The average upfront cost of a Big Apple rental apartment with a broker’s fee has reached an all-time high — nearly $13,000, a new analysis shows.
The whopping amount includes the broker’s cut, first month’s rent in advance and security deposit, according to the study by the rental-listing company StreetEasy.
The upfront average cost for such rentals now stands at $12,951 so far in 2024 — the most ever — and is about 47% more than the equivalent for a “no fee” rental, or $8,769, the website’s data show.
In 2023, the average upfront amount for units with a broker’s fee was $12,667 and $9,984 in 2019.
The shocking new figure was released ahead of a highly anticipated Wednesday vote by the New York City Council on a bill that would shift the burden of costly broker fees off of tenants’ shoulders. The bill appears to have near veto-proof majority support.
“The average New Yorker will be spending more than 10 percent of their annual income just to come up with these up front costs,” StreetEasy senior economist Kenny Lee told The Post.
The website surveyed more than 500 tenants for its study, and over 80% of the respondents said they believe landlords should be responsible for paying brokers’ fees, while 76% said they felt like they had no choice but to pay a broker’s fee to snag a Big Apple abode.
“It doesn’t seem like that’s something that happens elsewhere,” said 31-year-old Williamsburg, Brooklyn, resident Kayla, who estimates she paid $4,000 in broker fees for her apartment seven years ago. “Because I did all the work for this [apartment], I feel like I wasted my money.”
Jemma Rowlands of Melbourne, Australia, told The Post that the brokers fee she paid for her first New York apartment in 2018 felt “expensive and unnecessary,” adding that a bill to ax the upfront cost “sounds good to me.
“I’m not devastated for them,” she said about brokers, noting that her experience with her agent was minimal.
Greenpoint, Brooklyn nanny Isabella Werber told The Post she’s never paid a broker’s fee — and wouldn’t be able to afford one if she were to move out of the $2,950-a-month two-bedroom apartment she shares with her boyfriend.
“It’s just so expensive: It’s not $500 or $1,000, it’s at least $3,000 or more,” Werber, 29, said of the fees. “Nobody would be able to lend me that money. That would make it impossible to move.”
While apartments with broker fees represent about half of all city apartments, most of those are at the lower-priced end of the rental market, according to Lee – disproportionately affecting those struggling with affordability to begin with.
“A healthy rental market is essentially one that has mobility,” the economist said. “Renters deserve a choice when they think about where to move next. Often, cost really inhibits their ability to find a place that they can afford in the city.”
Proponents of the council bill – dubbed the Fairness in Apartment Rentals (FARE) Act – say the measure will help ease renters’ financial burden. But critics argue it will just make rents more expensive as landlords tack the broker-fee cost onto an annual lease.
“The FARE Act will fundamentally disrupt New York City’s real-estate market, raise rents and make it even more difficult to find an apartment, and nothing StreetEasy has proposed will address any of those concerns,” said a rep from the Real Estate Board of New York, the bill’s most vocal opponent, to The Post.
“New York City’s main problem is a lack of housing, and government policies have only exacerbated that issue,” the rep added, citing the city’s historically low vacancy rate.
A 20-year veteran broker told The Post, “[Landlords] are going to have to raise the rent to make up the difference, but if the market can’t pay that, then they will sell the investment.
“And if all these landlords sell their investments, it takes rental inventory out of the market, and then supply is low and rental prices go up.”
The bill’s sponsor, council member Chi Ossé, has previously said that even if a portion of the broker’s fee is passed onto tenants as rent, “it would be distributed over the course of 12 or 24 months, alleviating the prohibitive upfront costs.”
But even Mayor Eric Adams seemed to doubt the bill’s ability to curb landlords from adding the cost of broker fees back into a lease, according to his remarks at a Tuesday press conference.
“We just got to get it right,” Adams said. “I think the bill has the right intention, but sometimes good intentions do not get through.”
The measure’s supporters, including StreetEasy, contend the bill would help not only tenants, but brokers as well – who oftentimes work to rent a listing without the promise of pay.
“Oftentimes, landlords work with multiple agents, and the agents who brought the tenant first would get paid not by the landlord but by the tenant,” Lee told The Post. “If this bill passes, both landlords and agents will have a better clarity on how this essential service that brokers provide will be compensated.
“Once we see this bill in place, both landlords and agents will have the opportunity to negotiate how the compensation will be taken care of, and tenants will finally have a choice when it comes to if they want to work with a broker,” Lee added.
The legislation would take effect after 180 days if it becomes law.
