New York's rental law set to commence next week: Learn about modifications in apartment hunting process.
Let's Talk FARE Law: New York's Brokerage Fee Revolution
Gear up, renters - FARE Law is coming, and it's going to shake up the Big Apple rental market! The long-anticipated legislation is set to take effect on June 11th. It's the brainchild of none other than council member Chi Ossé, who's determined to make apartment hunting a little less painful for tenants.
The FARE Law, or the Fairness in Apartment Rental Expenses (FARE) Act, strikes a blow for fairness by making the contracting party, not the tenant, responsible for brokerage fees. That's right - no more sneaky fees on top of your rent!
Since the law passed in the city council back in November 2024, it's been a hot potato in the NYC rental market. But, for those on the hunt for a new pad, there's cause for celebration.
As Chi Ossé cheerily announced on Instagram, "We've done it! No more forced broker fees in NYC." Successful tenants have long grumbled about paying fees for brokers they didn't choose or even hire, so this change is a breath of fresh air.
StreetEasy's Forecast for the Post-FARE Market
The clock is ticking towards June 11th, and the Real Estate Board of New York's stalling tactics might not help them now. Their hope to hinder the law's implementation has fallen on deaf ears, leaving reformers with a clear path forward.
To help you get ready for the rental market after the FARE Law takes effect, the experts at StreetEasy have shared their insightful predictions. Here's what to expect:
- Lower Upfront Costs: In anticipation of the FARE Law, rentals charging broker fees will see a drastic drop in their upfront costs, down to around $7,537 from the current average of $12,942[EN1]. This valuable reduction in costs will significantly benefit tenants, who often struggle with meeting cumbersome upfront fees like security deposits and the first month's rent.
- Broker Fee Overhaul With the FARE Law, landlords will no longer be allowed to pass broker fees onto tenants. However, if tenants hire brokers, they'll be liable for those fees.
- Rental Market Dynamics Despite concerns about rent hikes due to eliminated broker fees, the FARE Act is expected to have minimal impact on monthly rent as a significant portion of the NYC rental market - nearly 50% - consists of rent-stabilized apartments[EN3]. The housing shortage remains a persistent challenge, with approximately 500,000 new units needed to meet demand[EN3]. Efforts such as zoning reforms and office-to-residential conversions aim to address this issue.
- Market Adaptation Renters are taking a wait-and-see approach, biding their time before entering the market following the FARE Law's implementation. Hit the ground running after June 11th, as the rental market could see a surge in activity. The shift in who bears broker fees could lead to changes in how apartments are rented and marketed, particularly as online listings become the norm[EN5].
- First-Time Homebuyers' Bonanza Looking to purchase your first home? Get excited - NYC has announced a $100,000 grant for first-time home buyers to help with their down payments! Stay tuned for more details as this groundbreaking initiative rolls out.
If you're feeling a bit overwhelmed, fear not - our expert-backed advice on winning the affordable housing lottery and the new first stabilized rent alert system in NYC are just the tips you need to get ahead in the game!
[EN1] https://www.streeteasy.com/blog/the-fare-act-nyc-will-lower-upfront-rental-costs/[EN2] https://thelongislandpress.com/fare-act-nyc-tenant-protection-bill-passes/[EN3] https://metro.us/2024/05/11/fare-act-nyc-rentals-costs-study/[EN4] https://www.nyc.gov/office-of-the-mayor/news/244-25/new-york-city-provides-record-nyc-home-first-time-homebuyers[EN5] https://www.nytimes.com/2024/08/18/realestate/fare-act-broker-fees-new-york.html
- With the implementation of the FARE Law, potential homebuyers in New York could find an advantage in the fluctuating rental market, as thedelta in broker fees might influence some renters to consider home-and-garden purchases, taking their finance into a different direction.
- The new FARE Law sets a new standard in the NYC rental market, influencing a potential shift in lifestyles for renters, as they could have more disposable income due to reduced upfront costs, leading to possibly improved financial situations.
