Brown Harris Stevens CEO Bess Freedman got right to the point.
“Let’s squash the shit out of Intro 360!” she yelled to cheers from people holding blue and yellow signs reading “Agents are tenants too,” and “Don’t Raise the Rent.”
Freedman was speaking at a rally opposing the Fairness in Apartment Rental Expenses Act, or FARE, a measure that would shift the responsibility for paying a rental broker’s commission to whoever hires said broker.
“For the agents, this bill wrecks your livelihood,” she said. “We all know how much hustle muscle it takes to get the deal done.”
Proponents and opponents of the measure held dual rallies outside City Hall on Wednesday, ahead of a hearing on the bill.
The Real Estate Board of New York projected that more than 1,500 real estate professionals from its organization and the New York State Association of Realtors would attend the rally, the same number of individuals who RSVP’d for the event. The turnout appeared to be short of that, but the crowd stretched from the City Hall west gate entrance at Murray Street to about Park Place ahead of the hearing.
A crowd of tenants, elected officials and members of construction and labor unions, including the New York City District Council of Carpenters, the Hotel Trades and Gaming Council and 1199 SEIU, gathered for a separate rally in City Hall Park.
“My members, they’re college-aged kids, they’re stuck at home, they can’t move out, they can’t begin their life,“ said Kevin Elkin, political director for the carpenters. “Our apprentices, they can’t afford the rent, and then can’t afford to move. All this bill is doing is making it easier to live in the greatest city in the country.”
The bill, sponsored by Council member Chi Ossé, doesn’t get rid of broker fees, but agents say it could leave them out of the job or restrict their ability to work on non-exclusive listings.
A fight five years in the making
The measure is the latest attempt by officials to regulate residential rental broker fees. City Council member Keith Powers proposed a measure in 2019 that would have slashed fees to 8.2 percent, instead of the typical 15 percent of annual rent. REBNY members similarly showed up in force at City Hall against that bill.
In 2020, the Department of State issued guidance that interpreted a portion of the 2019 rent law as a ban on forcing tenants to pay broker fees. REBNY sued over the guidance, which a state court ultimately voided, finding that the agency overstepped its authority.
Advocates for the measure frame the bill as a simple change: If the tenant does not hire the broker, they should not be on the hook for the broker’s commission, which further saddles New Yorkers with thousands of dollars in moving costs. Such costs can prevent New Yorkers from moving to a new neighborhood and potentially lessens their negotiating power in objecting to rent increases, the landlord knowing that the upfront costs of moving will likely keep the tenant in place.
“In the current system that we’re in, landlords know that tenants are trapped because of how expensive it is to move into another apartment,” Ossé said. “We believe that the passing of this bill increases tenants’ bargaining power and puts downward pressure on rents.”
Agents maintain that this narrative disregards how the market actually works: An owner of a “no fee” apartment sometimes offers a commission to any agent who procures a tenant for an available apartment, rather than hire an agent exclusively. The bill could bar such arrangements, according to BOND New York’s Brian Hourigan, and push landlords to forgo hiring a broker or force tenants to hire their own agent.
BOND’s Doug Wagner said the temporary ban on tenant-paid broker fees following the passage of the 2019 rent law temporarily led to less transparency on rental listings sites. He said the FARE Act would similarly prevent brokers from listing non-exclusive listings, creating a “shadow inventory.”
REBNY argues that if the bill is approved, landlords will either decide against using a rental broker or pass the cost of commissions onto renters by increasing monthly rent. The organization has said some tenants would prefer to pay costs upfront rather than pay a higher rent because they plan to stay in an apartment long-term.
“The FARE Act, it sounds like it’s nice and everything, but it’s actually going to result in higher rents, make it more difficult to access housing, less jobs,” REBNY President Jim Whelan told The Real Deal before the hearing.
The hearing, at times, became heated between brokers and council members, as the former objected to the perception that rental brokers simply unlock an apartment and then collect their fee. Attendees in the audience also were scolded a number of times for reacting to speakers.
One panel of real estate professionals cited a TikTok Ossé did with comedian Ilana Glazer to promote the bill, where he states that New Yorkers pay “thousands of dollars to someone who just opened a door to a place you found online.“ Osse said during the hearing that he did not remember saying that, but believes brokers provide a valuable service; he just believes the system is forced on renters.
Industry, authorities split on guidance
Not all real estate agents are against the bill. Anna Klenkar, an agent with Sotheby’s International Realty, said the opposition to the bill seems more about shielding landlords from extra costs than protecting brokers. She noted the popularity of the FARE Act.
“The more we fight it the more we erode public trust,” she said.
She said some agents in favor of the bill were too intimidated to attend Wednesday’s hearing, noting that REBNY contacted her manager when it found out she was testifying in favor of the bill.
“Your industry thinks you are a traitor for voicing your opinion,” she said.
Mayor Eric Adams’ administration is cautious about the measure. During Wednesday’s hearing, Ahmed Tigani, deputy commissioner of the Department of Housing Preservation and Development, testified that the agency is evaluating the measure but cited potential unintended consequences, including the possibility of landlords increasing rents to cover the costs of broker commissions, a key argument made by REBNY.
He said the agency understands why the measure “strikes a chord with New Yorkers,” but pointed to the “tremendous value” agents can provide in a housing search. He also emphasized the need to build and preserve affordable housing to address the housing crisis.
Adams himself has shown concern that the measure would hurt agents. During a press conference this week, a reporter asked the mayor about his time as a real estate agent, an anecdote that Adams has repeatedly used while speaking to real estate crowds. Adams said his time as an agent provides an important perspective in considering the measure.
“I used to spend, sometimes, a whole day taking a potential tenant around to 12 different locations where they say, ‘Oh, I don’t like where the bathroom is,’” he said during the press conference.
“Because I’ve had so many jobs, I think through and deliberate on these things,” he continued. “It’s just not, idealism collides with realism when you start to try to alter entire industries. We’re going to examine it and make a determination.”
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As of Wednesday, the bill had 33 sponsors, one short of a veto-proof majority.
The hearing also underscored mounting tensions between the City Council and the mayor. Council member Sandy Nurse told Tigani, who was the lone representative from the administration to testify, that the administration wasted its time by sending only one person from HPD, and no representatives from the Department Consumer and Worker Protection, which would oversee the measure if it passed.
“They left you on the chopping block,” she said. “This is disgusting.”