As it became clear that a broker fee bill wasn’t going away, the Real Estate Board of New York pitched its own version to the City Council behind the scenes.
The trade group has been fighting the Fairness in Apartment Rental Expenses Act, or FARE, which would require whoever hires a broker to pay the broker’s commission. The bill’s sponsor, Council member Chi Ossé, said last week that the measure would head to a vote Nov. 13.
REBNY’s version of the bill, obtained by The Real Deal, does not change who pays a residential broker. Instead, it requires agents to provide prospective tenants with a “tenant bill of rights.”
This document would spell out a tenant’s options and responsibilities if they sign a lease, stating that tenants do not have to work with a broker, identifying what fees a tenant is responsible for and underscoring that “compensation to a real estate broker is not fixed and negotiable between all parties to the leasing transaction.”
Of course, in a tight rental market, a tenant presumably would not have much leverage in those negotiations. The measure also requires brokers to provide a written fee agreement to tenants in cases where tenants are responsible for paying the broker commission. It also says that the bill does not bar a property owner or government entity from paying the broker fee on behalf of a tenant.
Though City Council Speaker Adrienne Adams has not signed on as a sponsor to the FARE Act, a source familiar with talks indicated that Adams has made clear that she wants to see some form of the bill pass. City Council leadership first received a copy of REBNY’s bill in August, and has met with the group, but it does not appear that the alternative has gained traction.
“We continue to gather input from a variety of stakeholders, as is typical for a bill going through the legislative process,” a Council spokesperson said in a statement.
A spokesperson for Ossé said the Council member does not consider the REBNY bill a replacement for the FARE Act, but is interested in exploring a tenant bill of rights after the FARE Act becomes law.
Ossé recently revised the measure, adding fines for brokers who fail to comply and expanding the definition of “hiring” a broker to include any agent who advertises a listing with the landlord’s permission. Opponents of the measure argue that this does not reflect the reality of the market because landlords often do not work exclusively with brokers who advertise their listings.
REBNY says owners will simply pass costs of paying brokers onto tenants by raising rents or deciding against hiring a broker entirely.
“REBNY has offered practical solutions for creating more transparency and protections for New York City renters,” the group said in a statement. “In contrast, the latest version of the FARE Act will lead to higher housing costs, sharply limit tenants’ access to apartment listings and jeopardize the jobs of hard-working brokers.”
City and state lawmakers have tried and failed for years to restrict or eliminate tenant-paid broker fees. Traditionally, tenants pay 15 percent of their annual rent to brokers, adding to the thousands of dollars of costs associated with moving in the city.
Ossé’s bill has support from 33 Council members, but only needs 26 to pass. The mayor has been critical of the measure. During a press briefing on Tuesday, Mayor Eric Adams expressed concern about how the FARE Act would affect small property owners.
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“We need to find a real way of distinguishing between those small mom and pop property owners that are really struggling and the large folks that could absorb this stuff, you know, that could hire staff inside to do their brokering and in their renting,” he told reporters. He went on to say that he was still reviewing the legislation and considering his next steps.
The legislation is coming to a vote at a time when the mayor’s negotiating position is likely weakened by his ongoing legal woes.