The Battle Over Broker Commissions Is Heating Up At City Hall

It's a common New York City occurrence that before moving into an apartment, a renter ends up paying a broker fee, even when it is actually the landlord that has hired the broker. But a bill being heard by the New York City Council next week could change that.

The legislation, introduced by Brooklyn Council Member Chi Ossé, aims to shift responsibility to whoever hires the broker. But the proposal also has a powerful enemy: the Real Estate Board of New York, which told Bisnow that it is planning to send 1,800 brokers to testify against the bill next week.

“The last time I think we had that type of number was in 2019 when we had a similar bill that we successfully pushed back and killed,” REBNY Vice President of Government Affairs Ryan Monell said. “I think we have a good shot of doing that again.”

The bill, known as Int. 360 or the Fairness in Apartment Rental Expenses Act, isn’t dissimilar to one that garnered support among city council members when Ossé proposed it last year. While that bill was allowed to die in committee, this year it faces a potential new trajectory. And as the new bill’s June 12 hearing date draws closer, it has been gaining momentum.

Among the general public, Ossé’s TikTok posts about the bill — including one with a cameo from comedian Ilana Glaser, of Broad City fame — have racked up hundreds of thousands of views. 

Among politicians, the bill has 31 co-sponsors, and talks with other lawmakers are “going well,” Elijah Fox, a spokesperson for Ossé, told Bisnow Thursday afternoon. Brooklyn Borough President Antonio Reynoso and Public Advocate Jumaane Williams are also co-sponsors. 

A dozen unions, including the Hotel and Gaming Trades Council and the New York District Council of Carpenters, signed a joint public letter of support for the bill. As of Wednesday afternoon, the bill had gained support from advocacy group Open New York and the Working Families Party, according to an email obtained by Bisnow. Another letter of support was also published Thursday by a group of 33 city housing, human rights and immigration advocacy groups.  

“This is a simple requirement that whoever hires a broker pays for a broker,” Fox told Bisnow.

He said the bill would improve market competition by giving tenants more leverage to negotiate proposed rent increases when renewing their leases, thereby putting downward pressure on rents.

A similar component of the Housing Stability and Tenant Protection Act ruffled feathers when state legislators passed the act into law in 2019. REBNY and the New York State Association of Realtors filed suit against the state over the guidelines, and an Albany County judge overturned it in 2021.

City Council Member Keith Powers introduced a bill in 2019 that would have capped the broker fee at one month’s rent, but his fellow lawmakers backed away after facing pressure from the real estate industry, Spectrum News NY1 previously reported. 

Broker fees are unpopular with many NYC voters. Fees average between 12% and 15% in the busy summer season, REBNY said, and around 8% during other parts of the year. But there have been stories of brokers charging gratuitous fees — sometimes up to tens of thousands of dollars — while doing little to show potential renters their options.

Still, Douglas Elliman broker Keyan Sanai is determined to demonstrate that those brokers aren’t representative of the industry. 

It's 5 p.m. on a Tuesday, and Sanai is pacing through a unit at 351 E. 51st St., a doorman condo building known as The Beekman Regent. It’s his second time in the building so far that day.

“I would say I'll probably have to show this in total 25 times to get a deal,” he said. “It's a bit of a numbers game, regardless of what people tell you.”

The public perception of brokers often doesn’t line up with the reality, he said.

“What people see on TV is now the opinion that they have of us — like, ‘billion-dollar listing, you made 250 grand!’ It's like, no, man, I showed a $6K rental 28 times and my take-home was 3,800 bucks,” he said. “And I've got to pay for my own health insurance.”

As a broker, Sanai said he doesn’t really care whether landlords or tenants pay the broker fee. But he said while tenants don't like paying the broker fee upfront, it is typically incorporated into the rent a tenant pays on no-fee apartments.

“You're paying for it either way,” he said. “The costs will get passed along.”

Sanai’s argument is one that REBNY supports. High rental costs are because demand is high and there’s a shortage of housing inventory, Monell said. Broker fees are negotiable, meaning that tenants can negotiate the best deal for themselves, while apartments without broker fees often have higher rents in the first place, he said. 

“What this bill ultimately does is it takes away the ability to negotiate the best deal for yourself, because it's just going to make it a one-size-fits-all market, to where everyone's going to pay the rent where the fee is effectively baked into it,” Monell said. “The reality is that the cost isn't just going to dissipate into thin air.”

A REBNY spokesperson cited an analysis from Property Club that took 7,000 listings from its own database, Corcoran, Douglas Elliman, Compass and StreetEasy in 2020. While no price changes were reflected in existing no-fee apartment listings it surveyed, listings that shifted responsibility for the broker fee from the tenant to the landlord increased by between 5.7% and 6.4%, depending on the borough.

“Brokerage firm members said their internal analysis at the time saw rents increase closer to 15% during the short period of time the prior bill was enacted,” REBNY spokesperson Christopher Santarelli said by email.

That period that tenants weren't on the hook for broker fees likely wasn't long enough to collect good data, said Fox, Ossé's spokesperson. And those figures are the listing numbers, he said — in other words, the rents that were asked for rather than the rents that apartments were signed at.

“A landlord is allowed to ask for whatever they want,” he said. “A much better metric would be the rent that is on the lease that’s signed.”

But even if the costs are passed on to tenants in the form of rent increases, that is still easier for them to deal with than a large one-off fee for services they never asked for, said Whitney Hu, director of civic engagement at affordable housing advocacy group Churches United for Fair Housing.

“Even if a landlord was to pass on the cost, it would be something that's broken down into 12 months versus an upfront cost,” she said. “For a lot of people, paying $20 more a month versus paying upfront is a huge, huge difference.”

CUFFH is one of 33 NYC advocacy groups that signed a letter to City Council Speaker Adrienne Adams and Consumer and Worker Protections Chair Julie Menin in support of the FARE Act, arguing it will result in more choice for tenants.

“The FARE Act does not curtail a broker’s ability to receive compensation,” the letter says. “It instead helps foster a competitive and free market for brokering services by ensuring that contracts are negotiated fairly between parties involved in both the selling and purchasing.” 

But the brokers who show up at City Hall next week are fighting for their earnings, said Deborah Riegel, a member attorney at Rosenberg & Estis who worked as an aide in the state legislature prior to her legal career.

“Owners aren't going to absorb this cost. They can’t,” she said. “And if they do absorb the cost, it’s certainly going to hurt the brokers, because they’re not going to be paying them the same commission levels.”

Sanai, the broker for Douglas Elliman, said he is concerned for his livelihood if Ossé's bill passes. His job hasn't meant cushy commissions — he once gave himself mercury poisoning from eating 14 cans of tuna a day.

“I wake up every day, and I'm afraid I'm going to get launched back into my old life when I was eating tuna fish,” he said.