NEW YORK - The New York Department of State released guidance specifying that landlords will now have to pay broker fees in New York City, not the tenants.
It’s the result of a sweeping rent reform law passed in Albany last year.
Broker fees have amounted to as much as 15 percent of the annual lease for some New Yorkers.
New York is one of the few cities in the U.S. with a broker industry with so much pull over how people rent apartments.
Brokers can still collect a fee, but must now be paid by the landlord, unless a prospective tenant hired them to help find an apartment.
Many New Yorkers who spoke with NY1 were on board with the change.
“Yea it was basically like $4,000, like a month's rent, which is kind of ridiculous. It makes no sense because they just show up and leave," said one renter.
"I agree with that. I think that if they are not helping you on your search no matter the place if you find it on your own you shouldn’t have to pay someone for no reason. They didn’t do anything for you," said another renter.
"Why not? We pay enough for rent down here in the city," noted a third renter.
Brokers, however, warn that landlords will likely pass on the cost of the fee by raising the rent.
"Increased monthly prices for renters especially if commissions are going to be baked into their monthly rent. That’s no longer a 25-hundred dollar a month rental, you better believe that’s a 28 or 29 hundred dollar a month rental," said Real Estate Board of New York Senior Vice President of Government Affairs Reggie Thomas.
The Real Estate Board of New York, or REBNY, slammed the ruling Wednesday in a tweet saying, "We oppose the Department of State's guidance on rental broker fees. If enacted, it would negatively impact consumers, residential brokers in our community, and tenants. As we care deeply about New York City, we respectfully urge DOS to reverse course."
The board is also concerned about the agents themselves, saying they usually earn only $50,000 a year and that this move promises to take money out of their pockets.
“Something that is as important as this that is affecting everyday New Yorkers both renters and agents. We can leave no stone unturned," said Real Estate Board of New York Senior Vice President of Government Affairs Reggie Thomas.
REBNY says thousands of its members will be calling regulators, asking them to reverse course on this decision relating to the brokers fees. And they say if that doesn't work, they are considering litigation.