Perfectly said on both counts. Rents, unlike broker fees, are highly transparent prices that are far more influenced by market pressure and competition, a win for buyers in a market already very lopsided toward sellers. Because broker fees are disclosed selectively and later in the purchase funnel, buyers (renters) often make less optimal and more expensive choices due to that information asymmetry.

There definitely will be a small spike in the cost of rentals, but 1) it will definitely not be a perfect 12-15% transfer from what the fee costs, and 2) I predict that downward price pressure will bring rental costs around what they are now, especially given the prevalence of no fee units. The cost will likely just cut into landlords' revenue, and anyone claiming prices will rise substantially are probably lobbying on behalf of landlords.

It's good that the prices are more visible. But the price of the rent will mostly be affected by the supply/demand curve.

Year Units Built Population Change (Number)

2019 26,900 -80,967

2020 23,000 +641,579

2021 24,000 -250,184

2022 24,000 -181,326

2023 27,980 -101,984

Last 5 years not much change in supply, but demand varies.

(based on https://en.wikipedia.org/wiki/Demographics_of_New_York_(stat...)

> The renter has no choice in which broker to use to find/transact w/ the property, so there's very little price pressure for these broker fees.

How does that change if the landlord pays it? The renter still hasn't chosen the broker.

And either way, it comes from rent money.

This feels no different from pricing that hides sales tax, versus reveals it.

How about getting rid of these fucking agents.

> the landlord does not want to have to eat a broker's fee next listing.

Wouldn't a landlord who doesn't want to pay a broker just not use one? Advertise the place and handle the applicants on their own?

I live in a building primarily owned by offshore investors.

NYC is a place where it's expected you'll always be on a lease - it's not common to go month-to-month after you fulfill your initial obligation (as it is in other cities).

I've heard a common grift here is to offer current tenants awful terms to renew the lease. The broker is banking on you balking, so she gets to tell the owner (who's never met you or even been to the US) "sorry - the existing tenant doesn't want to renew, so you're going to have to pay me to market the apartment again."

It looks like this measure only applies to "real estate agents who exclusively represent the landlord’s interests". "The bill requires landlords who hire real estate agents to pay the agents’ fees themselves".

My read is that as long as a broker works with multiple landlords, you the tenant will still pay them a fee. And it might remain difficult to find available lodging without going through brokers.

Tenants will have more cash each month. Tenants bid up rents to the point of affordability, and they'll become more affordable. Furthermore, there will be more would-be tenants b/c you don't need to save up a for a broker fee -- as long as your income is high enough, you can get a unit, at least in theory. So more competition....

Of course there's competitive pressure to reduce or get rid of these fees. Plenty of people avoid buildings with brokers fee. Its even a filter in most real estate sites. I personally only looked at no fee brokers in the apartments or amortized the broker into the monthly payments. And for me, only no-fee apartments got my rent.

People aren't dumb and look at an apartment and get quoted $4k a month and when they go sign they realize its an extra $6k broker fee and just open up their wallets like "whoops". It's definitely factored into the price and affects who gets in to the door

I don’t know much about the bill at all but knowing that Vickie Paladino opposes it is the best endorsement it could have received in my eyes.

> Why the fuck do you deserve $10,000 for unlocking the door to an apartment I found myself?

Oh, mine didn't even bother with that. He cashed the commission cheque and flew to Paris the night before. True story.

I was so furious about having to pay someone I didn't hire that we almost lost the apartment; I covered the security deposit while my partner paid the broker.

Same thing could said of real estate agents

> Why do landlords think they need a broker in order to rent out their units in NYC?

In NYC, it probably ties back to organized crime somewhow.

> I never understood why landlord brokers are even a thing in a market like NYC.

NYC is all about optimizing the grift.

Imagine a small-time landlord that owns six 20-unit 6-story buildings across Queens. When 1/3 of their inventory turns over in September (the busy time for apartments in NYC), do you think they want to run all over the borough to 500 showings until they finally get all of the units rented? Do you think they want to hire a staff that will show all the units? Hell no! They can, FOR FREE, just tell one (or several!) brokers, "if you manage to rent this unit out, you get to charge whatever fee you can get them to collect." And then they just need to do some paperwork when the broker finally lands someone.

> Why do landlords think they need a broker in order to rent out their units in NYC?

Because they know that the fee will be paid by the tenant, so why not?

> I live in SF and I've never heard of such a thing here

BTW brokers are very common in SF as well, usually called "leasing agent" or something similar. Every non-corporate rental I ever looked at had a broker involved at some level, e.g. organizing open houses, doing private tours, sending out application forms, vetting applicants, sending out lease agreements. It's just that you as the tenant don't have to know or care because you aren't the one footing the bill.

my assumption has been that the landlords noticed how much money the brokers were making and they figured why not bring it in-house and get a cut; i.e. the brokers are sharing the commissions with the landlords, and helping ensure there is no competition. My theory is if the landlords cannot make money doing this, they revert back to independent brokers. I don't have proof, but I'm pretty sure something like this is going on, and this law will do nothing. I think broker fees should be banned, and the rents should reflect the costs; if landlords want to hire broker/agents they can.

Good brokers serve as a liability shield from being hit with discrimination claims.

> but sometimes the greed is just too strong, and there is an endless supply of applicants who are willing to compromise.

This is why increasing the supply is so important too. Lawmakers like to overestimate the impact of their laws.

But banning fees is so much easier than building house/going against your paymasters.

We had a similar fee ban in England too. Has it moved the needle on the overall rental situation? I don't believe so

> This being so controversial and difficult to pass is sad.

The controversy is created by the people who have something to lose by it passing, and they somehow manage to fool voters into believing their bullshit "but regular people will be hurt because X!" justifications. And voters for some reason don't look at the background of the people who support or oppose these sorts of things to see where their interests are aligned.

I don't really know how we get to the point where we have an educated, informed electorate, where people are resistant to misinformation, and think critically about what a yes or no vote actually means, filtering out arguments made by people with sneaky ulterior motives.

Personally I think people should be strongly discouraged from voting on issues that they don't understand. When I fill out my ballot (California & SF, so there are always quite a few ballot propositions), I try to do my best to read about each proposition, arguments for and against, and take at least a cursory look at the people doing that arguing, but honestly there are still probably some I should leave blank, as I don't fully understand the consequences of a yes/no.

> you should not be forced to pay a fee for someone who does not have a fiduciary duty to you

This is one reason why I'm glad real estate purchase commissions are getting shaken up (the other is breaking up monopoly abuse). The current/previous commissions structure is bonkers.

lots of failed "this shouldn't be controversial" props passed in California. Just shows how unreliable it is to rely on uninformed people to make policy changes.

At least the arguments up top have obvious perverse incentives.

Not toothless at all. Even if the fine is $2k per tenant, that's way more than the landlord is going to pay to a service to list and show the apartment, which is maybe $500?

Remember, broker's fees don't go to the landlord. They go to the brokers! The only reason landlords use them is because they're free for the landlord.

It's absolutely cheaper for the landlord to hire a service than to pay a fine.

Except, the first prospective renter can report you, and the second, and the third, and the fourth... all before you get an actual renter.

And more likely, the vehicles these brokers depend on like Zillow, etc, will end up bearing the burden of enforcement more than individual renters reporting to agencies.

How did you find that link?

>Can't wait they also get rid of these "destination fees" billed by nearly all hotels in NYC.

That's not going to happen. Such fees (at least in the US, AFAICT) are in most cities.

Besides, hotels are for tourists. And a tourist's job is to spend as much money as the city can get them to cough up. And that's true of every city/destination.

I think hotel prices will go down once they stop housing migrants in them

Landlords who have many apartments to rent every year have a lot more leverage over brokers than renters who are generally renting at the very most once a year. So when landlords are forced to pay the fee that have more optionality to negotiate the fee down.

Even now, when a landlord has a lot of available apartments they need to move or when the market is soft (for example during peak COVID), they’ll typically offer a “1 month OP.” Meaning the landlord pays the broker a 1 month’s rent fee, and the broker markets the apartment to renters as no fee. Even if the landlord just roles that into the rent, it’s a savings over the 12-15% fee standard today.

Also, landlords with larger buildings or geographic density are already figuring out that they can rent apartments cheaper with a few salaried leasing agents, instead of paying brokers. If more of them are forced to internalize the broker fee, more of them will figure that out.

No. Rent is a function of supply and demand in the market and not landlord input costs. There are houses in SF that would carry mortgages of like, 8-12k, but can only rent for 4-6k. This is why people say that land value taxes won't be passed on to the renter. It doesn't matter how much it costs you to hold property. Its market value is its market value.

Or the brokers simply go away, like every other city in the country.

Landlords can shop around and brokers will have to compete on price. A potential renter has no ability to pick a different broker.

Maybe, but landlords like saving money and might opt to do away with the broker middleman rather than eat the cost.

The fee will end up somewhere.

If it's in the rent, it's better to amortize the cost of the broker fee over a year vs. pay upfront.

Between the fee + first month's rent + security deposit (+ sometimes an additional month's rent) it is common to have to front 10K - 20K just to get into an apartment here.

any fees that the brokers require will be zero because the owners will tell them to piss off

> curious if this will be creatively interpreted so that the broker is mandatory but supposedly represents the interests of both LL and tenant, so the tenant has to pay anyway

The problem with the old system was I was paying a guy who didn’t have any obligation to me. Dual obligations means the broker can at least be sued for a conflict of interest if they hide something or don’t do their job. It’s a step in the right direction.

No, because the broker fees never went to landlords in the first place. They don't need to make up for lost revenue or something like that, with the kinds of schemes you're proposing.

What happens now is that instead of a tenant paying $5K to the broker when they rent the place, the landlord pays $500 to a service which lists the apartment in a few places (like StreetEasy) and handles showing the apartment (which can often be offloaded to the super or similar). It's not even a "broker" at this point, it's just a service. Like how with existing no-fee buildings, it's just one more thing the management office does.

> I do expect brokerage fees to decline somewhat... but this is not going to be a huge change

Decline? Broker's fees, along with brokerages, are practically going to disappear (for the rental market). I don't know a single person who's actually gotten value out of using a broker, because everyone just finds the apartment they want on StreetEasy or whatever first.

This is going to be a gigantic change. And I have no idea why you think it would hurt low-income tenants? You're removing a huge fee they had to pay.

> only list the apartments on a website that operates on a subscription basis

oh no, that's horrible! what are these websites? just so i dont accidentally click on any, can you give me their names / links

I think you are misinformed about market rate apartments, very many of them still required you to pay a broker fee of 1-2 months rent on signing.

Pretty sure that rule already exists.

Good question. I rented my first and so far only NYC apartment in 2021 and I did not have to pay a broker fee. Apparently, I had very good timing...

"In 2020, interpreting a tenant protection law passed by the legislature, the New York Department of State issued guidance that prohibited brokers hired by landlords from charging tenants. The Real Estate Board of New York challenged the restriction in a lawsuit, resulting in a state court overturning the ban in 2021."

https://council.nyc.gov/shaun-abreu/2024/06/11/the-city-what....

The law didn’t pass or was quietly killed, presumably due to pressure by lobbyists representing rental agencies.

https://www.nytimes.com/2024/11/13/nyregion/congestion-prici...

As you requested.

LOL. The effect of this on prices: zero.