Socialist Alternative

New York Ends Broker Fees, But Real Estate Fights Back

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Renting in the City that Never Sleeps has never been simple. After finding an available, affordable apartment, renters usually need to pay a special burden called a “broker fee” – paid to the real estate agents and companies who control apartment listings, viewings, and leases on behalf of the landlord – in addition to the first month’s rent and a security deposit. Broker fees usually run into the thousands of dollars, frequently costing 15% of an apartment’s annual rent.

Under newly devised protections, however, New York State landlords who employ a broker to rent an apartment must pay the broker fee, rather than the tenants. 

The broker fee ruling comes in the wake of last year’s historic rent regulation laws, called the Housing Stability and Tenant Protection Act (Read Socialist Alternative’s 2019 article about the laws). The rent laws abolished rules that let building owners deregulate apartments, closed loopholes that permitted rent hikes, and spread tenant protections statewide. Similar to the broker fee issue, the Department of State has also clarified that the new rent laws cap application fees at $20, and forbid charging more than one month’s rent for a security deposit. 

Jubilant tenants’ rights activists hailed the state’s new broker fee guidance. Paulette Soltani, political director at the activist group VOCAL New York, said: “For our members, especially those who are homeless and perpetually unstably housed, this is hugely impactful. I think fees, historically, just defined who had access to the rental market and who didn’t. This is just going to allow people to equally be able to find housing and not have to pay these exorbitant fees to get access” (The Real Deal, 2/7/2020).

Real estate is big business. New York City has almost 26,000 active real estate brokers, and their lawyers from the widely-loathed Real Estate Board of New York (REBNY) won a decision on February 10 to temporarily block the state’s ruling until a March 13 hearing before a state judge (New York Times, 2/10/20). In the meantime, brokers can continue to collect a commission from tenants for rentals.

The struggle over broker fees is a reminder that when tenants and workers fight for reforms, victories are made possible. However, big business and the landlord lobby are not about to back down. Due to a capitalist political system where tremendous sums of money command incredible power, we should not be surprised that REBNY has already won a temporary injunction over the broker fee ruling. It will take political leadership from socialist elected representatives like State Sen. Julia Salazar (a member of the Democratic Socialists of America), and public meetings, rallies, and consistent organizing, to ensure that state regulators listen to the will of the people and make good on the promise of the new rent laws.

The real estate lobby argues that forcing landlords to pay broker fees will only lead to an increase in rents. But market-rate rents have been skyrocketing for years! This is a scare tactic. Similar to how many businesses cried over the impending $15 an hour minimum wage in Seattle, New York, and elsewhere as if the sky was falling, the raise in minimum wage did not cause significant inflation, and neither will landlords paying broker fees instead of tenants. 

The only way to protect this victory is by continuing the fight for more affordable housing! For example, Bernie Sanders calls for universal rent control on a national level. Universal rent control would keep renters from experiencing shock increases in private market rents, which often lead to evictions and homelessness. However these days, real estate developers don’t build affordable units: it’s not profitable, and they’re in business for profits. Working people can’t control what we don’t own, so we need to build high quality public housing, and we need to tax the rich and big developers to pay for it.

Housing should be a human right, which is precisely why Socialist Alternative’s own Seattle City Council Member, Kshama Sawant, is leading the fight to Tax Amazon to build permanently-affordable, publicly owned social housing. From Seattle to New York, when workers and renters get organized, we can make big business pay their fair share and house everyone.

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