You hire, you pay.
That is the crux of Council member Chi Ossé’s bill seeking to regulate rental broker fees in New York City. The measure, introduced last year, would require whoever hires a rental agent (usually the building owner) to pay the agent’s commission.
In any other context, the idea of the hirer being the payer would be obvious. But this is New York, where nothing is simple.
Agents have argued that the bill, and its predecessors, ignore the valuable service they provide and could put them out of the job if it prompts landlords to forgo hiring a broker.
Since at least 2019, elected officials have tried to regulate fees paid to rental brokers, to cut down on thousands of dollars renters pay upfront to move. A report by StreetEasy this month found that the average upfront cost to move into a rental in New York City was $10,454 in 2023, up 29 percent from 2019.
A previous bill by Council member Keith Powers would have capped fees at roughly 8.3 percent of the annual rent. He later amended the measure to specify that in cases where the broker was hired by the landlord, renters could only be held responsible for commissions worth one months’ rent. The bill did not cap fees, meaning landlords could pay the rest. The standard fee is 15 percent of the annual rent.
The following year, in a controversial interpretation of the 2019 rent law, the Department of State issued guidance banning tenants from paying landlords’ broker fees. A state Supreme Court ruled in April 2021 that the agency had overstepped its authority.
State lawmakers have since pushed for legislation that would more explicitly force landlords to pay commissions to the brokers they hire.
On Wednesday, City Council member Ossé reintroduced his bill to do just that.
The Real Estate Board of New York opposes the measure, arguing that it would hurt agents and fall short of its goal because landlords would simply recover the cost from tenants by raising rents. But at rent-stabilized units, increases are determined by the Rent Guidelines Board.
Any added costs for tenants would likely be incremental, rather than upfront. It remains to be seen if the state or city measures will gain enough momentum this year to become law.
What we’re thinking about: What projects will Marty Burger’s new company tackle first? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: The Turritopsis dohrnii or “immortal jellyfish” can revert to its earliest development stage, known as a polyp, when facing danger. This polyp grows multiple clones of the original jellyfish — essentially starting over with younger versions of itself.
Elsewhere in New York…
— The state legislature on Wednesday approved new maps for New York’s 26 congressional districts, Politico New York reports. The maps make small adjustments to the proposal put forward by the state’s redistricting commission, giving Democrats a better chance in some races. For example, according to Politico, Republican Rep. Brandon Williams will have a more difficult time holding onto his Syracuse-area seat.
— An appellate court judge on Wednesday declined to freeze a $450 million civil judgment against former President Donald Trump, the New York Times reports. Trump will have another shot next month to ask a panel of five appellate court judges to pause the judgment while he appeals the civil fraud case.
— For two days, Rockefeller Plaza will become “Olivia Benson Plaza” to celebrate the 25th anniversary of “Law & Order: Special Victims Unit,” Gothamist reports. Show-themed activities, including photo-ops and trivia contests, will be held on March 14 and 15.
Closing Time
Residential: The priciest residential closing on Wednesday was $11.6 million for a condominium unit at 500 West 18th Street in Chelsea.
Commercial: The most expensive commercial closing of the day was $8.6 million for a 10,000-square-foot retail building at 583 Grandview Avenue in Ridgewood, Queens.
New to the Market: The priciest residential property to hit the market on Wednesday was $11.75 million for a townhouse at 12 Sidney Place in Brooklyn Heights. Compass has the listing. — Matthew Elo