According to media reports, the city’s rental rates have spiked, significantly, since the ban on residential brokers’ fees was announced.
Prior to that prohibition, these licensed individuals would charge renters a fee, which was usually one or two months’ rent. And because they still need to be compensated for their work, and the cost has been shifted to property owners, the latter are raising their rental rates.
“While the ban on broker fees was meant to make finding an apartment more affordable to average New Yorkers, the trends we’re seeing show that might not be the case,” said Steve Kalifowitz, president of Localize.city.
Some argue that paying a higher monthly rent is easier than paying one lump sum fee at the start of the lease. However, as Kalfowitz points out, “if you spend two or three years in an apartment, that can mean a far greater total price paid than in a world where tenants pay a one-time broker fee.”
According to Crain’s New York, the “boost in rental price adjustments was abnormal compared to the average rental price 11 weeks before the ban.” Experts are unsure whether this trend will continue.
On March 13, a legal challenge seeking to reverse the ban will be heard by the courts. In that case, The Real Estate Board of New York filed a lawsuit accusing the New York Department of State of “abusing its authority and failing to follow proper steps before adopting the rule,” the New York Times reads.
*While administrative agencies are usually afforded considerable deference, the state licensing authorities may have overstepped in this particular instance,” noted Jarred I Kassenoff, a partner at Newman Ferrara LLP. “Since the law is silent on brokers’ fees, and the entitlement to collect such charges, we wouldn’t be surprised if this interpretation is reversed or found ‘arbitrary and capricious.’”
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To read the full story in Crain’s New York, click here: https://www.crainsnewyork.com/real-estate/city-rents-jumped-wake-broker-fee-ban
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