The FARE Act has eliminated the practice of charging NYC renters broker fees, which used to range from one month’s rent to 15% of the annual lease cost. This move is expected to ease the financial burden on tenants, especially as the city enters the leasing high season. While many renters celebrate this change, concerns arise among landlords about thinner profit margins and among brokers regarding potential income loss. The Act, which received strong support from the City Council, promotes transparency in rental costs and allows tenants to hire brokers if they choose.
"I think the days of paying high fees are going to be over," said Micky Lalchandani, the managing broker of Undivided Real Estate. "It may also open up avenues for different business models."
Until recently, around half of the 2.3 million rentals in the city's five boroughs required tenants to pay a fee to the rental broker hired by their landlord when they signed a lease.
That meant tenants had to pony up thousands of dollars in addition to the standard start-up costs of the first month's rent, application fee, and security deposit.
New York City Council passed the FARE Act last fall with a veto-proof majority, putting an end to tenant-paid fees and requiring more transparency around rental costs.
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