Surprise Broker Ban Spurs Price Surge Among Cheap Rentals: Study

NEW YORK CITY — A recent spike in rental listing prices — which analysts tie to the surprise announcement earlier this month of broker fee ban —hit the city's more affordable homes hard, a new study shows.

Lower-rent listings made up one third of listings to see rent hikes in the week following lawmakers' announcement that landlords could not hoist the costs of brokers on incoming tenants, according to the real estate platform Localize.city.

“The ban on broker fees was meant to make finding an apartment more affordable to average New Yorkers,” said Localize.city President Steve Kalifowitz. "The trends we’re seeing show that might not be the case."

Rentals that cost between $2,000 and $3,000 a month — less than the city's median $3,150 rent — made up 34 percent of listings with increased rents, Localize.city analysts said.

Normally, about 1 percent of New York City listings see rent hikes in a week, but after the ban, the rate jumped to 5 percent with 438 increases reported in roughly 9,000 listings, Localize.city found.

Listing prices spiked after the New York Department of State added a surprise addendum to the Housing Stability and Tenant Protection Act of 2019, analysts said.

Prices surged despite the ban being put on hold on Feb. 10., when the Real Estate Board of New York filed a lawsuit challenging the addendum and won a temporary restraining order until both parties return to court on March 13.

Localize.city noted the ban might still benefit renters by transferring costs to monthly payments instead of one lump sum.

"But if you spend two or three years in an apartment," warned Kalifowitz, "that can mean a far greater total price paid than in a world where tenants pay a one-time broker fee.”