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More than 1,000 agents descended on City Hall in New York City on Wednesday to oppose the Fairness in Apartment Rental Expenses (FARE) Act, a bill that would require rental property owners to cover broker fees when they enlist a broker to help them lease a unit.
The Real Estate Board of New York (REBNY) led the rally, with more than a dozen REBNY members testifying against the bill during a City Council hearing.
James Whelan | Credit: LinkedIn
“Legislation that will make rents higher, further limit housing access and threaten the livelihood of hardworking agents is legislation that New York City elected officials should be unanimously against,” REBNY President James Whelan said in a statement. “There are thousands of residential real estate agents that call New York City home and will not stay silent as policies are considered like the FARE Act, which will worsen our housing crisis and potentially put them out of work.”
Councilmember Chi A. Ossé reintroduced The FARE Act, also known as Intro 360, in February 2024 after failing to get a hearing for the bill 2023.
Ossé and the bill’s 31 cosponsors said New Yorkers contend with some of the nation’s highest rents, which reached a median of $3,600 in June. A renter renting a median-priced unit would pay $7,200 upfront for their first month’s rent and a security deposit. If they rent a unit that comes with a broker fee, they could be expected to pay 10 to 15 percent of the annual rental costs or an amount equal to one month’s rent — easily pushing their upfront costs into five figures.
“A party that purchases or contracts a good or service should be responsible for the cost,” Ossé, who represents Brooklyn, told The Gothamist on Monday. “This is the case in every other transaction across our vast economy, and should be true for New York City Rentals as well. The FARE Act has the potential to alleviate prohibitive upfront costs for workers and growing families searching for a new home.”
“If you want a broker, great, hire them. And if you don’t want one, my bill says you don’t have to pay,” he added in a TikTok leading up to Wednesday’s hearing.
While Ossé’s bill has found favor among renters and several local labor unions, it’s fallen flat with the city’s real estate community, who say the bill could compound long-term costs for renters.
In a phone call with Inman, REBNY VP of Government Affairs Ryan Monell said if the FARE Act is passed, property owners would likely pass the cost of brokers’ fees on to renters through higher rents.
Ryan Monell | Credit: REBNY
“What it really is going to do is complicate the transactions even further to where effectively that cost is going to have to be accrued through higher rent,” he said. “So while you may save some money on the front end of a transaction, the reality is the cost of the broker fee isn’t actually going to be evaporated into thin air.”
If passed, Monell said the impact of the FARE Act would be most felt during annual lease renewals.
“For those who decide to renew the lease year over year, it’s going to be a problem,” he said. “When you’re looking at a higher base rent for the first year you’re in an apartment, it’s going to be effectively amortized over time because when you go to renew, generally in New York City, they raise your rent, say 5 percent.”
“So if you’re already at a higher base rent for year one, you’re going to ultimately end up paying more year over year as opposed to paying a one-time fee upfront that for many people is probably going to be to a benefit, particularly if you’re staying in your apartment for multiple years on end,” he added.
Monell also said the FARE Act removes consumer choice. He said roughly half of New York City units already have no broker fees, and for those that do, renters have the right to negotiate.
“The reality is you have options right now in regards to what is best for you in regards to how you go out and look for an apartment and ultimately sign a lease,” he said. “And what this bill would effectively do is eliminate that choice.”
Bill Abramson
Beyond potentially raising costs for renters, longtime REBNY member and Buchbinder & Warren Director of Brokerage Bill Abramson said the bill fundamentally misunderstands the value brokers bring to a lease transaction.
He said brokers’ jobs go far beyond opening and closing doors — they have intimate and invaluable knowledge of New York City’s unique rental landscape.
“You have a large majority of rental apartments that are in co-op or condominiums, which require board packages,” Abramson said. “Some of these board packages are voluminous. I mean, like a hundred pages of references, bank statements, landlord references, applications [and] credit reports.”
“Just putting those together takes time and as we all know, time is money, right?” he added. “For a property owner, a small property owner especially, to put that together, it’s just going to be a disaster for the market. And frankly, the tenants don’t know how to do it either.”
Abramson said ending the current system would also put landlords between a rock and a hard place. He said many of the city’s units are owned by individual landlords with small portfolios.
Requiring them to shoulder brokers’ fees, he said, adds to the growing list of housing expenses and could push them to forego using brokers.
“You’re 100 percent right — landlords do have a bad reputation,” Abramson said. “But the fees don’t go to the landlord; there’s co-op fees [and] there’s condo fees that could be $2,000. That goes to the building. Taxes keep going up, the cost of living in Manhattan keeps going up, and insurance costs have doubled. The cost of business, from a landlord’s perspective, has incredibly increased.”
Instead of focusing on broker’s fees, he said, legislators should focus on other market factors that would lead to increased affordability for everyone.
“New York City is going to be facing a 560,000 unit deficit relative to where our population is in the number of rental apartments that will be needed, or apartments overall that will be needed,” he said. “What they really want to be looking at is opportunities to increase the supply of housing.”
Several leading New York City brokers attended Wednesday’s rally, including Compass agent and American Real Estate Association co-founder Jason Haber.
Haber at REBNY’s rally. | Credit: Grace Boak, REBNY
“I have been standing on the steps of City Hall and on sidewalks for the last 25 years fighting for women’s reproductive rights [and] fighting for our friends in labor who are here with us today,” Haber said in a video recording of comments before heading into City Hall. “I never thought that I would stand here today to demand the City Council stop the highest rent increase in the history of the city. That is what is at stake today.”
“Notice what they call it — the FARE Act — but notice how they spell it, F-A-R-E. Not fairness, but a cost, an expense. An expense that will be borne by everyone in New York,” he added, while hundreds of surrounding agents cheered. “Today, we make our voice heard on the outside until we go inside! Let’s make New York City more affordable for everyone!”
The fate of the FARE Act is now in the hands of Committee on Consumer and Worker Protection chair Julia Menin, who will need to decide whether to bring the bill to a vote. If the committee passes the Act, it will then move to the desk of Council Speaker Adrienne Adams who can bring the bill to a vote for the entire council.
“We look forward to evaluating this legislation and listening to all public feedback on this legislation today while diving deeper into the policy with the bill sponsors and stakeholders in the days to come,” City Hall spokesperson Amaris Cockfield told The City on Wednesday.
