Proposed City Council bill would force landlords to pay broker fees

If passed, the FARE Act ensure that the hiring party, whether tenant or landlord, pays the broker fee.
Brownstones in Brooklyn.
File photo by Susan De Vries

Brooklyn Council Member Chi Ossé recently introduced legislation aiming to alleviate the financial burden of broker fees on renters, forcing landlords who hire brokers to pay the associated costs. 

The Fairness in Apartment Rental Expenses (FARE) Act would not not restrict broker fees in any way, but instead require that when signing a new lease, the broker fee be paid by the party who hired the broker, whether the hiring party be landlord or tenant.

Ossé, who represents Crown Heights and Bedford-Stuyvesant, said his bill is “common sense,” and is aimed squarely at the spiraling housing affordability crisis throughout the city.

“In every other transaction, the party who hires a service pays for the service. New York is unique among major cities in America in having tenants often paying the fee for a broker’s services,” said Ossé.

New Yorkers often use brokers to find and fill apartments in the competitive city market, and can often pay a broker fee as much as 20% of their annual rent. 

Oftentimes, tenants pay the fee prior to moving into their apartment, even if the broker was hired by the landlord.

“This bill is simple and fair in assigning that cost to whoever sought the service. Also, to address the fear that landlords who pay the fee would simply pass the costs onto tenants: It should be noted that even if some portion of the cost were passed onto tenants as rent, it would be distributed over the course of 12 or 24 months, alleviating the prohibitive upfront costs,” Ossé said of the FARE Act, which is co-sponsored 11 of his fellow council members, including Manhattan pol Shaun Abreu.

Abreu said it’s unfair that tenants are footed with the bill for a broker they did not hire, particularly while navigating the “nightmare” that is finding affordable accommodation across the five boroughs currently.

“On top of application fees, the real kicker for prospective renters is the broker fee, which a tenant is often asked to cough up and can be upwards of a month’s rent for a service the landlord sought out,” said Abrue. “If we are serious about empowering tenants, tackling our affordability crisis, and protecting renters across this city, we must be united in defense of the FARE Act. I am proud to stand with Council Member Ossé in support of this bill.”

The introduction of the bill follows Wednesday’s vote by Rental Tenancy Board to hike rents for NYC’s 1 million rent stabilized tenants. The board approved a 3% rent increase for one-year leases, and bifurcated increases for two-year leases of 2.75% in the first year, and 3.2% of the newly increased rent in the second year.