NYC's FARE Act: A Double-Edged Sword for Renters and Landlords

Today, June 11, 2025, marks the implementation of New York City's Fairness in Apartment Rental Expenses (FARE) Act, a piece of legislation aimed at easing the financial burden on renters by shifting who pays the broker fee. While proponents herald it as a victory for affordability, many landlords and real estate experts are predicting an adverse effect: an increase in residential rental rates, making the already challenging NYC housing market even less affordable for its citizens.

New York City's rental market has long been notorious for its exorbitant upfront costs. Beyond the first month's rent and a security deposit, renters often face hefty broker fees, frequently amounting to 10-15% of the annual rent. This can translate into thousands of dollars paid out before a tenant even moves in, creating a significant barrier for many, especially those with lower or middle incomes. The FARE Act directly addresses this by mandating that the party who hires the broker – which, in most cases, is the landlord – is responsible for paying their fee.

On the surface, this sounds like a clear win for tenants. No more unexpected, thousands-of-dollars-deep broker fees that were often paid for services the tenant didn't even request. The hope is that this will lower the barrier to entry for New Yorkers seeking housing and foster greater transparency in the rental process, as landlords will also be required to disclose all fees upfront.

However, the real estate industry, particularly landlords and their agents, have voiced strong concerns that this change will not make housing more affordable, but rather simply shift the cost. Their argument is rooted in basic economics:

• The Cost Doesn't Disappear: Broker fees are a legitimate business expense for the services provided. If landlords are now required to pay them, that cost will inevitably be factored into their operating expenses.

• Increased Rents as an Offset: To maintain profitability and recoup these newly incurred costs, landlords are likely to pass them on to tenants in the form of higher monthly rents. While the upfront burden might decrease, the long-term cost for renters could actually increase over the duration of a lease.

• Market Dynamics: In a city with notoriously low vacancy rates and high demand, landlords have significant pricing power. They are well-positioned to adjust rents upwards to absorb these new expenses without fear of units sitting vacant for too long.

• Impact on Smaller Landlords: Smaller landlords, who may operate on tighter margins, could be particularly impacted. They might feel more compelled to raise rents to cover these new fees, potentially leading to a ripple effect across different segments of the market.

While some analyses suggest that rent increases might not be drastically higher than pre-existing market trends, the fundamental shift in who bears the broker fee creates a new financial pressure point for property owners. For New York City citizens already struggling with a severe housing affordability crisis – where median rents far outstrip median incomes and more than half the population is rent-burdened – any additional upward pressure on rents is a serious concern.

The FARE Act aims to bring more fairness to the initial financial hurdle of renting. But as it takes effect today, the underlying concern for many is that it may inadvertently contribute to the very problem it seeks to alleviate: making the daily cost of living in New York City even more prohibitive for its residents. The coming months will reveal the true impact of this legislative change on the city's complex and ever-evolving rental landscape.