New York BANS notorious broker fees for apartment rentals

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In a surprise move, New York has banned the notorious broker fees that renters in New York City have long been forced to fork over for the privilege of leasing an apartment.

The sweeping change was quietly published late on Tuesday in a Department of State regulatory guidance document intended to clarify new state laws that were passed last year.

New York City is one of the few cities where renters have to pay middlemen a fee before signing a lease, with the typical fee amounting to 12 to 15 percent of annual rent — on top of the security deposit and last month’s rent that most landlords demand.

Viewed by many as an anachronism from the pre-internet age, broker fees are a frequent source of rage for New York renters, who are baffled at being forced to pay a ‘finder’s fee’ for apartments they frequently found themselves online.

The new regulatory guidance was issued to clarify a state law that was passed in June, and included a number of tenant protections — but did not explicitly mention broker fees.

The document reads: ‘a landlord’s agent that collects a fee for bringing about the meeting of the minds between the landlord and tenant (i.e., the broker fee) from the tenant can be subject to discipline.’ 

The guidance implies that landlords would be on the hook for any brokers fees, and landlord groups reacted to the change with outrage, vowing to fight it.

The Real Estate Board of New York, the influential trade group representing landlords and brokers, immediately threatened to challenge the rule in court.

‘This is a dire issue with our members, so we are literally going through every single avenue,’ Reggie Thomas, the group’s senior vice president for government affairs, told the New York Times. 

‘It’s an all-hands on deck thing because this came out of left field.’ 

Brokers and landlords warned that if property owners were forced to pay the broker fees, they would simply raise rents even higher to compensate. 

Residents of New York City, long fed up with the middleman fees, for the most part rejoiced, however.

‘I had more than one broker whose entire function was to give me the code for a lockbox. We never met. Still asked for 15%,’ tweeted Oren Yaniv, an official in the King’s County District Attorney’s office. 

‘This is so great. In close to 20 years as a renter in NYC, I have easily paid more than $10,000 in broker’s fees,’ tweeted author Jill Filipovic.

Though local and state politicians rushed to take credit for the change, the guidance was issued by Department of State lawyers, whose names are unknown.

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