New York City bans forcing tenants pay brokers hired by landlords

Mandatory broker fees, an unusual feature of New York City flat-hunting long reviled by renters, will be banned under legislation that passed Wednesday after overcoming fierce backlash from the city’s real estate lobby.

Under a system that exists in New York and almost nowhere else in the country, tenants are often forced to pay the commission of a property agent before moving into a flat, even if that agent was hired by the landlord.

The fees are steep, typically totaling as much as 15 per cent of the annual rent, about US$7,000 for the average-priced New York City flat.

The legislation passed by the City Council aims to stop landlords from saddling tenants with those payments – at least as an up-front fee. Though tenants may hire their own representatives, they will no longer be forced to pay for brokers that solely represent the interests of their landlords.

In a city where two-thirds of households are renters, the bill is widely popular, a rare piece of municipal legislation championed by influencers on TikTok. It has also triggered opposition from brokers and their representatives, who warn it could send shockwaves through an industry that employs 25,000 agents.

“They spent hundreds of thousands of dollars to lobby our politicians to try to kill this bill and try to force you to pay broker fees,” Councilmember Chi Ossé, a Democrat who sponsored the the FARE Act, said at a rally Wednesday. “But you know what we did: we beat them”.