New York raises brokerage fees for end of brokerage fees for apartment rentals

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State Senator Jabari Brisport (New York State Senate, illustration by The Real Deal with Getty Images)

New York’s on-and-off relationship with brokerage fees could be heading for another rift.

New York Senator Jabari Brisport addressed the issue on Thursday morning Tweeter:

“Tenants should not pay brokers’ fees,” he wrote. “The owner hires the broker. The owner should pay the broker.

“[Assembly member Zohran Mamdani] and I have an invoice for it,” Brisport concluded. The lawmakers are two of the few members of the state legislature to be affiliated with the Democratic Socialists of America.

The renewed interest in brokerage fees by state lawmakers and City Councilwoman Carlina Rivera, according to Gothamist, comes as New York City rents have broken records for each of the past six months.

In response to this surge in demand, brokers are pushing the envelope to see what tenants are willing to pay. Exorbitant fees for rent-stabilized housing, for which landlords cannot charge market-rate rents, made headlines this summer.

In June, Hellgate reported that an Upper East Side walk-in was charging a $10,000 fee to rent a two-bedroom apartment for $3,150 a month.

And last month, a City Wide Apartments broker came to the attention of the State Department after asking for an additional $20,000 for a stabilized room on the Upper West Side.

Typically, brokers charge between one month’s rent and 15% of annual rent. When demand is low, like in 2020, no-cost apartments become easier to find.

But the five-figure fees stink of the “wallet” — illegal fees landlords charge tenants to secure a lease. Some have suggested that with such high fees, brokers could pass some of it back to owners.

Bisport’s bill aims to completely cut the cord between the tenant and the broker.

The state senator’s legislation, introduced and co-sponsored by Senator Julia Salazar in April 2021, would make it illegal for landlords to demand any payment at the start of a tenancy, except for the $20 allotted for handling claims. requests. This includes brokerage fees. It’s unclear how much traction this bill might get now that fees appear to be rising.

The much-contested legality of brokerage fees was only settled last year. After the Rents Act of 2019 imposed the $20 cap on application fees, the State Department issued guidelines in February 2020 that brokers who accept fees paid by the tenant could make the subject to disciplinary action.

Within days, brokerages and landlord groups, including the New York Real Estate Board, filed for a temporary injunction against the guidelines. The industry prevailed in April of that year when an Albany judge put brokerage fees back on the table.

Bisport responded with its invoice less than two weeks later. But given the state of New York’s rental market at the time, fees were no longer an issue.

In the spring of 2021, rents and demand for apartments in New York City were just beginning to recover from the pandemic and most housing was listed free of charge.

Even now, with the market back, tenant leaders such as Andrea Shapiro of the Met Council on Housing acknowledge that exorbitant fees have not been a major concern.

Bisport told Gothamist that tenant-friendly lawmakers have bigger fish to fry, including trying to enact an eviction for a good cause.

The brokers’ backlash against the fee bans pointed out that most brokers are middle-class New Yorkers and would see their incomes drop if landlords were not allowed to charge tenants to pay brokerage fees. .

The industry has also claimed that if brokerage fee pass-through is prohibited, landlords would instead raise rents, eliminating any savings for tenants and potentially costing them more in years to come.

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