborhood on one popular site. The search results showed 19 apartments had a broker fee and only two, including the most expensive unit listed, did not.
A spokesperson for the real estate websites Zillow and StreetEasy told CBS New York:
"StreetEasy & Zillow have on average 70% of the market share for the online real estate category in NY.
"According to research we published last year, about 50% of rentals on StreetEasy at any given time are listed as 'no-fee'; but this isn't uniform across price points. More affordable apartments at the low end of the market more often come with a broker fee than those at the higher end."
"The fact that landlords can get away with that, putting that responsibility on low-income tenants especially, is really ridiculous," Abreu said.
Another renter, Christian Garbutt, says a broker texted him requesting a $15,000 broker fee for a rent-stabilized unit costing about $1,025 per month.
"I was like, hell no," Garbutt said. "I got upset. I said to myself, this is taking so much advantage of people."
The New York Department of State, which is in charge of regulating brokers, tells CBS New York they have two open complaints on that broker. CBS New York reached out to that broker but has not heard back.
In 2023, the state received more than 700 complaints about brokers for various reasons. Some alleged the broker shouldn't have collected a penny because they didn't earn the commission. From that batch, so far, the state has taken disciplinary action against 68 brokers.
There are close to 60,000 brokers and agents in New York City. The vast majority have no complaints against them.
