The industry predicted that banning tenant-paid broker fees could lead to rent increases, and a new analysis finds it did — in 438 cases.
The findings from listings platform Localize.city show a dramatic increase in asking rents on those units during the period earlier this month when New York Department of State regulators banned tenant-paid broker fees.
The analysis found that the sharp rent hikes happened during the week of Feb. 3 — when The Real Deal broke the news about the new state’s guidance.
The median price on those 438 listings marketed units at $3,900 a month. More than a third of those were between $2,000 to $3,000 a month — below the platform’s median rental price of $3,150.
Localize.city declined to provide the average price increase on those 438 listings, which represent a fraction of the platform’s more than 9,300 listings online as of Feb. 20.
But in the nearly three months leading up the broker fee ban, the average number of rental listings that saw price increases hovered at around 55, according to Localize.city. The median prices for those 55 listings was significantly higher: $4,690 to $6,574.
The DOS guidance reversed the tenant-pays system long the norm in New York City. Landlords responded they would raise rents, and some listing brokers said that within days their clients had instructed them to hike asking rents on listings by hundreds of dollars. In one case, that jump amounted to $1,300 on a listing.
But five days after the DOS guidance created havoc in the rental industry, a New York judge granted an industry-led coalition a temporary restraining order that halted the ban on tenant-paid broker fees. The next court date is on March 13.
Write to Erin Hudson at [email protected]