Intensity Over New York City’s Proposed Fairness in Apartment Rental Expenses (FARE) Act
It is no secret that New York City is in the midst of a tumultuous housing market. Housing shortages and increasing costs are at all-time highs. Aware of this pressing issue, members of the New York City Council have taken steps to put out the flames.
To try and lower costs for apartment seekers, Councilmember Chi Ossé from Brooklyn proposed the FARE or Fairness in Apartment Rental Expenses Act. This legislation would fundamentally change the real estate landscape in the city.
Unlike most of the rest of the country, in New York City, when landlords hire brokers to lease their apartments, tenants usually are expected to pay the brokerage fee. This fee, typically 15% of the annual rent, can pose major financial burdens, especially to low-income tenants, and ultimately is a major deterrent, leaving many with limited housing options.
For example, say an individual finds an apartment for $1,500 a month. Add a 15% brokerage fee on the $18,000 total yearly rent, and that is another $2,700 that a low-income tenant would have to pay. One important thing to note is that most of the time the tenants do not even hire the broker they are required to pay.
With that being said, the FARE Act would flip the script, mandating whoever hires the broker, almost always the landlord, to pay this fee instead of the tenant. As demonstrated, that could save tenants $3,000 plus, and allow so many more individuals who would otherwise not be able to rent to have a roof over their head.
This legislation, making the Committee on Consumer and Worker Protection in June and having overwhelming support in the City Council, was met with serious opposition in the broker community. Representatives from the Real Estate Board of New York (REBNY) and other concerned members of the real estate industry came and spoke to lawmakers. Their central arguments were that this bill would unjustly harm the welfare of brokers, lead to higher rents, make listings harder to find, all with the ultimate result of increased homelessness in the city.
The latest update on the New York City Council website has the bill laid over in committee as of June 12th. Lawmakers are seemingly hesitant to advance the bill forward.
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Sources:
https://www.theguardian.com/us-news/article/2024/jun/29/renters-new-york-city-real-estate-brokers-fees
https://legistar.council.nyc.gov/MeetingDetail.aspx?ID=1192722&GUID=50BE660E-5533-4C79-BB0E-4EA46295DD3B&Options=&Search=
https://www.thecity.nyc/2024/06/12/broker-fees-bill-council-hearing-rent/
https://www.brooklynpaper.com/cm-chi-osse-broker-fee-bill-hearing/
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