If you’re looking to rent an apartment but don’t have enough cash for the sometimes hefty broker’s fee, you’re in luck — thanks to a new law.
A recent revision to the the Department of State’s (DOS) pro-tenant rent reforms, which became law in 2019, eliminates the listing broker’s commission for renters.
Traditionally, if you rent a home, there are often two brokers involved — the buyer broker and the listing broker. Prior to the new law, often the fee — usually one month’s rent — was split between the two Realtors in New York City.
Now, landlords will be saddled with the fees.
“We believe that the change will merely require that rentals be handled the way sales transactions are done,” said Sandy Krueger, CEO of the Staten Island Board of Realtors (SIBOR).
“This is the way rentals are handled in most other parts of the country,” he added.
While the elimination of the fee may help renters — especially first-time apartment-dwellers — get into a space faster, real estate professionals say this will hurt their bottom line.
“Already, we have many potential home buyers telling us that they will not entertain purchasing a two-family, due to all the new laws and restrictions,” said Christine J. DeHart, broker with the Castleton Corners-based Salmon Real Estate. “Now, they [landlords] are seeing that no notice has to be given before enacting a law that can affect so many parts of home ownership.”
If a tenant hires a broker to search for an apartment, he or she may still be charged a fee, according to DOS.
WILL RENTS RISE?
Some Realtors predicted that the new law will cause landlords to raise rents.
“If the property owners are going to have to pay a fee, the landlord may start charging more rent to make up for the cost of the fee,” said Jon Goldstein, broker/owner of Hometime Estates, Westerleigh. “This is really going to hurt renters because landlords are not going to want to pay the fee.”
Said Frank J. Rizzo, broker/owner of the Annadale-based Cornerstone Realty: “We all can agree that housing costs in the city are high, and we would like to see those costs come down. However, this is not the most effective way to accomplish that aim. Large landlords will increase their rents to offset their costs and mom-and-pop landlords -- like your neighbor who is renting that apartment to offset [his or her] mortgage payment -- will take the apartments off broker sites and MLS sites to save that one month of rent that they have already included in their budget.”
LANDLORDS MAY USE REALTORS LESS
Goldstein, who is also a landlord, said he may try to do the brunt of the advertising and marketing of the property on his own to avoid paying a fee.
However, some landlords said they don’t mind paying the broker’s fee.
“In the last two decades, I have come to an understanding that the landlord business in New York City is difficult, complicated and expensive,” said John Salis, real estate developer and property owner.
“My goal is to offer a nice, clean and safe place to the prospective tenants to live, and in exchange, receive a market rate value for my product. For anyone who wants to enter this business, there is a cost to pay, and I agree with the new law about landlords paying for a commission. ...On the other hand, I also feel that eventually the rents will spike by the landlords in order to cover that extra cost paid to the brokers," he added.
©2020 Staten Island Advance, N.Y.
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