Tenant advocates celebrate landlords’ having to pay broker fees

Supporters of new rule reject argument that rents must rise

(Credit: iStock)
(Credit: iStock)

Broker fees have long been onerous and annoying for New York City apartment hunters, who often find themselves paying thousands of extra dollars even when they find a place on their own.

So when news broke Wednesday that the Department of State ruled the new rent law requires landlords, rather than tenants, to cover the fees of brokers retained by owners, tenant advocacy groups were ecstatic.

“For our members, especially who are homeless and perpetually unstably housed, this is hugely impactful,” said Paulette Soltani, political director at the activist group VOCAL New York. “I think fees, historically, just defined who had access to the rental market and who didn’t.”

She added, “This is just going to allow people to equally be able to find housing and not have to pay these exorbitant fees to get access.”

A standard broker fee is 15 percent of an apartment’s annual rent. The median rental price for a Manhattan apartment is about $3,500, which means a broker fee of $6,300 — payable upfront.

But even when the fee is far less, it can be a major burden for tenants. That was the case for tenant activist Winsome Pendergrass when she had to pay a broker $450 upon moving into a Flatbush apartment in 2010.

“It’s a lot,” she said, “especially when you’re a single person, and you have kids that you have to take care of or other family members that are ill.”

She was thrilled with the new rule requiring landlords to pay, saying that tenants are no longer “suffering in silence.”

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“I know the landlords are not happy that we are calling them out,” she said, “and we are also calling out the politicians to say, ‘Hey, it’s about time you have our back.’”

Landlords say they plan to list and show apartments themselves or increase rents to cover the cost of brokers.

Soltani largely dismissed landlords’ claim about raising rents, saying that, by and large, they are doing well financially and are just intimidated by the potential impact of the new rule.

“I think that they are resisting any attempt to try to make our housing market more equitable for low-income people,” she said, “and so I don’t buy that argument at all.”

Jonathan Westin, executive director of New York Communities for Change, took the possibility that landlords would increase rents a bit more seriously, saying it just proved that the city needs to further reform its rent laws.

“This is why we believe in universal rent control,” he said. “This is why the rent victories last year were so important.”

He characterized landlords’ response as typical for the industry and said the consequences of this week’s ruling would likely be milder than landlords expect.

“When tenants get a victory, they cry the sky is going to fall, and as we saw with the current rent laws that were passed last year, it’s actually been a very good thing for New York City,” he said. “Evictions have gone down. It’s stabilized the industry, and we think this will have a very similar effect.”

Write to Eddie Small at es@therealdeal.com