Will New York Force Rents Higher: READ THIS!

Please read this article from the NY DAILY NEWS written by COMPASS real estate agent Jason Haber who speaks facts and truths, not vote-grabbing headlines:

Speak with two New Yorkers and you’re likely to get three opinions. This applies to almost every topic imaginable, except for one: There is universal agreement that the cost of rent in New York is too high. Yet, the City Council is considering new legislation, which if enacted, will trigger a massive rent increase, making the city more unaffordable than ever.

 In June, the City Council’s Consumer and Worker Protection Committee held a hearing on the bill, known as the Fairness in Apartment Rental Expenses, or FARE Act. The legislation would mandate that whoever hires a real estate agent for a rental transaction pays their fee.

 At present, roughly half the listings on public sites such as StreetEasy are free of broker fees while others require tenants to pay it. The City Council wishes to end this system and dictate from who pays that fee.

 During the hearing it became clear that the Council had no data, no quantitative evidence, or any material facts to support the claim that legislating which party pays a rental broker fee would improve the rental market or drive down its costs. In fact, the Council chided a representative from the city Department of Housing Preservation and Development who testified that his agency had no analytical data to share with the Council that could support the bill.

 If the FARE Act was passed landlords would raise rents significantly to offset their increased cost. This new base rent would reverberate not just on rent origination, (when one-time broker fees are paid), but on lease renewals which would be higher. Rents would not just go up in the aftermath of the FARE Act, they would continue to go up in the years after its adoption.

In the absence of any data that the FARE Act would benefit New Yorkers, the Council instead relied on their own assumptions about the market, feedback from special interest groups, and baseless claims on social media. The sponsor of the bill claimed, on TikTok, that you pay “thousands of dollars to someone who just opens the door” and then at the hearing denied that he said that.

 The proponents of this legislation are substituting leadership for likes and build their arguments around inaccurate assumptions: “renters don’t pay broker fees outside New York City” (false), “rent stabilized housing would be unaffected by this change” (also false), “market forces will keep landlords from raising rents if they need to pay fees” (very much false).

 The FARE Act is well-intended by elected officials who are searching for ways to bring down housing costs. But as recent history demonstrates, well-intentions are no substitute for sound policy prescriptions. We learned this the hard way in 2019 when rent reform took Albany by storm with the Housing Stability and Tenant Protection Act (HSTPA), a sweeping piece of legislation that upended real estate in New York.

The goal of the HSTPA was stability — lower rents, more affordable housing, better protections for rent stabilized tenants. Some argued this package would make history for tenants, and it did, just not in the way supporters expected. Today, as a result of HSTPA, rents have never been higher. Rent regulated housing has suffered ruinous declines, including an estimated 50,000-plus units that now sit vacant.

Government was looking to address the problem of affordability, but they approached it in the wrong way and made the city even less affordable. Sound familiar? Unless the FARE Act is defeated, history is about to repeat itself.

 The good news is that there are plenty of ways we can work together with the Council to increase affordability. For example, there are more than 1,000 vacant city-owned lots just waiting to be developed for affordable housing, which along the way will create good paying union jobs during their construction.

 After the hearing ended, I reached out via private message to the councilmember who sponsored the legislation. While I vigorously opposed his position, I thanked him for his time and invited him out for an in-person meeting. I believe government is at its best when it speaks not in an echo-chamber but with others who have diverse, even opposing views. To date, I have not heard back regarding my invitation.

 Like its name implies, the FARE Act is an expense — and it’s one that NYC renters simply cannot afford. Instead, let’s work together to enact meaningful reforms that will make the city more affordable for everyday New Yorkers.