Council Holds Public Hearing Challenging Current Broker Fees System

Image credit: New York City Council.

On June 12, 2024, the City Council Committee on Consumer and Worker Protection held a public hearing on Int. 360, sponsored by Council Member Chi A. Ossé. The bill, known as the FARE (Fairness in Apartment Rental Expenses) Act, ensures that the party hiring a broker, whether tenant or landlord, is responsible for paying the broker.

Currently, when renting an apartment in New York City, if a landlord decides to hire a broker, the new tenant is generally responsible for paying broker fees. Brokerage fees are typically 12-15 percent of the annual rent and are non-refundable. In New York, there is no limit to how high broker fees can be.

Dozens of individuals including brokers, New York City tenants, property owners, activists, and union members vocalized their support and opposition to the bill at the June 12th hearing, which ran for several hours.

Supporters of the bill argued the bill would stop tenants (which comprises two-thirds of city residents) from being financially burdened for paying for an unrequested service. Second, supporters argued the bill reduces housing inequity in New York City because individuals will have the opportunity to re-locate when necessary. Third, this legislation, if enacted, would allow individuals access to shelter (a fundamental right under Article XVII of New York State’s constitution).

New York City Comptroller Brad Lander and New York Senator Julia Salazar said, they support this bill because it provides transparency and fairness in relation to apartment fees.

Brooklyn Borough President Antonio Reynoso said he supports Int. 360 because it will provide access to housing. He stated this legislation has caused Brooklyn residents to call and inquire about brokerage fees because prior to this legislation they were not aware these fees could be negotiated or paid in installments. Councilmember Keith Powers highlighted that brokerage fees are not negotiable because finding an apartment in the city is worse than “the hunger games,” because what one person can’t pay another person can.

Executive Director and Co-Founder of Churches United for Fair Housing (CUFFH) Rob Solano discussed that the reason why brokers do not want whoever hired them to pay for their services is because tenants are often individuals without access to legal representation. If landlords had to pay brokers, they would not charge egregious fees because landlords have attorneys and brokers are afraid they will be sued.

Jordan Melkin, a real estate agent, said “for my real estate colleagues, when you do charge a landlord a broker fee, how much is that fee, and when you charge a tenant a broker fee how much is that fee?” Mr. Melkin said, “I have been doing this for over 20 years, in my experience across the board, landlords pay less for a broker fee when it’s a no fee listing, as tenants do when it is a fee listing. Landlords, if they are asked to pay a higher fee than they would like to pay, have hundreds of agencies and thousands of agents and brokers to choose from to take their business elsewhere and shop on the price of the broker fee.” Melkin went on to say that prospective tenants have “no leverage” because there will be other individuals “waving checks” ready to pay for the apartment they need – which is why “bidding wars” have occurred.

Those opposed to the bill argued that brokers would not be paid for their labor. They argued that brokers fees are negotiable and if a tenant does not desire an apartment without a brokerage fee added in, they can seek out other rentals. Opponents also argued that if this legislation were to be enacted, rent for tenants would be increased because landlords would add the brokerage fee into tenant’s rent reducing the transparency the bill aims to achieve.

A broker stated that 50 percent of the apartment units listed do not have a brokerage fee. Several tenants stated this is incorrect. Several residents testified that currently on Street Easy apartments are listed as not having a brokerage fee and when they showed up to view the apartment, they were told there is a brokerage fee.

Another panel of brokers stated if this bill was enacted landlords would incorporate the brokerage fee into the rent reducing transparency of fees. Councilmember Ossé said “the state deals with rent and setting rent, the broker fee is a fee that is not considered rent.”

Several brokers stated they do so much more than only assist with the renting of an apartment; they take pictures of the unit, put the listing online, and communicate with prospective renters. Brokers shared concerns that if the landlord has to pay their fee they would not be hired. Councilmembers and New York City residents stated this was not any of their experiences dealing with brokers and if their services are so valuable – the party that hires them will have no problem paying them. During closing remarks of the public hearing Council Member Ossé said, “this is not an anti-broker bill. Someone should not pay for someone they didn’t hire.”

If enacted this bill would affect 60 days after it becomes law, and would not apply to broker transactions retroactively. The committee will vote on this bill at a later date.

By: Chelsea Ramjeawan (Chelsea is the CityLaw intern and a New York Law School student, Class of 2025.)



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