New York City’s rental market is undergoing one of its most significant shifts in years with the implementation of the Fairness in Apartment Rental Expenses (FARE) Act. Passed by the New York City Council in December 2024, this new legislation redefines who is responsible for paying broker fees, a long-standing point of frustration for many renters.
Historically, tenants often paid hefty broker commissions—even when brokers were hired directly by landlords. Starting June 11, 2025, the FARE Act aims to correct this imbalance by requiring that broker fees be paid by the party who hires the broker—typically, the landlord.
The goal: reduce upfront costs, increase transparency, and make the rental process fairer for all New Yorkers.
Overview of the FARE Act
The FARE Act mandates that:
- If a landlord hires a broker to represent them in leasing a unit, the landlord—not the tenant—must cover the broker’s commission.
- Tenants remain free to hire their own brokers for personal representation; in those cases, tenants would continue to pay those fees directly.
- Full disclosure of all fees is now required at the time of listing and in lease agreements.
- Violations of the Act may result in civil penalties up to $2,000 per violation.
This law brings New York City more in line with other major U.S. cities that have already adopted similar renter protections.
Why Was the FARE Act Created?
The FARE Act directly addresses years of tenant concerns over high upfront rental costs. Previously, it was common for renters to pay broker fees ranging from one month’s rent to 15% of the annual rent—even when the broker was representing the landlord’s interests. This created significant financial barriers, especially for first-time renters, students, and those with limited savings.
By shifting the financial responsibility to the hiring party, the Act aims to:
- Promote transparency in real estate transactions.
- Alleviate financial strain on tenants.
- Create a fairer and more accessible rental process.
- Bring fee structures more in line with standard consumer service models: the party hiring the professional pays for the service.
Key Changes Introduced by the FARE Act
Here are the most significant updates:
- Broker Fee Responsibility: Landlords must cover broker fees if they hire a broker to lease a unit.
- Fee Transparency: All fees, charges, and commissions must be fully disclosed upfront in listings and leases.
- Enforcement and Penalties: Landlords and brokers who fail to comply may face civil fines of up to $2,000 per violation.
Impact on Renters, Landlords, and Brokers
For Renters:
- The law significantly reduces upfront costs.
- Tenants will only pay broker fees if they personally hire a broker to assist with their search.
- Tenants should remain vigilant for any hidden fees (such as “management fees”) that may be used to offset landlords’ new obligations.
For Landlords:
- Landlords will now bear the cost of broker commissions when they retain brokers for marketing and leasing services.
- Some landlords may attempt to adjust rental pricing to recoup these expenses, though market conditions and competition will limit how much can be passed onto tenants.
For Brokers:
- Brokers will need to clearly disclose who they represent (landlord or tenant) and make all fees transparent in marketing materials and leases.
- Ethical compliance will be critical: charging tenants for services performed on behalf of landlords will be prohibited.
- Non-compliance could result in significant financial penalties.
| Broker Responsibilities | Description |
|---|---|
| Clarify Client Relationships | Disclose whether representing landlord or tenant. |
| Full Fee Disclosure | List all tenant fees upfront in rental listings. |
| Ethical Practices | Avoid charging tenants for landlord-initiated services. |
| Legal Compliance | Follow disclosure rules to avoid fines up to $2,000. |
Potential Market Implications
While the FARE Act provides much-needed financial relief for renters, it may also reshape how deals are structured:
- Smaller landlords may seek ways to control operational costs.
- Brokers may see increased partnerships with landlords directly, shifting business models.
- Larger landlords may adjust their pricing strategies to absorb broker costs.
However, the law aims to foster a more balanced rental market in the long run.
Conclusion
The FARE Act represents a major step toward leveling the playing field in one of the country’s most competitive rental markets. While renters stand to benefit most from reduced upfront expenses, landlords and brokers will need to adapt their business models and compliance procedures.
Whether you’re a tenant preparing to sign a lease, a landlord reviewing your rental policies, or a broker navigating these regulatory changes, understanding the FARE Act is essential.
For additional guidance on how the FARE Act may affect your specific situation, feel free to contact us. We’re here to help you navigate this evolving landscape.
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