Save 2% When Buying in NYC: NYC Buyer Closing Cost Calculator:
What is the average rental broker fee in New York City? We will demystify this topic in the following video. My name is Nick from Hauseit. We are the largest reduced commission platform for buyers and sellers based here in New York City, established in 2014. So, let's get started. The average rental broker fee in New York City is approximately one month up to 15% of the annual rent.
The specific fee charged on a listing does vary based on the agreement in place between the landlord and the listing agent or perhaps between the tenant’s agent and the landlord or between the tenant and the tenant’s agent. So, there's a lot of jargon here and there's actually been some recent regulatory reform which has actually really changed the way the rental market works here in New York City.
So, in late January 2020 the Department of State issued regulatory guidance regarding the rent regulation that was enacted in 2019. And as part of that clarification the Department of State essentially said that it is now prohibited in New York State for a landlord’s agent, an agent who is retained by the landlord, to charge a broker fee directly to a tenant.
So, your classic example in New York City is you click on a listing online, you show up to the property, some broker opens the door, you like the place, you submit an offer, you get accepted and when you move in you've customarily had to pay this broker who is a landlord's agent some sort of fee when you sign the lease which is typically one month, which is around 8% of the annual gross rent and in some cases up to 15% of the total annual rent.
So, this rent reform has really changed things here in the city. Now there is pending litigation ongoing as of the time of this filming so it remains to be seen whether or not that regulatory guidance passes muster in the court of law. But as of now it is currently permitted for the tenants to pay the broker fee as they have in the past to the landlord’s agents. So, depending on the outcome of this lawsuit enacted by the Real Estate Board of New York, it will tell us in the future whether or not the tenants will be allowed to continue paying a broker fee to landlord’s agents.
Now one important distinction here, so it will continue to be allowed for a tenant to pay a broker fee to a tenant's agent. So, if you're a busy New Yorker and you don't have time to personally spearhead your search and you do want to have an agent help you out, there is no prohibition on you hiring a tenant’s agent and paying them some sort of fee. And in some cases, for larger rental buildings in the city the sponsor, the developer also known as the landlord may offer some sort of commission paid to tenant's agents. So, in that case you might be able to work with an actual broker on your search and you might not have to pay the fee. But again, what is not permitted is for a landlord's agent to charge a broker fee to a tenant.
So, we've established that the average rental broker fee in New York City is between 8% to 15% of the annual rent. Also known as 1 month of rent or 15%, which is a little bit less than two months of rent. We've also established that recent regulatory reform has called into question the mainstay practice in the city of tenants habitually footing the bill. Perhaps, you're not aware but in other parts of the country it's very normal for the landlord as opposed to the tenant to pay broker fees. So, assuming this regulatory change is upheld in the court of law it would essentially mean that in most cases landlords are going to be the ones who have to pay broker fees going forward. The benefit here is obvious and immediate to a potential renter. Savings of at a minimum one month of rent up to 15% of the annual rent which is payable at the time the lease is signed.
Save 2% When Buying in NYC:
NYC Buyer Closing Cost Calculator:
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Hauseit LLC, Licensed Real Estate Broker
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