The cost of renting an apartment in New York can be eyewatering, not least because of the fees.
But a new guidance issued by the New York Department of State this week has seen renters jump for joy while real estate agents and brokers consider the future of their businesses.
The DOS legal guidance says that brokers working for landlords may not charge a fee to tenants; the fees can be as high as 15% of annual rent and are paid by tenants along with a security deposit before they can move in.
The guidance says that brokers’ fees should only be charged to the property owners they represent. Those brokers that are hired by tenants to find them a home will still be able to charge their clients.
The change is concerning for many brokers and agents who fear their business may not remain viable without the fees they currently charge.
“It’s a major reversal in fortune,” Maurice Grey, who runs the small family business Esra Realty, told the New York Times. “I’m a third-generation real estate broker. But ask me if my kids will be the fourth generation? I don’t think so.”
The real estate brokerage industry is set to fight the DOS stance, especially as they have already been hit with rent regulations in recent months which have dampened investors’ interest in acquiring rental buildings.