As REBNY attacks broker-fee bill, Ossé says agents will support it

Council Member Chi Ossé’s fight with REBNY over his rental broker bill is getting vicious.

Ossé emailed the entire City Council last week a “corrected” version of a memo that the Real Estate Board of New York had sent to members it wanted to meet to discuss the bill, which the group opposed even before it was introduced.

The dueling memos make clear that the two sides exist in parallel universes connected by a sense of rising exasperation.

The industry argues that the bill, which would require the hiring party to pay the agent in a rental transaction, will hurt brokers and tenants alike.

“He keeps asserting, incredulously, that the legislation is good for real estate brokers,” said Ryan Monell, vice president of government affairs at REBNY, in a statement. “It is unfortunate that the Council member believes he knows better than the thousands of brokers who have already told him this legislation will raise rents and upend their ability to earn a living.”

Ossé’s rebuttal largely rejected the industry’s economic arguments and laid out why the bill, dubbed the FARE Act, will help some agents.

“Come on, everyone took Econ 101,” said Elijah Fox, Ossé’s spokesperson. “Who do these guys think they are?”

The bill has garnered support from tenant-side rental agents who are often squeezed out of deals by apartments’ listing agents, said Fox.

“As far as we can tell, we’ve got a ton of brokers lined up to testify when this thing comes to a hearing,” he said. “The New York City rental market is a tricky market and brokers play a valuable role. Right now a ton of them are getting stiffed.”

“He keeps asserting, incredulously, that the legislation is good for real estate brokers.”
Ryan Monell, REBNY

Fox went on to call REBNY “a very landlord-oriented thing. They’re not Team Broker.”

A REBNY representative said the group does not anticipate the bill will make it out of committee, citing a lack of support from Council leadership.

Still, the bill has revived a debate about rental brokers’ fees, three years after the Department of State attempted to spare tenants from paying brokers hired by landlords.

REBNY’s memo says having landlords pay the brokers handling their rentals, as opposed to having tenants pay them, as is often the case, will have a detrimental impact on agents and tenants.

Many landlords will choose not to hire agents, and those who do will pass the cost on to tenants in the form of higher rents, according to REBNY. That could price some renters out of apartments that require tenants to have annual income of at least 40 times the monthly rent.

REBNY said the bill also “eliminates the ability for renters to have flexibility about their own financial decisions they choose to make about their housing search.” (Tenants can opt to apply for no-fee rentals.) It will also lead to fewer online listings, REBNY warned.

Ossé’s office delivered a point-by-point rebuttal and was especially critical of the trade group’s claims of higher rents and less choice for tenants.

“The NYC rental market is tricky and brokers play a valuable role. Right now a ton of them are getting stiffed.”
Elijah Fox, Ossé spokesperson

“Some of this language is intentionally misleading,” wrote Ossé’s office. “The bill will provide flexibility in financial decisions by ensuring that each party pays for the services they hire. Tenants and landlords are each free to hire a broker to assist them in their search for a new home or for a tenant.”

It noted that Ossé himself hired a broker to assist in his recent apartment search “and was happy to pay for the excellent service.”

On the economics, Ossé claims that landlords won’t raise rents if they have to pay their brokers, because landlords charge as much as they can regardless. He said his bill would also discourage landlords from raising rents when negotiating renewals because losing a tenant would incur the cost of an agent fee to find a new one.

“There’s a strange assumption that REBNY keeps making that the market is so elastic that all these costs can just be passed back and forth freely, but that’s kind of silly,” said Fox.

Tenants may prefer that broker fees be spread over the course of a lease than to have to pay them up front, Fox noted. He added that when businesses pass along costs to customers, they typically absorb some as well.

“It’s like textbook stuff,” the spokesperson said.

But a REBNY spokesperson responded, “If the Council member is truly arguing that government should continue increasing costs for property owners in order to avoid rent increases for tenants, his argument is not supported by data or common sense.”

In the memo, REBNY also noted that rental agents would still have to pay StreetEasy’s listing fees, while Ossé’s bill would effectively reduce their commission income. 

“All landlords and brokers are, in a free market, allowed to pay for and use whichever tools and services they choose,” Ossé’s office answered.

The disconnect between the two sides was evident in that statement: Given StreetEasy’s dominance in rental listings, many brokers feel they have no choice but to use it. And by the same token, given how tight the city’s rental market is, many tenants feel they don’t have the luxury of applying for only no-fee rentals.

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