Longtime New York City renters are familiar with the broker’s fee: a mandatory expense you pay to your broker or real estate agent after submitting a rental application or signing a lease. Historically, these fees have been a substantial financial burden on New York renters, collectively costing marketgoers about $13,000 in the first nine months of 2024. However, with the recent passing of the Fare Act, financial relief may finally be coming for apartment hunters in the Big Apple.
In this blog, we’ll inform current and prospective renters in New York City what they can expect from the FARE Act. We’ll cover what the FARE Act is, when it will go into effect, and more by answering the following questions:
- What is the FARE Act?
- Why was the FARE Act introduced in New York City?
- Who benefits from the FARE Act?
- What are the challenges and criticisms of the Fare Act?
What is the FARE Act?
The Fairness in Apartment Rental Expenses Act, or FARE Act, prohibits brokers from charging tenants fees that exclusively represent the landlord’s interests. This means that whoever hires the broker must pay their commission, and usually, that person is the landlord. Therefore, brokers will no longer be able to charge these fees to tenants unless a tenant has hired the broker themselves.
The FARE Act also enforces rules on fee disclosures. Under its ruling, landlords and their respective brokers must disclose and advertise all required fees up front. This way, prospective tenants will know exactly what they’re financially in for when pursuing an apartment. If a landlord or broker does not disclose all fees, they could face legal or financial repercussions.
Why was the FARE Act introduced in New York City?
Broker’s fees have been a longtime staple of the New York City rental market. Because of the city’s competitive rental landscape, renters here often hire brokers to help them navigate the local market. Whether you need help finding available listings or submitting rental applications, a broker can help you conquer the complexities of the concrete jungle. However, their assistance can come with a hefty price tag.
The average New York City broker’s fee costs 12-15% of your annual rent. So, if you rent a Manhattan apartment for $4,000 a month, you could owe your broker up to $7,200 when you move in. For most renters, that’s a lot more than just some loose change. Add on application fees, security deposits, and first and last months’ rent, and you’ve got yourself a pretty penny to pay. Not to mention, your monthly rent will likely be substantially higher than most other U.S. cities. As of January 2025, the average rent in New York is $3,858 per month, which is nearly 150% higher than the national average. All that considered, it’s no surprise that New York legislators are now looking for ways to reduce expenses in the local rental market.
Who Benefits from the FARE Act?
The FARE Act is intended to benefit New York City renters, especially those with low—to middle incomes. The absence of a mandatory broker’s fee will alleviate renters’ upfront costs and increase their overall affordability. The FARE Act will also benefit renters by improving transparency between landlords, brokers, and tenants. Because landlords and brokers will be required to disclose fees upfront, renters will have a clear understanding of their financial obligations before signing a lease. This achieves what the FARE Act is ultimately trying to accomplish: create a more attainable, transparent, and fair rental landscape for New Yorkers.
Members of the New York City Council have echoed this sentiment as the FARE Act enactment has progressed. Speaker Adrienne Adams said in a recent press release that the Council is “taking action to make housing and [New York City] more affordable to New Yorkers,” focusing on improving the lives of working and middle-class families. Council Member Chi Osse also touched on this issue, saying that the goal of the FARE Act is to liberate renters and end the “era of the captive tenant.”
What are the Challenges and Criticisms of the FARE Act?
Though many favor the FARE Act and its potential to make New York City more affordable, some critics have raised concerns about its impact on brokers and landlords. On December 16, 2024, the Real Estate Board of New York (REBNY) filed a federal lawsuit challenging the FARE Act and posing the following arguments:
- Violation of free speech: REBNY argues that the FARE Act infringes on brokers’ constitutional rights to free commercial speech, arguing that the Act could discourage landlords from posting listings to avoid paying fees, ultimately impacting brokers’ ability to operate.
- Interference with private contracts: REBNY also claims that the FARE Act unlawfully disrupts private agreements between landlords, tenants, and brokers, violating the U.S. Constitution’s Contract Clause.
- Conflicts with existing state regulations: Finally, REBNY asserts that the FARE Act conflicts with existing state regulations and local authorities governing broker fees, creating regulatory inconsistencies that could complicate enforcement.
The FARE Act was enacted on December 13, 2024, meaning it’s set to go into effect in June 2025. However, during this interim period, REBNY can seek an injunction and challenge the Act’s implantation. In the meantime, New York renters remain excited and hopeful that a more affordable rental landscape is on the horizon.
FAQs
How can I apply for benefits under the FARE Act?
There is no application process for FARE Act beneficiaries. This act is not designed to directly benefit individual renters. Rather, it was enacted to improve the overall affordability and transparency of the New York City rental market. If you are a renter in NYC, you can expect to see reduced upfront costs and better disclosure of fees when searching for an apartment once the FARE Act goes into effect.
When will the FARE Act go into effect?
The FARE Act was enacted on December 13, 2024, and will officially go into effect in June 2025. Until then, New York City’s existing broker fee system will remain in place, meaning current renters will still have to pay a broker’s fee, even if the landlord hired the broker.
What should I do if a broker tries to charge me a fee after the FARE Act goes into effect?
If a broker attempts to charge you a fee that is not allowed under the FARE Act, you can report them to the New York Department of State Division of Licensing Services, which investigates the mishandling or overcharging of real estate fees or deposits.
