Tenants are preparing to say farewell to brokers’ fees as a law takes effect Wednesday requiring whomever hired the agent to pay the fee.

The law, known as the Fairness in Apartment Rental Expenses (FARE) Act — which the City Council ed with a veto-proof majority in November — states that a broker who publishes a listing for a property for rent is to be paid by the landlord and stipulates the disclosure of all fees tenants pay up front. 

Landlords often hire brokers to find tenants to rent open apartments, and tenants can also hire brokers to help find them suitable space. But in New York City and Boston, it’s been the custom that even if tenants find an apartment themselves, they may be on the hook to pay the broker fee, which has no cap but typically equals about a month or two of the monthly rent.

Now, under the FARE Act, tenants should only pay the fee if they hire the brokers themselves. 

The city Department of Consumer and Worker Protection can fine brokers and companies that violate the law by charging or even requesting a fee. The fines start at $750 for first-time offenders, $1,800 for second offenses and $2,000 thereafter.

Renters can file complaints for illegal activity by calling 311 or visiting the DCWP website.

Councilmember Chi Ossé (D-Brooklyn), who sponsored the FARE Act, encouraged New Yorkers to “screenshot, snitch, report,” as he put it in a recent video. “Become a community enforcer of the FARE Act.”

The FARE Act is meant to make moving more affordable for people trying to find housing in the city’s tight market. The average upfront cost of moving in New York City — including the first month’s rent, security deposit and broker’s fee — hovered near $13,000 in 2024, StreetEasy data showed. The company estimated tenants on average can expect to pay closer to $7,500 up front without a broker’s fee.

The city of New York — and its taxpayers — may also save money by avoiding brokers’ fees, which amounted to about $141 million through the One Shot Deal, an emergency rental assistance program, and rental vouchers over the past two fiscal years, according to the Independent Budget Office. (The Department of Social Services paid over $1.34 billion on the voucher program alone over those two years.)

Legal Wrangling Not Over

One wrinkle that could change the FARE Act in the future hinges on a lawsuit filed in December by the Real Estate Board of New York (REBNY) and some brokerage groups. The city of New York asked to dismiss the suit. 

The judge presiding over the case on Tuesday denied REBNY’s request for an injunction but did not dismiss the case, which adds some uncertainty moving forward.

“We’re disappointed that the preliminary injunction in our federal lawsuit has been denied and that the FARE Act will go into effect,” REBNY President James Whelan said in a statement. “New Yorkers will soon realize the negative impacts of the FARE Act when listings become scarce, and rents rise. We will continue to litigate this case as well as explore our avenues for appeal.”

Still, REBNY advised its about how to comply, and renters in the midst of apartment hunts are cautiously optimistic about what new law might mean for their wallets.  

Tabby Greene, a data analyst in Flatbush, Brooklyn, who must move out of her apartment by July 31 found a listing for a studio apartment in Bensonhurst on Zillow for $1,500 per month. When she reached out to the broker to ask for more information, she learned there would be a broker’s fee equivalent to one month’s rent.

When Greene pushed back, the broker told her the rent would increase between $125 to $200 per month if she didn’t want to pay the fee.

“You have the option for me to represent you and pay a one time broker fee or pay a forever broker fee,” the broker wrote to Greene via text message. “Is [sic] just stupid politics.”

Greene, who visited the apartment and submitted an application, recently checked the listing again and saw the apartment’s rent rose to $1,850 — a 23% increase that puts it out of her budget. (The listing description still indicates a one-month broker’s fee.) So, she’ll keep looking.

“As long as the FARE Act goes through, I really don’t see why I would be paying for a broker’s fee,” she said. “If I don’t hire them, what am I paying you for?”

Brokers who vehemently opposed the FARE Act warned rents would rise because landlords would bake the brokers’ fees into rents. That worries one tenant, who lives in the heart of Queens and said she’s nervous about being priced out.

For three years, the tenant has been dealing with poor conditions in her apartment and has a difficult relationship with the landlord. 

“We stayed here because we knew we couldn’t incur the cost of another move,” said the woman, who requested anonymity given her sensitive living situation. “My mentality going to the next apartment search, in hoping we don’t have to pay a broker’s fee is, if it’s not the perfect place, we can move next year — instead of, guess we have to stay here for a while.”

An analysis from StreetEasy found properties that dropped the broker fee in April raised rents 5.3% — compared to 4.6% increases in the rest of the market, where fees remained. That means landlords aren’t baking in the full cost of the broker fee into the baseline rent.

In 2024, no-fee rentals were about 4.2% more expensive on average than similar apartments charging a broker fee.

“Asking rents are primarily driven by market conditions, rather than solely by property managers’ costs,” said Kenny Lee, an economist at StreetEasy. “The demand and supply dynamics are really the core drivers of the asking rent, on top of whatever the cost that the landlords have to cover.”