Could recent regulations eliminate one more financial obstacle to securing housing in a city where rents are already astronomical?
The real estate investing industry is aflutter with buzzing rental regulation news in the nation’s largest city. Last week, regulators announced a big change in broker fees; brokers will no longer be able to charge prospective tenants looking for an apartment in New York City.
Brokers are the middlemen who grant prospective renters access to listings, viewing appointments, and leases in exchange for a fee, up to 15 percent of one year’s rent. This recent regulation, which will affect—albeit differently—agents, tenants and landlords, is said to further implement tenant-protection laws from June 2019, which state “brokers acting on behalf of landlords would no longer be allowed to collect fees from new tenants,” according to The New York Times.
What does no broker fees mean for renters in New York City?
It’s one less financial obstacle to securing housing in a city where rents are already astronomical and affordable apartments are scarce. As part of last year’s new rent laws, apartment application fees were capped at $20 and security deposits limited to one month’s rent. These altered fees and deposits are more inline with many other parts of the country when it comes to leasing an apartment.
What does it mean for brokers and landlords?
According to The New York Times, brokers are still allowed to collect fees but only from landlords, unless the tenant hired the broker to help find an apartment. Some industry experts claim this could cause landlords of market-rate apartments to pass on the cost of the broker fees to tenants by raising the rent; yet, “landlords of rent-stabilized units would not be able to raise rents to offset the expense.”
Although tenants could end up paying more over time if the abolished fees are disguised in future rent increases, Eddie Wilson, CEO of the American Association of Private Lenders (AAPL) and of Think Realty, said, “Laws like this will help renters who are already struggling with affordability. They will no longer have to pay the traditional NYC fees to middlemen who are acting as a broker and gaining fees.”