City Council could take a hatchet to the rental broker fee
Agents already being squeezed by StreetEasy fees, landlords advertising directly to renters
A new City Council bill slated to be introduced Wednesday would cut residential broker fees nearly in half.
The proposed legislation, whose prime sponsor is Manhattan Council member Keith Powers, seeks to cap fees at one month’s rent. Brokers often charge 15 percent of annual rent for their services. This bill would slash that to roughly 8.3 percent.
“The bill addresses the outsized costs associated with finding an apartment in New York City, which particularly harms younger and lower income New Yorkers,” Powers said in a statement. “With a low vacancy rate in New York City, it is increasingly important that we provide a framework to protect consumers.”
So far, the legislation has 25 sponsors. The measure has also already drawn some criticism from the residential brokerage community. Douglas Wagner, BOND New York’s executive vice president of brokerage services, questioned if this was the best way to help renters.
“You can’t cure income disparity by limiting people’s incomes,” he said. “This would qualify as restraint of trade, plain and simple.”
Real Estate Board of New York president John Banks said agents “rely on commissions to feed their families.”
“They offer a valuable service for both renters and owners,” he said in a statement. “The decision to use a real estate agent is optional and the fees are negotiable.”
Broker fees are typically paid in addition to security deposits — usually 1.5 or two times the monthly rent — and the first month’s rent. For a Manhattan apartment with the median rental price for the borough — $3,300, according to Douglas Elliman — that means paying $14,190 upfront.
Rental brokers have already been feeling the squeeze from StreetEasy, which increased its $3 a day fee per listing to $4.50. Agents also have to contend with the rise in co-living concepts, roommate matching startups and landlords advertising directly to consumers.