Despite pushback from brokers, the city council of New York City approved a significant change to how real estate brokers and agents are paid for rentals in the city’s unique real estate market, shifting the cost to landlords, which aligns with how nearly every other metro conducts transactions.
With overwhelming support from the council but still facing significant opposition from industry stakeholders—including the Real Estate Board of New York (REBNY), the independent real estate association overseeing much of New York City—the FARE Act will still need to be signed by New York City mayor Eric Adams, who expressed reservations about the legislation, according to the New York Times.
But any veto could be easily overridden based on the council’s support, with 42 votes in favor of the bill, and only 34 needed to overcome a potential Adams objection.
Under the previous system, landlords could charge renters broker fees even if the broker was hired by the landlord. Under the FARE Act, whoever hires the agent or broker will pay the fee.
REBNY and some other industry advocates have claimed that landlords will just raise rents to cover the additional expenses. Supporters of the bill have focused on the massive affordability crisis in New York City, and argued that market forces and rent stabilization laws will result in lower costs for renters.
Back in the summer, REBNY rallied members to protest an early hearing of the bill. REBNY sued successfully to block a previous attempt to have landlords pay their own broker fees back in 2020.
In an update on its website after the FARE Act passed, REBNY urged members to continue “educating” council members. The post claimed that apart from failing to lower costs, the bill will also prevent brokers from “independently” advertising rental listings and will create confusion in the larger market.
Not all real estate stakeholders opposed the bill. Zillow-owned New York City portal StreetEasy supported the changes, and in a social media post following the bill’s passage emphasized that the FARE Act will also require landlords to disclose fees charged to tenants.
“These changes will create a more transparent, efficient and affordable rental market,” the company wrote. “StreetEasy will help you navigate these changes and provide the information and tools needed to succeed.”
