New York City Council Passes ‘Broker Fee Bill’ Over Real Estate Industry’s Objections

NEW YORK—Over the real estate industry’s strident objections, the New York City Council approved the FARE Act that will shift the burden of a broker fee from the tenant to the landlord. The council overwhelmingly approved the measure by a 42-8 margin.

Council members sought to reform rental broker fees as a means to address the housing affordability crisis in the city. While real estate advocacy organizations vow to continue to fight the measure, the vote margin makes the bill virtually veto-proof. The bill will go into effect 180 days after passage unless vetoed by Mayor Eric Adams.

Introduction 360-A, also known as the FARE Act, sponsored by Council Member Chi Ossé, ensures that tenants are not forced to pay the fee for the services of a real estate broker they did not hire. The bill prohibits brokers from passing their fee onto tenants when the broker is exclusively representing the landlord’s interests. This would include brokers who publish listings with the landlord’s permission. Landlords or their agents would be required to disclose the fees that the tenant must pay in their listings and rental agreements. The Department of Consumer and Worker Protection will enforce the bill and will conduct education and outreach. Any person who violates this bill will be subject to a civil penalty or civil action.

“To address the affordability crisis in our city, we must make the process of renting an apartment more transparent and affordable for working-class New Yorkers,” said City Council Speaker Adrienne Adams. “The Council is proud to pass this historic bill to protect our city’s renters, ensuring that tenants aren’t on the hook for fees for services they did not request. Many New Yorkers can’t afford these major upfront payments, blocking them from the ability to secure a home. This bill would deliver economic fairness to renters, and greater transparency in the rental process.”

“The system of forced broker fees is an affront to all New Yorkers,” said Council Member Ossé. “Today, we end that system. The victims of the old paradigm are too many to count. Families unable to have another child, because they cannot afford to move into a larger home. Children aging out of their parents' homes unable to find a place in their own communities. Victims unable to flee domestic violence. Workers unable to live near their jobs, or in their city at all. Anyone who is hoping to bring their talents and passion to our great city but can’t afford to get through the front door. Today the New York City Council proved it can put the interests of the people first and be an example of good governance. This is a win for our city and for healthy democracy.”

However, organizations such as the New York State Association of Realtors and the Real Estate Board of New York see the impact of the FARE Act much differently. Earlier this month NYSAR and the Hudson Gateway Association of Realtors issued a Call to Action to their respective memberships in opposition to the bill. In June, approximately 1,500 brokers and real estate professionals rallied at City Hall in opposition to the FARE Act, otherwise known as the “Broker Fee Bill.”

In a prepared statement, REBNY President Jim Whelan said: “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. 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.”

NYSAR also released a statement slamming the bill’s passage. “The New York State Association of Realtors remains firm in its opposition to Int. 360-A (FARE Act). The City Council’s decision to approve this misguided legislation without collaboration from industry partners is unfortunate and does not take into account the immediate and long-term harmful impacts it will have on both hardworking real estate professionals and tenants in search of safe, affordable housing.”

NYSAR’s statement continued: “The FARE Act will undoubtedly lead to higher rents and reduced access to available rental listings for prospective tenants, exacerbating housing affordability challenges New Yorkers already face. New Yorkers deserve better policies that actually improve housing accessibility and affordability and does not disregard the livelihoods of thousands of hardworking small business owners. NYSAR will continue to fight this ill-conceived legislation on behalf of its Realtor members across all five boroughs.”

Mayor Adams at a press briefing prior to the vote said the city was attempting to find some middle ground on the issue and believes the FARE Act will likely lead to higher rents for tenants.

“I was a real estate agent. If you have to pay that fee of $800 one time to get a place, and then you change it and the owner of the property, particularly small property owners, decide that they're going to spread it out to $50 a month. Now you're paying that for the life of your rental. Because there's nothing in the bill that states they can't do that. We need to be clear on that. There's nothing in the bill that states the property owners can't pass that fee into the cost of that (rental).”

He added, “And so, again, I've witnessed this in Albany and I see it now. Sometimes our ideas are not fleshed out enough to know what are the full long-term ramifications. So that $800, if it's passed into the bill to $500 a month, within two years, you have now paid more than just that $800.”