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The FARE Act May Fare Better Than Opposition Claims

Rob Loeser

New York City is currently in an affordable housing crisis.[1]  This crisis consists of two parts—availability and affordability.[2]  On the availability side, the rental vacancy rate plummeted from 4.54 percent in 2021 to a mere 1.41 percent in 2023,[3] a multi-decade low.[4]  Additionally, only 400,000 housing units have been built over the past decade, despite the creation of nearly 1.2 million jobs.[5]  Meanwhile, on the affordability side, over half of New York City households are rent-burdened, defined as spending more than thirty percent of income on rent.[6]  Furthermore, rent prices in 2024 are seven times greater than actual salaries.[7]  

Introduction 360-A, also known as the Fairness in Apartment Rental Expense Act (“FARE Act”),[8] is one of the ways in which the New York City Council has sought to address this crisis, particularly on the issue of affordability.[9]  By prohibiting landlords from passing brokers’ fees[10] onto prospective tenants where the broker is solely representing the landlord’s interests,[11] the New York City Council is eliminating an exorbitant, and nationally uncommon,[12] upfront cost that tenants must pay simply to move to a new home.  In doing so, this law should alleviate some of the affordability issues surrounding the New York City housing crisis.  While its opponents say that this law may result in rent increases to cover the cost,[13] thanks to New York City’s rental scheme where many apartments are rent-stabilized,[14] this fear may not be as substantial as the law’s detractors make it out to be.

Introduced by New York City Council Member Chi Ossé,[15] the FARE Act became law on December 14, 2024, and will take effect around June 2025.[16]  The law requires landlords who hire brokers to market their units to pay the broker’s fee or potentially face civil penalties,[17] alleviating prospective tenants of this cost.  However, it has been met with substantial opposition, particularly from the mayor and many real estate groups.[18]  Most notably, the Real Estate Board of New York (“REBNY”) sued in federal court, seeking to strike down the law.[19]  Carl Hum, general counsel for REBNY, said that the legislation would “raise rents and make it harder for tenants to find housing.”[20]

This, however, may not necessarily be the case.  In 2023, rent-stabilized units represented forty-one percent of rental units,[21] almost half the rental stock of New York City.[22]  Rent increases for stabilized units are capped at a percentage decided annually by New York City’s Rent Guidelines Board (“NYCRGB”).[23]  The NYCRGB’s current proposed rent increases are 2.75 percent for one-year leases, and 5.25 percent for two-year leases.[24]  Meanwhile, brokers’ fees can range from one month’s rent to fifteen percent of a total year’s rent, not monthly rent.[25]  Thus, brokers’ fees tend to be larger than the rent increases proposed by the NYCRGB.  Because these rent-stabilized units are limited in how steep their rent increases can be, landlords for these units would not be able to increase the cost of rent to reflect the total price of their broker fees.

However, market rentals are not protected by the NYCRGB’s limits on rent increases,[26] which may cause concerns that prospective tenants for these units will suffer from markedly increased rents.  Even for these units, though, the fear may be stronger than what will come to pass.  Because the FARE Act has yet to be imposed, it is possible to compare the prices of no-fee rental units to rental units that charge brokers’ fees.[27]  When controlling for other factors that could increase rents, like location, size, and amenities, StreetEasy found that in 2024, no-fee rental units were only 4.2 percent more expensive on average than rental units that charged broker fees.[28]  This rate is far less than the fifteen percent that brokers can impose, and suggests that landlords are not likely to fully add in the broker fee pricing to no-fee rental units.  This indicates that while there may be an increase in rent for units that previously included brokers fees, the total pricing of rent without a broker fee would be less than units that would require a broker fee.  As a result, it seems that a New York City market with only no-fee units for rent, a market much more like the rest of the country,[29] would not lead to the drastic increases in rent that the FARE Act opponents suggest.  Because the FARE Act aims to eliminate the uncommon practice of imposing brokers’ fees on prospective tenants in apartment rentals and will improve the affordability of rental units, as suggested by StreetEasy’s data, the FARE Act is an effective measure in addressing New York City’s affordable housing crisis.


[1] See generally Phenix Kim, How New York is Addressing Its Affordable Housing Crisis, Cɪᴛʏ & Sᴛᴀᴛᴇ N.Y. (May 9, 2024), https://www.cityandstateny.com/policy/2024/05/how-new-york-addressing-its-affordable-housing-crisis/396461/ [https://perma.cc/GB8N-NAD7].

[2] See generally New York City’s Vacancy Rate Reaches Historic Low of 1.4 Percent, Demanding Urgent Action & New Affordable Housing, N.Y. Cɪᴛʏ Hᴏᴜs. Pʀᴇsᴇʀᴠᴀᴛɪᴏɴ & Dᴇᴠ. (Feb. 8, 2024), https://www.nyc.gov/site/hpd/news/007-24/new-york-city-s-vacancy-rate-reaches-historic-low-1-4-percent-demanding-urgent-action-new#/0 [https://perma.cc/J25M-AYD7] (In this article, the NYC HPD looks at both the extremely low availability and vacancy rates of NYC apartments, as well as the increasing cost and decreasing affordability of NYC apartments.).

[3] Id. 

[4] See Spotlight: New York City’s Housing Supply Challenge, N.Y. Cɪᴛʏ Cᴏᴍᴘᴛʀᴏʟʟᴇʀ (Feb. 13, 2024) https://comptroller.nyc.gov/reports/spotlight-new-york-citys-housing-supply-challenge/ [https://perma.cc/T3FH-SHHR].

[5] Kim, supra note 1.

[6] FARE Act Becomes Law, Reforming Broker Fees to Help Working-Class New Yorkers Afford Housing, N.Y. Cɪᴛʏ Cᴏᴜɴᴄɪʟ (Dec. 14, 2024), https://council.nyc.gov/press/2024/12/14/2770/ [https://perma.cc/EE67-Z2Y4].

[7] Kim, supra note 1.

[8] FARE Act Becomes Law, Reforming Broker Fees to Help Working-Class New Yorkers Afford Housing, supra note 6.

[9] Council Majority Leader Amanda Farias said that landlords who pass broker fees onto prospective tenants add “to the burdens of moving expenses during a housing crisis.” Press Releases, N.Y. Cɪᴛʏ Cᴏᴜɴᴄɪʟ (Nov. 13, 2024), https://council.nyc.gov/chi-osse/press-releases/ [https://perma.cc/52YN-LGGJ].

[10] “Broker fees are paid to a licensed real estate agent or broker in exchange for representing a prospective buyer or renter during a real estate transaction…In New York City, broker fees also apply to [a number of] rental units.” Cait Etherington, A Renter’s Guide to Broker Fees in New York City, CɪᴛʏRᴇᴀʟᴛʏ (Mar. 14, 2024), https://www.cityrealty.com/nyc/market-insight/features/get-to-know/a-renter039s-guide-broker-fees-new-york-city/56483 [https://perma.cc/Y5Z5-QCBM].

[11] See generally Int. 0360-2024, N.Y. Cɪᴛʏ Cᴏᴜɴᴄɪʟ, https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6557858&GUID=2E6273DC-FF0F-40B2-AAB5-B9B3D9BD09DB&Options=ID%7cText%7c&Search=360 (last visited Jan. 29, 2025) [https://perma.cc/9NJW-VDD9].

[12] Jake Offenhartz & NBC New York Staff, No More Forced Broker Fees: NYC Bill Becomes Law, Takes Effect in 6 Months, NBC (Dec. 14, 2024), https://www.nbcnewyork.com/news/local/nyc-broker-fees-bill-becomes-law/5982212/ [https://perma.cc/CQU2-DG57]. (“Under a system that exists in New York and almost nowhere else in the country, tenants are often forced to pay the commission of a real estate agent before moving into an apartment, even if that agent was hired by the landlord.”).

[13] Katie Houlis, NYC’s FARE Act Reforming Broker Fees Becomes Law After Mayor Eric Adams Declines to Sign Bill, CBS Nᴇᴡs (Dec. 14, 2024), https://www.cbsnews.com/newyork/news/nyc-broker-fee-legislation-becomes-law/ [https:perma.cc/5HAR-JMW8]. (“Others opposed to the bill, including the Real Estate Board of New York, say landlords will bake the added costs into monthly rents.”).

[14] “Almost half of all apartments in New York City are rent stabilized.” Rent Stabilization in NYC, N.Y. Cɪᴛʏ Mᴀʏᴏʀ’s Pᴜʙ. Eɴɢᴀɢᴇᴍᴇɴᴛ Uɴɪᴛ, https://www.nyc.gov/site/mayorspeu/programs/rent-stabilization.page (last visited Jan. 31, 2025) [https://perma.cc/66YJ-XTR8].

[15] Id.

[16] Id.

[17] Celia Young, REBNY Sues to Block New NYC Broker Fee Law, Bʀɪᴄᴋ Uɴᴅᴇʀɢʀᴏᴜɴᴅ (Dec. 17, 2024), https://www.brickunderground.com/rent/real-estate-board-of-new-york-sues-stop-broker-fee-bill-fare-act-osse [https://perma.cc/98C7-WMDB].

[18] Houlis, supra note 13.

[19] “[T]he lawsuit argues that the FARE Act violates brokers’ first amendment right to publish an open listing—where multiple agents market an apartment—on rental platforms such as RentHop, according to court documents. (StreetEasy already bans these types of posts.) REBNY further argues that the FARE Act violates the contracts clause of the U.S. [C]onstitution because it prevents brokers from entering into a contract with a landlord to advertise their apartment, and then ‘seek compensation from the tenant.’” Young, supra note 17.

[20] Id.

[21] N.Y. Cɪᴛʏ Hᴏᴜs. Pʀᴇsᴇʀᴠᴀᴛɪᴏɴ & Dᴇᴠ., 2023 N.Y. Cɪᴛʏ Hᴏᴜs. & Vᴀᴄᴀɴᴄʏ Sᴜʀᴠᴇʏ: Sᴇʟᴇᴄᴛᴇᴅ Iɴɪᴛɪᴀʟ Fɪɴᴅɪɴɢs, at 5 (2024).

[22] Rent Stabilization in NYC, supra note 14.

[23] Id.

[24] 2024-25 Apartment/Loft Order # 56, N.Y. Cɪᴛʏ Rᴇɴᴛ Gᴜɪᴅᴇʟɪɴᴇs Bᴏᴀʀᴅ, https://rentguidelinesboard.cityofnewyork.us/2024-25-apartment-loft-order-56/ (last visited Jan. 29, 2025) [https://perma.cc/ LT4Z-KA6E].

[25] How Much is the Average Broker Fee for a NYC Rental? Do You Have to Pay a Broker Fee?, Bʀɪᴄᴋ Uɴᴅᴇʀɢʀᴏᴜɴᴅ, https://www.brickunderground.com/guides/how-to-rent/do-you-have-to-pay-a-brokers-fee (last visited Jan. 29, 2025) [https://perma.cc/3ABP-9BQL].

[26] “The New York City Rent Guidelines Board] does not set the rent increase for unregulated apartments or subsidized housing. Market rate apartment rental rates and lease terms are negotiated between the owner and tenant.” Rent Increases, NYC311, https://portal.311.nyc.gov/article/?kanumber=KA-03296&os (last visited Jan. 31, 2025) [https://perma.cc/HP78-9FLD].

[27] StreetEasy has, in fact, run that very comparison. See Kenny Lee, FARE Act Will Cut Upfront Costs for NYC Rentals by More than 40%, SᴛʀᴇᴇᴛEᴀsʏ, https://streeteasy.com/blog/fare-act-will-cut-upfront-costs-40-percent/ (last visited Jan. 31, 2025) [https://perma.cc/B58U-PHSG]. 

[28] Id.

[29] Offenhartz & NBC New York Staff, supra note 12.

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