Lawmakers in New York City could soon ban real estate brokers from charging exorbitant fees to renters and instead transfer the cost to landlords.
Currently, a tenant in New York City is required to first shell out thousands of dollars in fees to a real estate broker, even if the agent was hired by the landlord. The broker's fee varies and is usually between 10% to 15% of the annual lease amount, but it can easily cost tenants an additional $10,000. In comparison, landlords in other cities cover the commissions of brokers who work on their behalf.
However, new legislation now aims to prevent brokers from charging fees to renters who did not hire them. Instead, the cost would be covered by the party who hired the broker. However, the bill will not affect apartment sales, where fees are paid to agents representing the seller and the buyer.
City Council Member Chi Ossé, who sponsored the bill, said the current system is "exploitative" and noted that it "exists virtually nowhere else."
"It's an additional fee in an already expensive and competitive market," he said, as quoted by the New York Times. "It's holding a lot of people back from finding new homes, and it's pushing people out of the city."
How NYC Residents and Brokers Reacted to the Bill
The proposal has gained support and triggered opposition from New York City's real estate industry.
Ahead of the Wednesday hearing, hundreds of brokers gathered to voice their objections at a rally organized by the Real Estate Board of New York.
"This is the start of a top-down government-controlled housing system. The language is so incredibly vague we actually have no idea what this would look like in the world," Jordan Silver, a broker with the firm Brown Harris Stevens, said.
Bess Freedman, CEO of the brokerage Brown Harris Stevens, argued that the bill would likely lead to higher rents in the city, adding that it would also threaten the livelihood of thousands of brokers in the city.
"Today, an upfront fee in writing is transparent and negotiable. This bill would make the fees hidden and progressive, predatory and incredibly misleading," she said.
On the other hand, Delaney Masal, a teacher and actor, testified during the hearing that one apartment she looked at in Brooklyn cost $1,500 a month and had a broker fee of $5,000.
"I'm one of the people who has grown up in this city and cannot afford to move because of these upfront fees being such a barrier to entry," she said in her testimony, per New York Times.
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