Last June, on a sweaty summer evening, in our 550-square-foot Brooklyn apartment filled to the brim with towers of stacked moving boxes, my partner and I took a final appraisal of what our cross-country move to New York City had officially cost us. We might as well have bought a new car.
We’d moved from Chicago, renting a U-Haul that John drove across the country while I trailed him in our banged-up 2013 Ford Escape, our two dogs and numerous plants in tow. The truck, including gas, cost around $1,000. We hired movers in New York to help us unload the truck; their services cost $550.
$1,550 for a cross-country move? Not terrible. Not something we’d still be financially recovering from, more than a year later. But moving to New York, and getting an apartment in New York, wiped out our cash savings. By the time we picked up the keys to the apartment, we’d spent nearly $13,000.
For our two-bedroom apartment in Brooklyn’s Crown Heights, we were charged $10,884 in collective fees and deposits. This included the first month’s rent ($2,800), a one-month security deposit ($2,800) and a broker fee of 15% of our annual rent, or $5,191. That’s because renters in New York have historically been held responsible for paying the broker that the landlord hired to find tenants.
Until recently, New York was one of two cities that required renters to pay for these services; the other is Boston. Typically, such broker fees range from 10% to 15% of a tenant’s annual rent; in a city where the average monthly rent is currently $3,898 per month, renters often had to pay several thousand dollars just to move.
For a $3,898 per month apartment, a 10% broker fee would be $4,667, while a 15% fee would cost the renter $7,016. The high fees can trap renters earning lower or average wages in apartments for years, unable to shell out the cost of an $18,000 gold Cartier bracelet simply to move apartments. (It’s worth noting that you can’t put a broker fee on credit — tenants typically must wire the money directly to the broker. If you don’t have that cash on hand, you can’t move.)
In a City Council hearing on a bill introduced to ban New York’s broker fee structure, Councilmember Chi Ossé described the fee structure as “an exploitative system that exists virtually nowhere else.” In Boston, legislation that would’ve banned the practice failed to advance earlier this year in the Massachusetts State Senate.
But the New York City Council today approved The Fairness in Apartment Rental Expenses (FARE) Act. The bill, first introduced by Ossé in 2023, requires that a broker who is hired by a landlord — or a broker who publishes the rental property's listing — is to be paid by the landlord. It passed 42-8, with more votes than needed for a veto-proof majority.
Numerous tenants and housing advocacy groups, including Make the Road New York, New York’s Working Families Party, the Community Service Society of New York and the Legal Aid Society, supported the legislation. And, broadly speaking, New York’s brokers aren’t fans of the FARE Act, with many arguing that broker fees are transparent and negotiable.
Brokers say getting rid of broker fees will actually lead to higher rents because landlords will refuse to pay brokers and instead include them in the rent — say, upping the rent by $400 a month, to spread out a $5,000 fee over a 12-month lease. “Landlords cannot pay fees. It’s not in their budgets and they won’t do it,” one real estate broker said at a demonstration of hundreds of real estate brokers at City Hall in June.
“We have some of the strongest tenant protections,” Whitney Hu, civic engagement and research director at Churches United for Fair Housing, told Salon. “At the same time, we have some of the strongest counter forces that one could imagine.”
Michael Corley, a real estate broker who’s worked in the city for more than 20 years, told Salon that requiring landlords to pay the brokers they hire would create a system eventually benefiting both renters and landlords.
“They will pay a reasonable fee,” Corley said of most landlords in the city. But those landlords might demand more from some brokers who, Corley says, have been able to take advantage of the fact that they’re guaranteed to be paid by tenants.
“I've told everybody that I speak with in the broker world, ‘You've got to establish a value proposition.’ And that's going to be hard in the beginning, because you've given this away for free,” Corley said.
When combined with the requisite first month’s rent and security deposit in a city boasting some of the steepest rents on the planet, broker fees make moving in New York a cost-prohibitive luxury available to a select tier of renters with above-average access to cash. According to the Federal Reserve’s most recent Survey of Consumer Finances in 2022, the median savings account balance for U.S. households was $8,000. StreetEasy, the Zillow-owned listings site that represents as much as 70% of New York and New Jersey’s rental market share, published a report in February that found tenants in New York City pay an average of $10,454 in upfront costs for a rental property — up 29% from before the pandemic.
What kinds of tenants have been able to afford these fees? Renters with means, or good credit (or, fairly often, rich parents). When John and I moved to the city, we were relatively privileged renters compared to many others in Brooklyn, with remote tech jobs that allowed us to work safely throughout the pandemic and build our cash savings up to $13,000 – which, eventually, funded the move.
But gone are the days when a remote tech job translated to real stability; two weeks after we moved to New York, John was laid off. Almost a year later, I was laid off from my job, too.
Our lease is up next June, and we’re itching to move to an apartment with a bit more space for us and the two dogs we brought from Chicago (thank goodness we’re near a neighborhood park). We’ve managed to squirrel away a couple thousand dollars, but have since amassed nearly three times that amount in credit card debt (a reality not dissimilar from dozens of our friends and peers in the city). If we had the opportunity to break our lease tomorrow and move into a place offering more space, we couldn’t. Like the average New Yorker, we just don’t have the cash for that broker fee.
Initially, some landlords might refuse to pay brokers, instead opting to handle the entire leasing process on their own. That won’t last long, Corley said.
“When they start being sued for fair housing discrimination and other things, which they will be, because they have no idea what they're doing, they will come back to us,” Corley said. He added, “The market will go through a correction phase, maybe 12 to 18 months. But when it's all done, it will be a much better environment for ethical practitioners, and everybody else will be gone.”
