If you’ve ever tried to rent in New York City, you know how much of a headache it can be. One of the persistent barriers renters faced was the broker fee, which could run up to 15 percent of an annual lease. Now, New York City regulators made it illegal to require a broker fee paid by the tenant, thanks to a new addendum to last year’s rent laws. Instead, brokers must be solicited by the renter or be paid for by the landlord. Though unexpected, the ban aligns with the city’s push to expand tenant rights. Some say that this could lead to increased rents for tenants while others say that it is a win for affordable housing in a city whose tendency to favor brokers was already an anomaly in America. Either way, this is a complete shake up of the real estate landscape as brokers and landlords alike scramble to figure out a way to work within the laws and redistribute the cost burden of listing.
In New York City’s intensely competitive rental market, tenants usually deal with middlemen known as brokers, who have near absolute control over apartment listings, viewing appointments and leases.
In return, brokers collect fees that can be as much as 15 percent of the annual lease, typically paid in one lump sum by tenants before they can move in.
But late on Tuesday, New York State effectively eliminated them.
In an unexpected addendum to last year’s rent laws, state regulators said renters can no longer be charged broker fees, potentially upending the market and delivering the latest blow to an industry already reeling from new regulations and sweeping tenant protections.
New York is one of the few cities in the country with a broker industry that has such financial leverage over how people rent apartments.