Avoiding a broker by finding a no-fee rental has long been the holy grail of New York City apartment hunting. Now, the City Council is weighing a plan to reduce the often burdensome and upfront costs faced by renters.
On Wednesday, Manhattan Councilmembers Keith Powers and Carlina Rivera are set to introduce five bills that would rein in brokers fees and security deposits and which they estimate would save renters thousands of dollars. Both said the legislation is designed to even the playing field for lower-income renters; since brokers fees are negotiable, it often hands an advantage to those who are more savvy about the market.
Under the slate of proposals, the broker fee on an apartment — which currently ranges between 12 to 15 percent of the total annual rent — would be limited to a maximum of one month’s rent. The bills would also require brokers to provide renters with a breakdown of what the fee is being used for.
Similarly, security deposits would also be capped to one month’s rent, which is currently the rule for rent-stabilized units. The legislation would also allow renters to smooth out the payments over time, paying in installments of six months for longer leases and one month for leases shorter than six months.
The bills would also require landlords to return security deposits to renters within 60 days of the end of the lease.
A 2017 study by the NYC Comptroller's Office found that New Yorkers spent $507 million on security deposits in 2016. Moreover, low-wage renters considered “high-risk” faced security deposit charges two or three times higher. Cities like DC and Seattle have also limited security deposits as well as other states.
"It’s not news that New York City is one the most expensive places to live in the country. But there is something we can do about it,” Councilmember Powers said in a statement. “With this legislation, New Yorkers will not only be able to make more informed housing decisions, but tenants—particularly young and low-income tenants—will no longer have to pay thousands and thousands of dollars to build a home here.”
Unsurprisingly, the Real Estate Board of New York (REBNY), the powerful industry lobbying group, has criticized the legislation as hurting the wages of those who work in the real estate industry.
“Real-estate agents rely on commissions to feed their families, they offer a valuable service for both renters and owners,” John Banks, REBNY's president told the Wall Street Journal in a statement. “The decision to use a real-estate agent is optional and the fees are negotiable.”