State lawmakers have put the New York City rental market in disarray.
Guidance unexpectedly issued by the Department of State, reversed the policy of renters paying the broker fees charged by real estate firms, putting the onus on the landlord instead.
According to StreetEasy, there are 5.6 million renters spread out between the five boroughs comprising New York City. Tenant advocacy groups are celebrating the change, while landlords and those in the real estate industry are shaken.
The guidance is based on the Department Of State's interpretation of the rent law passed in June 2019, that agents being employed by landlords will be penalized if tenants pay their broker fees.
This has some real estate firms worried that this will be a death blow, leading to real estate agents losing their jobs and rents increasing in a city that already has some of the highest in the nation.
Broker fees are typically 15 percent of an apartment’s annual rent. According to Douglas Elliman's report from December 2019, the median rental price for an apartment in Manhattan was $3,499. A 15 percent broker fee would mean the renter would end up paying an additional $6,298.
New York City was one of the few cities in the nation where tenants were charged a broker's fee when renting an apartment.
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