The implementation of the FARE Act in New York City has led to a paywall for prospective renters, with some facing exorbitant fees to access off-market listings. According to a report, the law, which bars brokers hired by landlords from charging renters a fee for their services, has created a convoluted situation.
Renter Alexandra Dye paid an agent $4,000 to see a listing for a Brooklyn apartment, which she considered an amazing deal despite feeling a little taken advantage of. The agent had told her that the original listing she was interested in was no longer available, but that a different unit was available if she agreed to pay a fee to see it.
The law’s provision forbidding brokers and landlords from conditioning the rental of an apartment on a prospective tenant hiring or paying a specific agent has been flagged as potentially ambiguous by the Real Estate Board of New York’s general counsel, Carl Hum. Attorney Claudia Cannam said that since the law’s implementation, agents and landlords have resorted to workarounds, such as labeling the broker fee as another charge like a key access fee.
Cannam noted that enforcement has been relatively minimal, with the city’s Department of Consumer and Worker Protection issuing over $36,000 in penalties for FARE Act violations and returning over $15,000 to renters as of July. They are still waiting to see where the line gets drawn.
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Bohemia Realty Group co-owner Sarah Saltzberg said the law has put brokers in a tough spot, as they can’t advertise apartments that the landlord isn’t paying them to list. Instead, they have to rely on a tenant enlisting them to help find an apartment in exchange for a fee. However, to attract potential clients, they can’t advertise that they have access to certain listings without risking running afoul of the provision.
Saltzberg described the situation as complicated and gray. Earlier this week, Marketproof published a report on “Participant Only” listings, a category of listings available to all participants on REBNY’s residential listing service but not the general public.
The FARE Act’s impact on the rental market is still being felt, with renters like Alexandra Dye facing unexpected fees and brokers handling the complexities of the law. As the city continues to enforce the law and address the gray areas, it remains to be seen how the situation will play out in the long term.
We’re still in this gray area where we’re seeing how it’s playing out, how it’s working in the real world, said attorney Claudia Cannam. The situation has raised concerns about the accessibility of listings and the potential for brokers to find ways to circumvent the law, affecting the rental market.
