The Status Quo
Renting an apartment in New York City has traditionally required significant upfront costs. Whether you’re a longtime renter, new to the city, or somewhere in between, anyone who is familiar with the process has felt the burden of paying the first month’s rent, security deposit, and a broker's fee all at once—myself included.
According to StreetEasy, in 2024, the average total cost to secure a lease reached $12,951, an amount equivalent to approximately 17% of the city’s median household income, based on data from the American Community Survey. That’s a 24% jump from 2023, where the average cost to rent an apartment was $10,454.
While it’s widely accepted that the standard practice of paying first month’s rent and a security deposit isn’t going anywhere, broker fees have been a more debated topic. Traditionally, landlords could structure listing agreements so incoming tenants, rather than landlords, cover the broker’s fee. And in 2024, nearly 47% of NYC rentals still required tenants to pay a broker’s fee, which could run anywhere from one month’s rent to 15% of the annual rent. As costs continue to rise, this practice has prompted discussions about transparency and affordability in the rental process. To address concerns, the New York City Council recently passed the Fairness in Apartment Rental Expenses (FARE) Act. This isn't their first effort either; the 2019 HSTPA restricted the amount landlords could collect from security deposits, capping it at one month's rent.
What’s Going to Change?
Under the FARE Act, whoever hires the broker has to pay the broker's fee. So, if a landlord hires a broker to list their apartment, the landlord (not the tenant) will have to cover that cost. In addition, the FAIR Act stipulates that any fees paid to the owner, upfront or ongoing, must be clearly disclosed in both the listing and lease agreement. Non-compliance could result in penalties.
To avoid any confusion, if a tenant decides to hire a broker to help with their apartment search, that’s still allowed. For many renters, especially those short on time or new to the city, it can still be a worthwhile service.
When will the FARE Act go into effect?
The FAIR Act was passed on November 13, 2024, with 42 out of 51 council members voting in favor. As Mayor Eric Adams did not sign or veto the bill, it automatically became law 30 days later and is scheduled to take effect on June 11, 2025.
How will the changes impact NYC renters?
Whether the FARE Act will actually make renting in NYC more affordable is still up for debate. Big platforms like StreetEasy and Zillow believe it’ll deliver real benefits for renters. Others worry that landlords might just bake those broker fees into higher monthly rents.
Time will tell.
