New York state regulators issued a ruling on Tuesday that bans real estate agents and brokers from charging renters a fee for securing an apartment, effective immediately.
This means that renters could save thousands of dollars when applying for an apartment. The rule shifts the fee burden to landlords.
Agents and brokers typically charge a fee to vet prospective tenants, show units and negotiate deals. The fee can range from the equivalent of one month’s rent to as high as 15% of the apartment’s annual rent.
In New York, where the average rent for a one-bedroom apartment is close to $3,000, it’s a hefty savings for renters.
The combination of an average New York renter paying a security deposit, application fee, credit check fee and first month’s rent upfront already adds up to a giant chunk of change. Without the broker’s fee, the rental application process has been made less lengthy.
“So many people do not have the funds to make a down-payment on a home, yet you need to put out a lot of cash to move into an apartment,” said Matthew Murphy, executive director of the NYU Furman Center, which focuses on housing, neighborhoods and urban policy, to CNN. “What the state legislature tried to do was mitigate a few things that required you to lay out that cash.”
Last June, New York Governor Andrew Cuomo signed a rent law legislation, strengthening tenant protections.
These laws were meant to protect tenants and strengthen rent regulations. Tenants couldn’t be charged more than $20 in fees when applying for an apartment. Security deposits were also capped at one month’s rent.
Meanwhile, real estate agents in New York say that this ban could complicate their jobs.
“We are aggressively pushing back on the Department of State’s misguided interpretation that will have a devastating impact on hard-working real estate agents, owners, and renters throughout New York State,” Reggie Thomas, senior vice president for government affairs at The Real Estate Board of New York, told CNN.
“If enforced, this guidance would result in higher prices for New Yorkers as building owners include commissions into rents and dramatically cut the incomes of tens of thousands of agents who provide a valued service in helping people find their new homes,” Thomas said.