Good-bye to the Broker Fee

Photo: Emil Cohen/NYC Council Media Unit

Some good news, for once: The broker fee as we know it is over in New York City. A City Council bill that would prevent your landlord from charging you the fee that their broker is actually charging them passed on Wednesday after years of opposition from the real-estate industry. The FARE (Fairness in Apartment Rentals) Act, which was first introduced by Chi Ossé in 2023, states that a landlord has to pay the fee for a broker who lists a unit for them and that brokers and landlords have to disclose any other fees to tenants up front. It sounds simple, but it was actually extremely hard to get here. “We put a lot of effort into this campaign,” Ossé said on Tuesday. “The fact that it’s even coming to a vote tomorrow is a really good sign.” On Wednesday, a veto-proof majority of 42 City Council members voted in favor of it.

New York is one of the few cities in the country where tenants regularly have to pay brokers who are hired by their landlords to show the properties they’re trying to rent out. What this has meant in practice is that brokers have been gouging tenants with fees that can reach as high as 15 percent or more of their annual rent. That’s generally thousands of dollars in fees for a broker whom your landlord hired and who also maybe didn’t even show up. (In my current apartment, I had to pay a month’s rent to a broker who texted me to buzz everyone in the building until someone let me in so I could show myself the apartment.)

A first attempt to kill the compulsory broker fee happened in 2020, after the state Legislature passed a slate of tenant protections and the New York Department of State issued a surprise guidance that banned the city’s wacky fee system. For a few sweet weeks that year, charging tenants for what was actually the landlord’s expenses was illegal. But the Real Estate Board of New York sued, saying the Department of State had “illegally overstepped its role,” and a judge eventually agreed and overturned the ban.

Then in June 2023, Ossé introduced the FARE Act. It didn’t go anywhere. According to reporting from the New York Daily News, REBNY struck a private deal with then-Councilwoman Marjorie Velázquez, who was chair of the Consumer and Worker Protection Committee and blocked the bill from coming up for a hearing. Ossé reintroduced it again at the beginning of 2024, garnering backing from labor unions and reaching out to different social-media influencers to drum up support. “It created a lot of natural public buzz around the bill that made it hard for the City Council to ignore,” Ossé said. (Plus Velázquez lost her reelection bid.)

As momentum built around the bill, the real-estate industry went nuts. Brokers opposing the bill took over City Hall Park before a hearing this summer, wearing Corcoran-branded pullovers and holding signs that said things like “Agents Are Tenants Too.” (“It’s pretty insulting,” one Douglas Elliman broker told me at the rally. “We don’t just open doors.”) REBNY claimed that landlords would just bake the fee into higher rents, an argument our beleaguered mayor seemed to buy. But this kind of thing can’t happen in the case of nearly 1 million rent-stabilized apartments, since landlords can’t set rent above a certain threshold. REBNY even tried to shop its own version of the bill in October, which would require agents to give apartment hunters “a tenant bill of rights,” which would inform them, among other things, that broker fees were negotiable “between all parties.” (Sure!)

Not all brokers, though, were against the idea. “The FARE Act does not cap agent commissions,” Anna Klenkar, a broker at Sotheby’s testified at the hearing. “If our incomes drop because landlords pay us less than they expected tenants to pay, it just shows the current system is built on exploitation.”

As for any potential legal challenges this time around? “There’s always the opportunity for anyone to sue anything, especially REBNY,” Ossé says. “But I’m feeling good about this bill.” Let’s hope he’s right.