The New York real estate industry is fuming. New legislation might force landlords to pay the hefty broker’s fees that tenants have traditionally paid to real estate companies.
Should the law pass, many landlords might skip brokerages to preserve their cash flow. They won’t get much sympathy from tenants, though. With soaring New York rental prices and the city caught in an affordability crisis, renters are struggling to pay the sky-high fees brokers charge—usually 10% to 15% of the annual rent, not including a security deposit and first month’s rent.
The move would change the composition of real estate in New York City—one of the most expensive markets in the country.
The State of New York City’s Rental Market
Renters comprise over two-thirds of the city’s households and hold huge sway in elections. Their frustration at the exorbitant broker fees is understandable: They never hired the brokers representing the apartments, and being forced to pay thousands of dollars for the privilege has been a cause of resentment for years. What’s especially grating is the fact that in other cities, the landlords, not the tenants, pay the broker’s fees.
“In most businesses, the person who hires the person pays the person,” Agustina Velez, a house cleaner from Queens, told ABC News. She said she recently paid $6,000 to switch apartments. “Enough with these injustices. Landlords have to pay for the services they use.”