It is an expensive New York City rite of passage that greets generations of renters eager to find an apartment: the dreaded broker fee.
The fee can rise well into the thousands of dollars — on top of a security deposit and first month’s rent — providing a culture shock to people from other cities, where landlords typically pay broker fees for rentals.
Now the City Council is seeking to rein in the fees, and a majority of council members support a bill seeking to transfer the costs to landlords. A key hearing for the bill, which would require whoever hires a broker to pay the fee, is scheduled for Wednesday.
At a time when rents have soared, it can easily cost more than $10,000 just to get the keys to an apartment. The hefty broker fee is a one-time payment that is typically between 10 to 15 percent of the annual lease amount. For an apartment in Manhattan, where the median rental price is $4,200 per month, the fee could be as high as $7,500.
Councilman Chi Ossé, who shared his own struggle to find an affordable apartment in Brooklyn, said that some business leaders and labor unions were supporting the bill because the city has become so unaffordable.
“It’s an additional fee in an already expensive and competitive market,” he said. “It’s holding a lot of people back from finding new homes, and it’s pushing people out of the city.”
The bill has 33 sponsors in the 51-member City Council, one vote away from a veto-proof majority that might be necessary if Mayor Eric Adams — an ally of real-estate interests — were to veto it. The coalition behind the bill now includes Bradley Tusk, a venture capitalist and former adviser to Mayor Michael R. Bloomberg; the left-leaning Working Families Party; and the Central Labor Council, which includes DC 37 and 1199 SEIU.
The City Council speaker, Adrienne Adams, has not taken a position on the bill, but she appears open to it.
William Fowler, a spokesman for the mayor, said that Mr. Adams was committed to addressing the housing crisis and noted that renters are not required to pay broker fees in city-financed affordable housing.
“We are reviewing the legislation and taking time to understand any potential impacts,” he said.
The powerful Real Estate Board of New York, the industry’s main lobbying arm, opposes the bill and plans to hold a rally at City Hall on Wednesday. The group has argued that if landlords were forced to absorb the broker fees, they would simply pass the cost on to renters by raising rents.
Ryan Monell, a vice president for the real estate board, said in an interview that the best way to solve the housing crisis is to increase the housing supply, and his group supports the mayor’s “City of Yes” housing proposal.
“If we’re looking to solve for rising costs, we think this bill goes in the opposite direction,” he said.
Mr. Adams, a Democrat who once proclaimed, “I am real estate,” said at a news conference on Tuesday that he worked as a real estate agent when he was a police officer and understood the industry’s concerns.
“I used to spend sometimes a whole day taking a potential tenant around to 12 different locations,” he said, adding: “It’s a lot of work.”
Broker fees were briefly banned in early 2020 under sweeping rent protection laws passed by the State Legislature. But the Real Estate Board of New York City filed a lawsuit and broker fees were reinstated.
New York’s broker-fee framework was established well before the internet age, during a time when landlords and brokers were the gatekeepers to rental units and earned fees for hustling to list apartments in different publications, answering calls, arranging tours and handling the paperwork. But today, most renters find an apartment online or through word of mouth, and many never meet a broker.
The Council bill does not affect apartment sales, where fees are often paid to agents representing the seller and the buyer.
Cory Epstein, a spokesman for Mr. Tusk, said in a statement that broker fees keep smart young people out of New York City — “people who will go on to start businesses, create great works of art and change the world.”
“Otherwise, we just end up with a city of management consultants and investment bankers and who wants that?” he said.