New York City’s FARE Act to Eliminate Upfront Broker Fees

Categories: New York State Business NewsNew York State News

New York City's rental landscape is evolving with the FARE Act.

News Summary

New York City’s rental market is set for a major reform with the introduction of the Fairness in Apartment Rental Expenses (FARE) Act, which will eliminate upfront broker fees for most tenants starting June 11, 2025. This significant change aims to ease the financial burden on renters who currently face high upfront costs when securing leases. While the law has garnered support from tenant advocates, it faces opposition from landlords concerned about potential impacts on rental listings and prices.

New York

New York City’s rental market is set to undergo significant changes with the enactment of the Fairness in Apartment Rental Expenses (FARE) Act, which will eliminate upfront broker fees for most tenants starting June 11, 2025. Under this new law, broker fees, which have historically been a financial burden for renters, must be paid by the party that hires the broker, typically the landlord or property management company.

Currently, nearly 50% of leases in New York City include a broker fee, as revealed by data from StreetEasy. In the past year, tenants have reported an average upfront cost of approximately $12,942 when signing a new lease. The introduction of the FARE Act is projected to decrease this figure by 41.8%, lowering it to about $7,537. This change aims to relieve financial pressure, especially for low-income New Yorkers, who often face significant upfront costs when searching for housing.

Broker fees in New York City generally range from 12% to 15% of the annual rent. For example, a tenant renting an apartment for $3,000 a month could pay around $5,400 in broker fees. As the FARE Act comes into effect, many tenants will no longer need to budget for these substantial fees, thereby making housing more accessible.

The initiative behind the FARE Act was spearheaded by New York City Council Member Chi Ossé, who sought to address rising housing costs and financial disparities affecting tenants across the city. Despite facing opposition from landlords and the Real Estate Board of New York (REBNY), who filed a lawsuit to attempt blocking its implementation, a judge ruled against REBNY, allowing the law to proceed.

Supporters of the FARE Act, including tenant advocates, consider it a landmark achievement for renters in New York City, expressing optimism that it will dismantle the financial barriers previously hindering access to housing. Nevertheless, critics, such as REBNY President James Whelan, warn that the law could inadvertently create a scarcity of rental listings and increase rent prices, as landlords may opt to incorporate costs associated with renting into the monthly rent rather than absorbing them.

The enforcement of the new law will be managed by the NYC Department of Consumer and Worker Protection. Penalties for non-compliance include fines starting at $750 for initial violations and progressively increasing for subsequent infractions. Tenants who find themselves facing illegal broker fees are encouraged to file reports through the city’s 311 service or visit the official government website.

Furthermore, the FARE Act stipulates that brokers acting on behalf of landlords are prohibited from charging tenants any broker fees. To enhance transparency, landlords are now required to disclose all fees a tenant must pay within property listings. However, it is important to note that while the FARE Act removes broker fees for most transactions, tenants who elect to hire brokers for their rental searches will still be liable for the fees incurred.

In addition to this new legislation, New York City will maintain ongoing support programs for rent stabilization, an initiative currently benefiting around 1 million units across the city. This would suggest a continued focus on stabilizing the rental market and ensuring affordable housing remains accessible to the city’s diverse population.

Overall, the FARE Act represents a significant shift in New York City’s rental landscape, with the potential to positively impact thousands of current and future tenants by alleviating some of the financial challenges associated with securing rental properties in one of the nation’s most competitive housing markets.