NYC ended most broker fees last month. What has the new law done to rents?

Opponents of a new law that eliminates pricey upfront broker fees for most New York City renters warned of a major unintended consequence: a spike in rents as landlords absorbed a cost previously passed on to tenants.

But a new report from the online listings giant StreetEasy finds that hasn’t been the case overall, at least in the first month since the measure took effect on June 11.

StreetEasy, which supported the law, found that rents have risen by an average of 5.3% for apartments that were previously listed with a broker fee before the new law took effect. That’s less than 1 percentage point higher than the 4.5% average increase for apartments that had no broker fees to begin with.

The review also revealed that just 1.7% of apartments listed on the platform had rent increases higher than 10% since the new law took effect.

StreetEasy economist Kenny Lee said it was still too early to assess the measure's full impact in a market with more than 2.3 million apartments — including roughly 1 million rent-stabilized units with annual price increases determined by a city panel — but that asking rents appeared to remain stable.

“Time will tell, but the early data really showed me promising signs that acceleration in rent growth has been pretty modest,” Lee told Gothamist.

He attributed the rise in average rents to a typical surge in demand in the summer months.

Lee also noted that the number of apartments listed on StreetEasy rebounded after a sudden drop of approximately 1,000 units in mid-June. There were 14,094 apartments listed on the site on June 30 – up from 13,560 on May 31, according to the company’s data.

Median rent was $4,000 for apartments listed on StreetEasy, the report found.

New York City's housing shortage

The new law is playing out amid New York City’s deep housing shortage, which drives up rents, prices out many tenants, and has become a defining issue in the city's mayoral race. Less than 1% of units priced below $2,400 a month are empty and available to rent, according to the city’s most recent housing survey. New Yorkers cited housing affordability as their top concern in multiple polls conducted ahead of the Democratic mayoral primary last month.

Before the new law, tenants typically shouldered the lump-sum payment owed to a broker, even though the broker was usually hired by the landlord to market their apartments and handle applications. The upfront fee generally ranged from the equivalent of a month’s rent to 15% of the yearly total — $7,200 for a $4,000-a-month apartment, for example, on top of a security deposit, first month’s rent and moving expenses.

The new law, known as the Fairness in Apartment Rental Expenses Act, now requires whoever hires the broker to pay their fee and to disclose all upfront costs. Agents or landlords who violate the measure could face penalties of up to $2,000 per offense.

As of Monday, the city’s Department of Consumer and Worker Protection received 562 complaints about violations of the new law, according to data shared with Gothamist. Agency spokesperson Michael Lanza said officials are now investigating the complaints and attempting mediation before issuing fines.

The City Council passed the FARE Act in November 2024, and StreetEasy was a proponent of the measure. The company released a widely reported statistic that renters paid an average of nearly $13,000 to move into a new apartment when factoring in a broker fee and other upfront costs.

But Lee said his company’s advocacy did not affect the review of rental listings for its new report.

“That’s not what we do,” Lee said. “At StreetEasy, we capture most of the market.”

Gothamist contacted other listings sites for their data on rental trends over the past month. The company Zumper found median rents increased by 3.3% on one-bedroom apartments and 3.1% on two-bedroom units as of July 9, compared to median rents on June 9. The firm RedFin reported that median rent was $2,945 in June, up by 2% from May, but 2.7% less than June of last year.

The data contrasts with numbers touted by brokerages and their trade group, the Real Estate Board of New York, which sued to block the law. A federal judge allowed the measure to take effect last month, but REBNY is still pursuing an appeal.

“Our members corroborate reports that market-rate rents have spiked since the implementation of this reckless law, as the industry predicted,” REBNY spokesperson Christopher Santarelli said.

Santarelli pointed to two news articles citing data from the real estate analytics company UrbanDigs, which found median rents for the Manhattan apartments they reviewed rose 15.7% in the 12 days after the FARE Act. UrbanDigs also reported that the number of new listings in that period decreased 55% compared to the same span last year.

Predicting landlord moves

The law's opponents have argued that landlords would hike monthly rents now that they are more often required to foot the broker’s commission, a fact that owners, agents and their lobbyists say is happening in many cases.

Brooklyn-based broker Sam Moritz said he has seen a few examples of landlords increasing rents now that they have to pay his bill, but that owners of rent-stabilized apartments don’t have that option.

He said one Brooklyn owner who typically hired him to rent two or three units each year is now listing the apartments himself.

“I haven’t heard from him,” Moritz said.

Seth Coston, director of operations for the property manager Time Equities Inc., has a nuanced view of the new law. Coston said his company doesn’t use outside brokers for the roughly 500 units it manages, but that he has seen competitors raise rents since the law took effect.

“Over the life of the average tenancy, it may be that people pay more,” Coston said. “But on the other hand, it does reduce the large upfront cost that many landlords charged in association with leasing their apartments.”

And for many tenants, lifting the lump-sum cost could be the difference between whether they move or remain in place.

Software engineer Landon Johnson, 25, said he was committed to avoiding that fee at all costs when he began his apartment hunt last month.

'Trying to strong-arm me'

Johnson said his landlord decided to raise the rent on his Flatbush studio from $2,000 to $2,500 a month, prompting him to look elsewhere. He said he found a one-bedroom nearby listed at $2,100, but the landlord’s broker told him he’d have to pay an upfront fee to unlock that monthly rate. Otherwise, he’d have to pay $2,500 a month for the one-bedroom.

Johnson said he filed a complaint with the city’s Department of Consumer and Worker Protection and opted to continue his search.

“Essentially, he and the landlord were trying to strong-arm me into paying for his services even though he’s working on behalf of the landlord,” Johnson said.

Earlier this month, he said, he and a friend agreed to move into a two-bedroom apartment in Bed-Stuy, where they will pay a combined $3,500 a month, without a broker fee. The move will save him about $800 a month compared to his current apartment.

Johnson said he encountered far more “no fee” apartments in recent weeks and suspected the rental market was adjusting to the new law.

“It did seem like things were getting more reasonable after a few weeks of brokers trying to work around it,” he said.

Clarification: This story has been updated to more precisely describe UrbanDigs.