Members of the New York City Council, the city’s governing body, took aim at the fees associated with renting an apartment in New York City, which sometimes requires prospective tenants to spend thousands of dollars in deposits and charges up-front, when signing a lease.
One of the bills, introduced by City Councilman Keith Powers, which is currently co-sponsored by 25 members of the 51-seat city council, seeks to make it illegal for individuals to collect fees in connection with a rental real estate transaction that exceed the value of one month of rent.
The bill was introduced into the council’s committee on housing and buildings and first reported by The Wall Street Journal.
“It shall be unlawful for any individual or individuals to collect fees in connection with a rental real estate transaction from a tenant or prospective tenant which, in the aggregate, exceed the value of one month of rent of the property in such transaction,” Powers’ bill reads.
Legislation introduced by Councilwoman Carlina Rivera, and co-sponsored by Powers, would allow for tenants to pay out a security deposit in six equal, consecutive monthly installments if the term of their lease is for more than six months.
Rivera is also introducing a bill that would require an itemized list of expenses associated with processing an application fee for an apartment in New York City.
The bills will become law if and when they are passed by a majority of yay votes in committee, then a simple majority of 26 votes in the full council, and then signed by New York City Mayor Bill de Blasio, who may also veto them (a mayor’s veto can be overridden by two-thirds vote of the council).
The Real Estate Board of New York (REBNY), the city’s real estate trade association, has already spoken out against the legislation.
“Real estate agents rely on commissions to feed their families, they offer a valuable service for both renters and owners,” John Banks, the president of REBNY said in a statement. “The decision to use a real estate agent is optional and the fees are negotiable. This legislation would interfere with the way hardworking New Yorkers earn a living.”
But not all agents are unhappy with the proposed legislation. Nick Rafter, a New York City agent with Citi Habitats, isn’t opposed to the bill.
“This would actually not be terrible for brokers either,” Rafter posted on his Twitter account. “We lose a lot of business because of 15 percent fees.”
The fees can be a deterrent for some hesitant to plunk down thousands of dollars in order to move and it’s often tough to discern what fees will be required until you speak with the rental agent. None of the rental listings that populate the first three pages Manhattan search results on StreetEasy, Zillow’s New York City subsidiary, have the fees required to move in disclosed — unless they are a “no-fee” apartment.
The median rental price in Manhattan for December 2018, according to Douglas Elliman was $3,300. If the broker’s fee is 15 percent of the annual rent — which is common in Manhattan — that means prospective tenant would need to drop close to $6,000 on a broker’s fee. If you include a security deposit and first and last month’s rent, that brings the total to around $15,000 up-front to get into the median apartment in New York City.