Two Key Manhattan Reps Quiet On Broker Fee Bill

NEW YORK CITY – Will paying broker fees to rent an apartment soon be a relic of history?

“Ha!” chortle savvy New Yorkers. Heard that one before.

But wait, keep reading: the current effort to shift the financial nuts and bolts behind how most New York City renters obtain apartments is likely to sail through City Council on Wednesday, as it’s supported by a significant majority – 33 – of members, according to The City.

What Is This Bill, Anyway?

The legislation is expansive:

This bill would prohibit brokers from passing their fee onto tenants where 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 a tenant must pay in their listings and rental agreements. The Department of Consumer and Worker Protection would enforce this bill and would conduct education and outreach. Any person who violates the bill would be subject to a civil penalty or civil action.

Fines start at $1,000 for a first offense, but are capped at $2,000 within a two-year period.

What’s Going On Here?

For the unfamiliar, brokers serve as a liaison between landlord and tenant, brokers say, and typically handle apartment showings, tenant questions, and ultimately shepherd both parties through the leasing process. All of that for a substantial fee, of course, which is at least one month's rent and as much as 10 to 15 percent of an apartment's total annual rent. Sometimes more.

Brokers and real estate interests largely oppose the new legislation, adding that brokers will persist and landlords will simply increase rents to cover the broker’s fee.

Supporters of the bill, on the other hand, say that although brokers typically represent landlords and their interests, it is tenants who pay the fee – tenants who did not hire the broker in the first place. And perhaps more importantly, in a city that is already prohibitively expensive for many, a broker fee creates a major barrier between renters and housing – a barrier the bill at hand would at least partially dismantle, they argue.

In fact, New York is the only major city in the United States where such a system is common practice (brokers are also a feature of life in Boston).

New York City (and State) have made several unsuccessful attempts to curtail broker fees in recent years, the latest of which was struck down in court following a Real Estate Board of New York (REBNY) lawsuit in 2021.

Adams Appears Hesitant

Mayor Eric Adams equivocated when asked about the bill in a press conference on Tuesday.

When it comes down to the bill, we're gonna look at it...affordability is a real issue in the city. People are leaving the city because it's just too expensive and we need to find ways of ensuring that we get that affordability but we can't do it with just a knee-jerk reaction.

We need to analyze that if you pass the [cost] on...to the small property owners, nothing stops…them from building it into their rent. So it goes from a one-time fee to a permanent fee that's built into your rent. And so some of the ideals [collide] with the reality of the operationalizing implementation.

So we just gotta get it right, make sure we reach the goals that we're looking for and at the same time, don't hurt small property owners and try to give some relief to those who are trying to live in the city. So that's the question that we need to look at and I think the bill has the right intention but sometimes good intentions do not get the results you're looking for.

Brewer And Menin Could Be Key

Only two of Manhattan’s City Council reps remain uncommitted.

Gale Brewer, who represents District 6 on the Upper West Side? No comment. The same goes for Julie Menin, who represents District 5 – the Upper East Side.

There are 51 City Council members in New York City, and 2/3 of these members – 34 of them – can override a mayoral veto, which means that either Brewer or Menin (or both) could eventually play a key role in the bill’s passage or its failure, were the bill to pass and Adams to veto it.

So: Will New York City ban broker fees?

In 2019, Keith Powers – who supports the current bill – introduced legislation that would’ve capped broker fees at one month’s rent. It never even made it to a vote.

UPDATE: The bill passed on Wednesday afternoon, with 42 in favor and 8 opposed. Both Brewer and Menin voted in favor.