The bill shifts the responsibility for broker fees from renters to property owners in hopes of easing affordability woes. However, opponents of the bill say it will only raise costs for renters in the long run.
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“Holy shit, we won!”
That was New York City Councilmember Chi A. Ossé’s first tweet after ending a nearly two-year battle to pass the Fairness in Apartment Rental Expenses (FARE) Act, a bill that will require rental property owners to cover broker fees when they enlist a broker to help them lease a unit.
The Council passed FARE with a vote of 42 to 8, and it will be sent to Mayor Eric Adams for final approval. If Adams signs the law, it will go into effect 180 days later.
Chi Ossé | Credit: X
Ossé has yet to release a full statement about the bill’s passage; however, the councilmember said in previous interviews that FARE was created to address the concerns of everyday New Yorkers who struggle to keep up with rent growth. The average rent in New York City reached $3,888 in November — which is 150 percent higher than the U.S. average of $1,558 per month.
Ossé and FARE’s 33 cosponsors said the typical renter in the city is expected to pay their first month’s rent and security deposit, which, using November trends, would be $7,776. If they rent a unit that comes with a broker fee, they could be expected to pay 10 percent to 15 percent of the annual rental costs or an amount equal to one month’s rent — easily pushing their upfront costs into five figures.
“A party that purchases or contracts a good or service should be responsible for the cost,” Ossé, who represents Brooklyn, told The Gothamist in a previous interview. “This is the case in every other transaction across our vast economy and should be true for New York City Rentals as well. The FARE Act has the potential to alleviate prohibitive upfront costs for workers and growing families searching for a new home.”
Although Ossé and his supporters are celebrating FARE’s passage, the Real Estate Board of New York (REBNY) is mourning the Council’s decision.
James Whelan | Credit: LinkedIn
“Wednesday’s vote is yet another instance of prioritizing ideology over economic and practical reality when it comes to the city’s rental housing stock,” REBNY President James Whelan said in an emailed statement. “The FARE Act will make it harder for tenants to find housing, raise rents, and make the hard work of real estate agents even more difficult.”
REBNY rallied against FARE in June, with more than 1,500 brokers taking to City Hall to oppose the bill. After the rally, former REBNY VP of Government Affairs Ryan Monell told Inman that FARE would harm renters, as property owners could simply pass the cost of brokers’ fees on to renters through higher rents.
Monell also said more than half of the city’s units are already fee-free, and for those that do come with a fee, renters can negotiate.
“What it is going to do is complicate the transactions even further to where effectively that cost is going to have to be accrued through higher rent,” he said. “So while you may save some money on the front end of a transaction, the reality is the cost of the broker fee isn’t going to be evaporated into thin air.”
“The reality is you have options right now in regards to what is best for you in regards to how you go out and look for an apartment and ultimately sign a lease,” he added. “And what this bill would effectively do is eliminate that choice.”
Dev Awasthi | Credit: LinkedIn
The Board’s current government affairs rep, Dev Awasthi, told The Gothamist on Wednesday that tenants could feel FARE’s burn during their lease renewals next year.
“All those costs are going to end up going to the tenant as they end up paying more per year based on the no-fee than they would if they paid the one-time broker fee,” Awasthi said. “If that tenant would like to re-sign their lease, they’re now starting at a higher rent. We don’t want to be forced into a situation to raise rents.”
Although REBNY has been steadfast in its opposition to FARE, there are pockets of the industry that believe Ossé’s bill will have the intended effect.
StreetEasy General Manager Caroline Burton said the company supports FARE, as it “provides immediate relief to renters today.”
The day before the Council’s vote, StreetEasy released a report about upfront rental costs, noting the typical renter who signed a new lease for a unit between January and September had upfront costs of $12,951 — that’s a 19.28 percent increase from 2023.
For renters who leased a unit with broker fees, they “likely spent 42.9 percent more” in upfront costs than renters who leased a unit without broker fees.
“The average New Yorker will be spending more than 10 percent of their annual income just to come up with these upfront costs,” StreetEasy senior economist Kenny Lee told The Post of the study’s results.
Looking forward, REBNY President James Whelan said the fight for FARE isn’t over.
“REBNY will continue to pursue all options to fight against this harmful legislation on behalf of our members and the renters they serve,” he said.