The issue of real estate broker fees came to a head at a heated City Council hearing on Wednesday, when hundreds showed up to testify both for and against a bill that would essentially shift the burden of paying the dreaded fees to landlords.
The marathon meeting of the Committee on Consumer and Worker Protection centered on the Fairness in Apartment Rental Expenses (FARE) Act, legislation that could potentially transform New York’s rental system amid the historically dire housing crisis.
The bill from Councilman Chi Ossé (D-Brooklyn) would require whoever hires a broker — usually the landlord — to pay their fees. Under the current system, those costs are not capped and can reach eye-watering sums that fall to renters even if they didn’t hire the agents.
“I believe brokers do provide a valuable service, especially when the individual party hires that broker,” Ossé said. “I just think when the dynamic is forced upon people, it’s an unfair situation.”
Supporters of the bill including advocates, labor groups and even some brokers say the current system is unfair because the upfront fees can prove prohibitive and renters often end up paying for agents they didn’t hire.
The real estate industry has largely come out against the bill, arguing it would undermine brokers’ ability to make a living while passing the cost onto tenants over time in the form of higher rents.
The hearing saw several tense exchanges between real estate reps and committee members. But the Adams administration also came under fire from electeds who blasted the absence of representatives from the Department of Consumer and Worker Protection, which would be tasked with enforcing the bill.
“This administration has wasted our time today,” Councilwoman Sandy Nurse (D-Brooklyn) told a representative from the Department of Housing Preservation and Development. “You all showed up with no data, no input, nothing conclusive, no analysis to offer on this bill. It’s embarrassing.”
Some 400 people signed up to speak following a pair of dueling morning rallies held outside City Hall Park.
The Real Estate Board of New York, a powerful industry group, has led the lobbying efforts against the measure.
“It seems fair to only pay what you’re hiring someone to do,” testified Ryan Monell, the Board’s vice president of government affairs. “But the reality is, if this bill were to pass into law, the fee is still going to be passed on to the renter.”
Bess Freedman, CEO of Brown Harris Stevens, took a similar view.
“Housing affordability will not be solved by this misguided and hollow legislation,” she said. “Simply put, this bill will make it harder for brokers to be fairly paid, raise housing costs, and limit housing access — the last thing New York City needs right now.”
Ossé characterized the FARE Act as common sense.
“This bill is not reinventing the wheel,” he said. “This is replicating how this is done in every other major city in America except for Boston.”
Recent law school graduate Annie Abreu, 25, said she and her mother are low-income and broker fees have kept them from relocating.
“If I want to move within New York City, I can’t move freely,” she testified. Instead, “I have to keep myself in an insecure living situation, keep myself in an uncomfortable living situation, keep myself in an inadequate living situation until I have enough money to pay somebody that I did not hire to move.”
The FARE Act currently has 33 Council supporters, one shy of a supermajority. But whether or not it will fare better than past attempts to reform broker fees will largely depend on Speaker Adrienne Adams (D-Queens), who has stayed mum on the issue.
Mayor Adams hasn’t said whether he supports the legislation one way or the other, telling reporters on Tuesday he will “look at the bill and we’re going to see exactly how it impacts the industry.”
With Chris Sommerfeldt
