- The Fairness in Apartment Rental Expenses (FARE) Act, now in effect, bans broker fees charged to tenants, shifting the cost burden to landlords.
- Landlords are reacting by raising rents, in some cases by hundreds of dollars overnight, in an attempt to recoup broker-related expenses.
- Analysts warn that while renters may save upfront, long-term rent hikes could ultimately cost more than the now-banned fees.
A Big Win—or a Costly Tradeoff?
New York City renters woke up Wednesday to a transformed rental landscape, per The WSJ. With the new FARE Act now in effect, tenants can no longer be charged broker fees when renting an apartment—fees that traditionally added 10% to 15% of annual rent on top of moving costs. Now, that financial burden shifts to landlords, many of whom are responding with rent hikes that, in some cases, are among the sharpest the city has seen in years.
Immediate Market Response
Brokers and landlords had been bracing for this shift. Listings on platforms like StreetEasy showed dual pricing in the lead-up to the law’s enactment. One Park Slope unit, for example, jumped from $3,300 to $3,795 per month overnight—a $495 hike timed with the new law.
Industry professionals like Jason Haber, co-founder of the American Real Estate Association, predict “the biggest rent increase in the history of New York City” could be underway, at least temporarily.
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Long-Term Tradeoffs
The law is expected to lower upfront move-in costs by around 42%, according to StreetEasy. That’s good news for renters like Brooklyn resident Rita Liu, who says avoiding broker fees makes moving far more attainable, especially for young or lower-income renters.
But analysts caution that long-term implications may outweigh short-term savings. As rents rise to absorb the cost of broker commissions, future renewals and rent increases will be based on higher starting rents. Over multiple years, that could erase any upfront gains.
Context and Outlook
New York is one of the last major US cities to eliminate tenant-paid broker fees—Boston now stands alone. The change comes amid a broader affordability crisis: NYC’s rental vacancy rate is at a historic low of 1.4%, and median rents for two-bedrooms have surged 17.5% year-over-year to $5,560, the highest in the nation.
According to UrbanDigs, the FARE Act could “light a fire” under already-scorching rent trends. While rent hikes may taper as the market adjusts, the immediate disruption underscores the city’s ongoing housing affordability challenges.
What’s Next
With over 2M rental units now governed by the new law, developers and landlords may seek new ways to maintain profitability—either through further rent escalations or alternative fee structures. Meanwhile, tenant advocates continue to push for broader reforms aimed at addressing the deeper supply-and-demand imbalance in the city’s housing market.
