New York City renters can finally kiss broker fees goodbye.
On Wednesday afternoon, the City Council passed the FARE (Fairness in Apartment Rentals) Act, which shifts the payment of broker fees to the party that hired the broker, which is typically the landlord or management firm.
The bill was passed with a veto-proof majority of 42-8.
Until now, tenants had been footing the bill for the broker fees charged to the landlord or management firm, which can be "up to 15% of their first year's annual rent," says Nikki Beauchamp, an associate broker with Sotheby's International Realty in New York City.
But not everybody thinks the FARE Act is a good thing.
"The theoretical intent of the legislation is to help affordability, but the brokerage commissions are not what is making housing unaffordable," says Beauchamp.
The FARE Act could even end up costing tenants more money in the long run, according to the bill's opponents.
"The FARE Act, while well-intentioned, is misguided," says Ashley Murphy, senior vice president of communications at the realty group Brown Harris Stevens, which has offices in New York City. "If landlords are forced to pay broker fees, they will likely bake the price into the rent, and the lease will be more expensive each and every time a tenant goes to renew."
Instead of paying a one-time upfront fee, "tenants will pay more over a longer term. This is not a sound strategy to help affordability in this city," says Murphy.
Yet Chi Ossé, the city councilmember who introduced the bill, told CBS News he disputes that.
"Forty-seven percent of homes for tenants in New York City are rent-stabilized, so it would be illegal for landlords to bake the fee into rent in that case," says Ossé.
Even if the cost does get baked into some people's rents, Ossé says splitting the fee over 12 to 24 months would allow more people to move into apartments.
The FARE Act now goes to Mayor Eric Adams' desk to be signed. Once that happens, it will go into effect within 180 days.
After the Act was passed on Wednesday, Adams said: "The bill has the right intentions, but sometimes good intentions do not get the results you're looking for."
Strategist Bradley Tusk, who worked as an investor and campaign manager for former Mayor Michael Bloomberg, told Gothamist that he will spend $10,000 in an effort to pressure the mayor to not veto the bill.
"New Yorkers have been getting ripped off for decades and decades. The more we can do to make it cheaper and easier for talented young people to come here and stay here, the better off we'll be," he told the Gothamist in a statement.