"Tenants, No Brokerage Fee Charges"... Industry 'Boiling' Over New York State Guidelines in the US

One of the Most Expensive Cities for Rent, New York City
Brokerage Fees Up to 15% of Annual Rent
Strong Industry Backlash... Plans for Legal Action Underway

Manhattan Times Square area, USA (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The real estate industry is strongly opposing New York State's ban on charging brokerage fees to apartment tenants. New York State, home to New York City?one of the most expensive rental markets in the world?has faced criticism for the heavy burden on tenants due to high brokerage fees.

According to The New York Times and Bloomberg News on the 8th, New York State announced on the 4th (local Eastern Time) that under the new law, tenants in New York cannot be charged brokerage fees.

The newly revised rental law enacted last year introduced various regulations to reduce tenant burdens, such as rent increase limits. Although the prohibition on charging brokerage fees to tenants is not explicitly stated in the legal text, it is a guideline issued by the state government.

In New York, brokerage fees borne by tenants can be as high as 15% of the annual rent, making them significantly high.

Even when tenants list or find properties directly online, it is often reported that they still have to pay brokerage fees commonly accepted in the market. It is estimated that about one million apartments in New York are subject to rent regulation.

However, the U.S. real estate industry is fiercely opposing New York State’s new guideline. There is even a mood to pursue legal action.

The New York Times reported that the Real Estate Board of New York City, an organization composed of real estate developers, landlords, and brokers, plans to sue New York State on the 10th for abuse of authority and violation of administrative procedures.

The New York State Association of Realtors, which includes about 60,000 brokers, is also expected to join the lawsuit. They argue that even if brokerage fees are banned for tenants, these fees will ultimately be passed on to the rent, rendering the policy ineffective.

Bloomberg News also explained that landlords are expressing dissatisfaction, saying that with the new law making rent increases and cost recovery for repairs and renovations very difficult, the added burden of brokerage fees is frustrating.

Meanwhile, it has been reported that apartment prices subject to regulation under New York State’s strengthened tenant protection laws are declining. Bloomberg News analyzed that "investment sentiment has also plummeted."

This content was produced with the assistance of AI translation services.