Why Are NYC Renters Paying $4,000 Just to See an Apartment?

More than a year after New York City's FARE Act banned landlords from passing broker fees onto renters, a new and controversial workaround has emerged: some renters are now paying brokers thousands of dollars simply to access apartments they cannot find on public listing sites. According to Bloomberg, one renter paid $4,000 just to see a Brooklyn two-bedroom priced roughly 60 percent below market. Here is how the situation developed, where the legal line actually falls, and what your rights are as a renter.

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Why are some NYC renters paying thousands of dollars just to see an apartment?

Because a growing share of desirable apartments are now kept off-market. Since the FARE Act shifted responsibility for the broker fee onto whoever hires the broker, which is usually the landlord, many landlords have chosen not to hire or pay a broker at all. Instead they fill units quietly through referrals. Those apartments still exist, but they are hidden from public listing sites, so some brokers have assembled private inventories of off-market listings and use access to them as a selling point, encouraging renters to hire and pay them for entry to apartments they would not otherwise see. In the Bloomberg case, that meant a renter paying $4,000 to view a Brooklyn two-bedroom priced about 60 percent below market.

What is the FARE Act and what did it change?

The FARE Act is a New York City law that bans landlords from passing broker fees onto renters. It took effect and has been enforced for more than a year. The core change is that responsibility for paying the broker fee now falls on whoever hires the broker, which in most cases is the landlord. Before the law, a tenant could be handed a broker fee of up to 15 percent of annual rent for a broker they never chose. The FARE Act was designed to end that, and it recently survived a federal appeals court challenge, so it remains in effect.

Is it legal for a broker to charge a renter to see an off-market apartment?

It depends on the setup. Under the FARE Act, renters may still choose to hire and pay their own broker, including to help find off-market apartments, and that is legal. What is not legal is a bait-and-switch: a broker publicly lists an apartment, then tells an inquiring renter that the only way to see that specific advertised apartment is to pay the broker. New York City treats that as an illegal practice. In the reported Bloomberg case, the renter had first inquired about the apartment on StreetEasy, which is exactly the kind of fact that determines whether a line was crossed.

Why are NYC landlords keeping apartments off-market?

It is a rational business response to a change in costs, not necessarily anything improper. Because the FARE Act makes the landlord responsible for the broker fee when a broker is hired, many landlords now treat paying a broker as a last resort. One Brooklyn landlord who owns roughly 100 units described exactly that approach. Rather than hire and pay a broker or pay to advertise online, these owners fill vacancies through word of mouth and referrals, which keeps those units off the public listing sites where most renters search.

What are my rights as a renter under the FARE Act?

A few things are worth knowing. First, if an apartment is publicly listed by the landlord's agent, you cannot be required to pay a broker fee to see or rent it. Second, you may voluntarily hire your own broker for off-market help, but no one is allowed to use a specific advertised apartment as leverage to force a fee out of you. Third, if you encounter an illegal bait-and-switch, you can file a complaint with the city at 311 or nyc.gov/consumers, and you may have grounds to sue. Fourth, the FARE Act survived a federal appeals court challenge and remains in effect.

Does the FARE Act broker-fee workaround affect Staten Island and Brooklyn renters?

Yes, especially in Brooklyn, where the reported case took place and where off-market referral renting is common. The practical takeaway for renters across Staten Island and Brooklyn is to know the difference between a legitimate arrangement and an illegal one. Paying a broker you chose to help you find hidden inventory is allowed. Being told you must pay to see an apartment that was publicly advertised is not. If you are unsure whether a fee is legal, that is a good moment to ask before you pay.

Questions about how this affects your home in Staten Island or Brooklyn? Work with Joseph Ranola, or text or call (917) 905-2541. New episodes of Daily Tesla News break down the NYC real estate stories that move the market.