New York City Council Votes to End Broker Fees Squeezing Renters

This is a win for price competition - the "broker fee" paid by the renter is a classic example of principal agent problems / information asymmetry.

First, the service is being provided to the landlord (listing, tours, etc.), not the client, for all listings these days (I don't know any young person who has ever used a renter's agent, except maybe if it's provided in a relocation package). The renter has no choice in which broker to use to find/transact w/ the property, so there's very little price pressure for these broker fees.

Second the information asymmetry - the terms of the fee are completely opaque in the listings, and are not disclosed basically until signing unless you press brokers earlier. So there's basically no competitive pressure pushing these fees down, since it's basically a "junk fee" from a user experience perspective tacked on at the very end (and not listed on listings), and the landlord - who IS in a position to negotiate on price - doesn't care.

I don't buy the argument that there will be some long-term price hike in rents as a result of this decision - people who rent for 1-5 years already are paying a MASSIVE "net effective" premium for having an additional month's rent tacked on up front - but also it strongly incentivizes tenant retention (e.g. by being more responsive, keeping prices lower, etc.), because the landlord does not want to have to eat a broker's fee next listing.

I live in a building primarily owned by offshore investors.

NYC is a place where it's expected you'll always be on a lease - it's not common to go month-to-month after you fulfill your initial obligation (as it is in other cities).

I've heard a common grift here is to offer current tenants awful terms to renew the lease. The broker is banking on you balking, so she gets to tell the owner (who's never met you or even been to the US) "sorry - the existing tenant doesn't want to renew, so you're going to have to pay me to market the apartment again."

As someone who rented for 20 years in NYC, this is a bizarre scenario you describe. You deal with a broker during the leasing process, and then after you lease it, you pay the landlord, they have to sign the lease and approve repairs, and are the person with whom you review lease increases. The most arms length relationship I have ever heard or seen is having an admin assistant for the landlord handle all the operational things.

I have never seen a situation where the broker is responsible for the lease terms, because in the end the landlord has to sign their end.

My lease is with "Foreign Investor c/o Local Broker."

I think the reason it was listed as a "no fee" apartment is because the brokerage is the de facto landlady.

As the person who told me about this grift explained, this is not an uncommon relationship.