New York’s FARE Act aims to eliminate broker fees for renters, but some real estate experts warn the cost savings might be canceled out by potential rent increases.
At a Glance
- NYC’s new FARE Act prohibits landlords from passing broker fees to tenants unless the tenant specifically hires a broker
- Average upfront moving costs could decrease from $13,000 to $7,500 without broker fees
- Broker fees typically range from one month’s rent to 15% of annual rent and affect about half of NYC’s 2.3 million apartments
- Some industry experts warn landlords may increase rents to offset these costs
- Real estate groups have filed a lawsuit challenging the new law
Understanding the FARE Act
The Fairness in Apartment Rental Expenses (FARE) Act has taken effect in New York City, potentially reducing the financial burden for tenants searching for new homes. The legislation prevents landlords from requiring tenants to pay broker’s fees unless the tenant explicitly chooses to hire a broker. These fees have traditionally been a significant upfront cost for renters, often amounting to one month’s rent or as much as 15% of the annual lease value, creating a substantial barrier to housing access for many New Yorkers.
Under the new law, rental listings must now clearly disclose all fees that prospective tenants will be responsible for paying. The Department of Consumer and Worker Protection has been authorized to enforce these regulations, with the ability to issue fines starting at $750 for first-time violations. This marks a significant shift in how apartment rentals operate in one of America’s most competitive housing markets, where approximately half of the city’s 2.3 million apartments have historically involved broker fees.
Financial Impact for Renters
The immediate benefit for tenants is clear: substantially reduced upfront costs when moving into a new apartment. City officials estimate that average moving costs could decrease from approximately $13,000 to $7,500 by eliminating the broker fee component. This represents a meaningful change in accessibility for many potential renters who previously struggled to assemble the substantial funds needed to secure housing in the city. The city government also anticipates saving money on emergency rental assistance programs as fewer residents will require financial help to cover these significant one-time costs.
“We could have used that money for other things. It could have gone toward savings to buy our own place, an emergency fund, or a higher general rent for a place that would have suited us better.”, said Elizabeth Gyori.
The FARE Act has received support from many tenants’ rights organizations who view it as a necessary step toward making housing more accessible in a city known for its high cost of living. By removing what many consider an unnecessary middleman expense, supporters believe the law helps create a more transparent and equitable rental market. Some brokers have also expressed support for the change, recognizing that it clarifies their role and relationship with clients.
Potential Market Reactions
Despite the apparent benefits, real estate professionals have raised concerns about potential unintended consequences. Some industry experts warn that landlords may simply increase monthly rents to offset the costs they will now incur by paying brokers directly. This adjustment could potentially negate the savings for tenants over the course of a lease, especially for those who remain in their apartments for longer periods.
“If you stay in an apartment for more than a year, then you’ve just paid more in rents than if you’d paid that broker’s fee.”, said Keyan Sanai.
Data from StreetEasy appears to support this concern, showing that properties that eliminated broker fees in the past raised rents by approximately 5.3%, compared to 4.6% increases where fees remained in place. Further analysis indicated that no-fee rentals were about 4.2% more expensive on average than similar apartments charging a broker fee in 2024. However, market experts note that broader market conditions, rather than property managers’ costs, remain the primary drivers of asking rents in New York City.
Legal Challenges and Implementation
The FARE Act has not been implemented without resistance. Several real estate groups have filed a lawsuit challenging the legislation, arguing it interferes with established business practices and contractual relationships. This legal battle is ongoing, creating some uncertainty about the law’s long-term prospects. Despite this challenge, the law has taken effect, and brokers and landlords are now required to comply with its provisions or face potential penalties from city regulators.
“There has been a lot of talk about this issue. As a broker, I am glad that there will be no commission charge by a landlord if someone wants to lease their apartment. I think this is a win-win move for both sides.”, said Sonia I. Christian-Bendt –
The coming months will be crucial in determining the actual market impact of the FARE Act. While tenants may experience immediate relief from upfront costs, the true test will be whether these savings persist or are gradually absorbed through adjusted rental prices. For now, prospective renters in New York City can expect a different, and potentially more affordable, experience when searching for their next apartment.
