Intro. 1423: Capping Residential Rental Agent Commissions

 

Legislative Update

Four months ago, the City Council introduced a bill that would cap all residential brokerage commission fees at one month’s rent. After the residential real estate industry came together to voice our collective opposition to the bill through social media, petitions, letters, op-eds, and meetings with elected officials educating them on the ramifications that this bill would have for agents, property owners, and renters, the bill was recently amended.

What does the bill do now?

The bill now focuses exclusively on agents who represent property owners. For transactions where a broker or agent represents a property owner, the broker or agent is permitted to only collect at most one month’s rent as commission from the tenant. If the agent is a tenant’s representative, they can continue to collect whatever the market will bear. Clearly this legislation is still an overreach and only the first step to other commissions being regulated by the City Council. In addition to cutting your hard-earned income, this bill would work counter to its goal of creating deeper affordability in the housing market by inadvertently leading to increased rents. In instances where a property owner is responsible for paying a commission fee, they would logically pass this cost down to the tenant in the form of rent increases that would only be further exacerbated when it comes time for lease renewals – which leads the tenant to pay the commission fee two-fold, three-fold, and so on.

What can you do?

We need you attend the City Council public hearing on Tuesday, June 11th. Due to large crowds expected, we strongly encourage all attendees to be at the City Hall security gates by 9:30am to ensure entry into the hearing. REBNY staff providing flyers and posters will guide you in.

The hearing itself will begin at 10:00am inside City Hall. Once you are passed security and entering the building, please walk or take the elevator directly upstairs into City Council Chambers and find a seat towards the front of the room. When the hearing starts, please hold up your posters to signal to the Council Members your opposition to the bill. We are asking all attendees to stay until at least 12pm.

Please be aware that City Council hearings can run all day long, as there is no way to predict how long the members will take questioning panels. We strongly encourage all attendees to stay for the entirety of the hearing. If you are interested in testifying, please submit your name to the sergeant at arms once you enter the City Hall Chambers. You must also bring with your person, 20 copies of your testimony to supply the Council with. If you would like help with drafting your testimony, please contact Reggie Thomas, rthomas@rebny.com.

This hearing is the first step for the City Council to cut your commissions. We can only stop it if we show up in full force.

Let’s send a message to the City Council that solving the City’s affordability crisis won’t happen on the backs of hard-working agents. After all, we’re all tenants too.

Join us in our fight against Intro 1423, the City Council bill that seeks to cap residential brokerage commissions on Tuesday, June 11th.

 

How Do I Get To City Hall?

For those traveling from the East: Take the 4,5,6 trains to Brooklyn Bridge-City Hall. The entrance to the East Side gates of City Hall is located on Park Row directly across from Pace University.

 

For those traveling from the West: Take the A,C train to Chamber Street, the 2,3 to Park Place, the R,W to City Hall or the E to World Trade Center. The entrance to the West Side gates is located on the corner of Broadway & Murray St.

 

Proposed Int. No. 1423-A

 

By Council Members Powers, Rivera, Cumbo, the Public Advocate (Mr. Williams), Lander, Levin, Kallos, Van Bramer, Levine, Ayala, Chin, Rosenthal, Gibson, Moya, Constantinides, Dromm, Koslowitz, Richards, Reynoso, Cornegy, Espinal and Ampry-Samuel

A Local Law to amend the administrative code of the city of New York, in relation to limiting the fees charged in a rental real estate transaction

Be it enacted by the Council as follows:

 

Section 1. Title 26 of the administrative code of the city of New York is amended by adding new chapter 26 to read as follows:

CHAPTER 26

FEES ASSOCIATED WITH REAL ESTATE TRANSACTIONS

§ 26-2601 Definitions.

§ 26-2602 Fees in rental real estate transactions.

 

§ 26-2601 Definitions. As used in this subchapter, the term “rental real estate transaction” means a residential real estate transaction involving the rental of real property.

§ 26-2602 Fees in rental real estate transactions. a. It shall be unlawful for any individual or individuals to collect fees in connection with a rental real estate transaction from a tenant or prospective tenant which, in the aggregate, exceed the value of one month of rent of the property in such transaction, where such individual is a representative or an agent of the owner of such property. Nothing in this chapter shall limit the total fees any such individual or individuals can collect in any rental real estate transaction.

b. Subdivision a shall not apply to the collection of fees by the owner or landlord of a residential rental property.

§ 2. This local law takes effect 60 days after it becomes law, and shall only apply to rental real estate transactions entered into on or after the effective date of this law.