Decades-old tenant broker fee requirement abolished in move to improve housing fairness
New York City has officially banned a long-criticized practice requiring tenants to pay broker fees for real estate agents hired by landlords. The legislation, which passed the City Council with a veto-proof 42-8 vote, will take effect in six months.
The move ends a nearly century-old system unique to NYC and a few other places, like Boston, where tenants are required to pay brokers’ commissions – fees that often reach 15% of annual rent, or about $7,000 for the average apartment in the city. Under the new rules, tenants will still have the option to hire brokers for their own representation, but landlords will now bear the cost of agents working solely on their behalf.
For renters, who make up two-thirds of NYC households, the ban represents a major victory. Mandatory broker fees have long been criticized as an unfair burden, especially in a city where many tenants struggle with high upfront costs like security deposits and first month’s rent.
“In most businesses, the person who hires the person pays the person,” said Queens resident Agustina Velez, recalling the $6,000 fee she paid just to move apartments. “Enough with these injustices. Landlords have to pay for the services they use.”
Renters have become increasingly frustrated with fees, particularly as most listings are now accessible online, and self-guided tours have become the norm. Many feel brokers do little to justify their high commissions, with some renters reporting paying thousands for minimal tasks, such as unlocking doors or sending lockbox codes.
The real estate industry, which employs around 25,000 brokers in NYC, has pushed back hard against the legislation, warning of potential fallout. Critics argued that landlords will likely raise monthly rents to offset the additional costs, ultimately passing the burden back to tenants in a different form.
“This is the start of a top-down, government-controlled housing system,” said Jordan Silver, a broker with Brown Harris Stevens. “The language is so incredibly vague, we actually have no idea what this would look like in the world.”
Read more: Should NYC renters pay broker fees? City debates reform
The Real Estate Board of New York also opposed the legislation, claiming it could disrupt the rental market and hurt brokers financially.
Mayor Eric Adams, a former real estate broker, has raised concerns about potential unintended consequences.
“Sometimes our ideas are not fleshed out enough to know what are the full long-term ramifications,” he said, expressing a desire to find middle ground. However, with a veto-proof majority in the City Council, the legislation is set to move forward.
However, advocates of the bill said spreading the costs across monthly rent is far preferable to requiring tenants to pay thousands of dollars upfront.
Supporters of the legislation see it as a step toward making NYC more accessible, especially for younger renters and those moving into the city for the first time. Entrepreneur Bradley Tusk praised the move as a way to attract and retain talent in New York City.
“From the perspective of a tech investor and business owner in New York City, the more we can do to make it cheaper and easier for talented young people to come here and stay here, the better off we’ll be,” Tusk said. “Anyone who has paid 15% of their annual rent in brokers fees for someone to let you in an apartment for 10 minutes knows the practice is nothing more than legalized theft.”
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