Rents Jumped After NY Announced Surprise Broker Fee Ban: Study

NEW YORK CITY — Certain rental listing prices spiked immediately after New York state lawmakers unexpectedly banned landlords from saddling tenants with brokers fees, according to a new study.

Rents rose more than 6 percent in about 7,000 New York City listings after the New York Department of State announced Tuesday a surprise addendum — dictating brokers hired by landlords could no longer bill tenants for their services — to the Housing Stability and Tenant Protection Act of 2019, PropertyClub says in a new report.

"As it turns out, the industry moves fast," PropertyClub analysts wrote. "A lot of listings were quickly updated and displayed higher rents than before."

Specifically, listings that went from having a tenant-paid broker fee to a landlord-paid fee showed significantly higher numbers, PropertyClub found.

Rents increased by 10 percent or more for one out of every 10 of those listings and more than 70 percent saw a rise in price worth about a month's rent, analysts said.

The citywide jump was 6.1 percent, with the highest increase reported in Brooklyn at 6.4 percent, followed by Queens at 6.1 percent, Manhattan at 5.9 percent and The Bronx at 5.7 percent, according to the study.

The Harlem listings saw the highest rent increase at 10.9 percent and the Brooklyn neighborhood East New York came in second at 10.4 percent, analysts said.

Hamilton Heights, Williamsburg, Bed-Stuy, and the Lower East Side were not far behind with rent increases of more than 8 percent.

The researchers noted that, despite rent increases, New York City tenants would likely wind up saving money if the ban survives a lawsuit from residential brokers, filed earlier this week.

Broker fees typically make up about 15 percent of an apartment’s annual rent, which means the shift to increased rents would still save tenants a combined $256 million a year, analysts said.

If spared paying the broker fee, Battery Park City renters could save $7,413, Soho renters could save $6,337 and Long Island City renters could save $5,565 a year, PropertyClub said.

"If the landlord is responsible for covering the brokers fee, tenants are in a much better position when negotiating a long term lease or a renewal," said PropertyClub CEO Andrew Weinberger.

"Having landlords pay broker fees changes the game completely."

Read the full analysis here.