NYC tenants will no longer pay brokerage fees

Regulators unexpectedly banned brokerage fees in New York, which make up 15% of the annual rent. Opponents believe that this could destroy the brokerage industry. This publication writes The New York Times.

Фото: Depositphotos

To rent housing in New York, tenants for many years were forced to resort to the help of intermediaries. Thus, brokers have almost complete control over the process of renting apartments. The fees they charge for their services can be as high as 15% of the annual rent, usually paid in one lump sum by the tenant before moving into the apartment.

New York is one of the few cities in the country with a brokerage industry that has such financial leverage over how people rent apartments, the source notes.

However, on February 4, the situation changed - regulators unexpectedly banned brokerage fees. So with the passage of rent laws last year, New York has moved even further as a national leader in creating tenant-friendly regulations.

Brokers can still charge a fee, the state’s revised rules say, but it should be paid by the landlord, unless the potential tenant has hired them to help find the apartment.

Reaction to innovation

The new rule, buried in the legal guide for last year’s rental law, took lawmakers, many landlords, and brokers by surprise.

The influential trade group The Real Estate Board of New York immediately threatened to challenge it in court and called on its members to protest. “This is a serious issue for our members,” said Reggie Thomas, the council's senior vice president of government affairs. “This matter concerns everyone.”

Brokers warned that the new rules would simply increase the amount tenants pay monthly rent, as many landlords would likely pass the cost on to tenants by raising their rent. “What was the purpose of this? said Jared Antin, Director of Sales at Elegran. — If we are talking about minimizing the cost for the tenant, then it will simply change. Instead of paying upfront, they will pay monthly.”

It is noted that state laws limit the amount of rent for 1 million apartments with regulated rent. There are also more than 900 apartments at market prices that are not regulated.

Tenant advocates supported the new brokerage commission rule. They say it helps influence the uneven playing field in the real estate market. “These are important tenant protections, and it’s time we had them,” said Michael McKee, treasurer of Tenants PAC.

New arrivals in New York have long been disappointed that they have to pay brokerage commissions even when they find an apartment on the Internet. But, unlike most US cities, landlords often prefer not to work directly with tenants and not sell their apartments on their own. Instead, they hire a broker.

For several months, real estate experts feared just such an interpretation of the new housing rental laws that encouraged Democratic lawmakers.

How it will work

New laws aimed at protecting tenants and tightening rent regulation stipulate that tenants may be charged a fee of not more than $ 20 when applying for an apartment, including a biography and credit rating.

Read more at ForumDaily New York.

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