The future of broker fees for renters in NYC & Boston

In November, the New York City Council passed the FARE Act that requires the person hiring the real estate agent to pay the agent’s fees. This goes into effect on June 11th of this year pending litigation.

  • At this time, there is no proposed legislation for Westchester County NY and Fairfield County CT. Most have already reduced to 1 month’s rent vs. percentage of annual rent.
  • At this time, there is no proposed legislation in New Jersey. Normal broker fee is 1 month’s rent.
  • In Massachusetts, similar legislation has been proposed but not voted on or adopted. Normal broker fee is 1 month’s rent.

The hope is to reduce the cost for the tenant. The articles discussing this legislation are assuming that the landlord is hiring the agent; however, if you are the renter/tenant, and one who is not familiar with the area, you’ll likely want someone to represent you and show you rentals. This may not be as critical for someone local who knows the area and rental buildings but has been, and will continue to be, essential if you are relocating and have to do so quickly to start a new job. That means broker fees are not going away.

WHAT WILL CHANGE

The talk in NYC is that if landlords list their rentals with agents, the broker fee will be reduced from 15% of annual rent to 1 month’s rent. Likewise, the tenant’s agent will charge the tenant 1 month’s rent.

However, it’s widely known that today, very few landlords have formal listing agreements. Instead, they have a relationship with their agent of choice and that agent leases the unit and is paid by the tenant. With no listing agreement, an agent cannot post the property online for rent unless there is no broker fee to the tenant. Instead, there will be vague listings online: Studio apartments available starting at $xxxx, 1 bedrooms starting at $xxx. No specifics, no representation except to the person who hires that agent to show those apartments.

So how does one find these rentals? This is the insider network of NYC – agents know the players and what landlord, managing agent or real estate agent to call for each building.

In June, the question remains, will landlords list their rentals publicly for the consumer to see, or will landlords continue to circumvent the legislation by not advertising their units and rely on the current method? The consensus among brokers is that landlords with low-to-mid level rents will be slow to adopt the new practice.

WHAT DOES THAT MEAN FOR RENTERS

For locals, they know the apartment buildings and may choose to walk-in and work with the agent officially or unofficially representing the building owner.

  1. If there is no formal listing agreement, that agent appears to work for the tenant and is still charged a 1-month broker fee.
  2. If there is a formal listing agreement meaning the landlord hired his agent, that agent represents the landlord who pays the fee and there is no fee to the tenant (tenant has no representation).

For newcomers and expats who do not know the area and need/hire an agent to navigate the complexities of the market, the broker fee will be based on:

  1. If the landlord has a formal listing agreement with his agent, the tenant would only pay 1 month to tenant’s agent.
  2. If it’s one of the unadvertised rentals, a handshake agreement between an agent and landlord, the broker fee would likely be 15% of annual rent split between both agents.
  3. If it’s an apartment community that offers 1 month free, that month would not be free rent but would pay the tenant’s broker fee.

WHAT IS THE IMPACT

Publicly advertised rentals with no fee to the tenant may continue to be in short supply. If landlords do begin listing their properties and paying the broker fee to the listing agent, they will likely increase the rent to cover their compensation to the agent. Either scenario is likely to increase rent to the tenant at least short term.

HOW TO PLAN

Our suggestion: Plan and account for a 1-month broker fee.

For tenant’s and companies who have been used to paying 15% of annual rent, this reduces relocation costs by 45%.

  • Before June 11, 2025: A $4600 apartment would have a broker fee of $8280 (15% of annual rent).
  • After June 11, 2025: The tenant would pay $4600 (1 month) unless it’s one of the unadvertised rentals without listing agreements.

In Westchester County NY and Fairfield County NY, most have already reduced to 1 month’s rent vs. percentage of annual rent. In New Jersey, normal broker fee is 1 month’s rent. In Massachusetts, normal broker fee is 1 month’s rent.

Next Month: As reported in our Trends Report that came out in January, that there is an increase in people looking for short term and co-living housing options. Stay tuned next month for the why, the pitfalls and nuances and how PorchLight can help.

Sources:

https://www.mass.gov/news/governor-healey-announces-proposal-to-eliminate-renter-paid-broker-fees#
https://www.wgbh.org/news/housing/2025-01-13/renters-wouldnt-automatically-pay-broker-fees-in-mass-anymore-under-governors-new-proposal
https://stationcities.com/how-will-the-new-fare-act-impact-renters-relocating-to-new-york-city/
$4600 is within average 1 bedroom rent in Upper Westside of NYC as reported by Zumper and RentHop
PorchLight Preferred Partner – The Steiner Team, Serhant
Stock Vector ID 2413647675

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