NYC renters see ‘significant’ savings over nixed broker fees

The Fairness in Apartment Rentals Act, which went into effect on June 11, has had a significant impact on New York City renters. According to a recent study by OpenIgloo, tenants in the Big Apple have been saving an average of $1,300 due to the ban on broker fees. This ban has forced landlords to include these fees in monthly rents, resulting in a modest 6% increase in rents compared to the previous year.

Prior to the implementation of the FARE Act, tenants were required to pay broker fees ranging from 8% to 15% of their annual rent. While the savings for tenants have been notable, real estate experts warn that this financial gain may not last in the long term. Douglas Eliman’s Kelyan Sanai predicts that as rents continue to rise, tenants may end up paying more over time.

Danielle Nazinitsky, founder of Decode Real Estate, also points out that while renters may be saving on broker fees initially, the base rent has increased, resulting in higher overall costs. She estimates that her clients are paying an average of 10% more in rent increases.

In trendy neighborhoods like SoHo, the West Village, and East Village, rent increases have been even higher. The average cost of a one-bedroom apartment in the city has risen by 14.6%, from $3,600 to $4,125 post-June 11. Despite the ban on broker fees, some neighborhoods are experiencing even steeper rent hikes.

However, in areas like Long Island City, Crown Heights, and Gowanus, where housing stock is increasing, rent increases have been more subdued. Landlords in these areas are being cautious about raising rents, as they seek to retain their tenants in light of the FARE Act.

While the FARE Act has created incentives for landlords to keep their renters, the overall rental market in New York City remains competitive. As rental inventory continues to decline, asking rents are on the rise. Real estate experts suggest that renters may need to be patient and wait for the housing supply to catch up with demand in order to see long-term impacts of the FARE Act.

In conclusion, while tenants in New York City have been saving money on broker fees, the overall increase in rents suggests that these savings may not be sustainable in the long run. As the rental market remains competitive and inventory continues to decline, renters may need to navigate carefully to ensure they are getting the best deal possible.