Bid to shift NYC real estate broker fees to landlords heading back to City Council

Councilman Chi Ossé is set to reintroduce a bill on Wednesday that would mostly shift the burden of broker fee costs to landlords, setting the stage for a potentially contentious rematch in the City Council.

The Brooklyn Democrat first unveiled the Fairness in Apartment Rental Expenses (FARE) Act last June, but the measure wasn’t given a hearing last year in the face of stiff opposition from the powerful real estate lobby.

The bill would not ban or restrict broker fees but would instead ensure that whoever hired the broker is responsible for paying them. As it stands, tenants pay the broker’s fees when moving in even if they were hired by the landlord, or if the tenant did much of the work themselves, a situation all but unique to New York.

“I think it’s a bill that’s common sense to a lot of people that hear about it,” Ossé told the Daily News. “This bill is just replicating how the broker industry and economy works in every other city within this country: whomever hires a broker will pay the broker fee.”

The bill may get a boost this time around due to support from unions including DC 37, the city’s largest public employee union and one of several groups he said are backing the FARE Act.

The use of brokers is common given the city’s historically tight rental market and broader housing crisis. But there are no caps on broker fees, which can run into the thousands of dollars.

The real estate industry has largely balked at Ossé’s proposal, with some critics predicting it could undermine brokers and make rents more expensive in the long run.

Perhaps the strongest opposition has come from the Real Estate Board of New York (REBNY), an influential trade group.

“This bill would make the process of renting an apartment more costly and challenging for New Yorkers, while negatively impacting the livelihood of hardworking agents,” a spokesperson for the board said in a statement. “REBNY is focused on data-driven policy discussions to address New York City’s housing supply crisis.”

Ossé in turn pointed out that about half of New York apartments are rent-stabilized and predicted any rent increases for market-rate apartments would be minimal if they happen at all.

“Rents are set by market forces, not landlords,” he said. “You know, if they could raise it by $1,000 tomorrow or however much they said they would if they were to bake the broker fee in, landlords would do that already.”

The FARE Act previously secured support from a majority of the City Council, which Ossé said it still has despite REBNY campaigning hard against it in 2023. The News reported in August that the group had struck a deal with then-Councilmember Marjorie Velázquez to block the bill from being heard in the Committee on Consumer and Worker Protection, which she chaired at the time; Velázquez lost her Bronx seat to newcomer Kristy Marmorato in the November election.

Ossé said having union support and more time to push the bill are cause for optimism.

“Last year was the closest we’ve ever gone to reforming the broker fee system within New York City,” he said. “I think this will be the year that we get it past the finish line.”

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