New York City renters have seen an average savings of roughly $1,300 since the city’s ban on broker fees took effect June 11, according to a study published Friday by tenant-review platform OpenIgloo — but real-estate experts warned the financial boost may be short-lived as landlords fold costs into higher rents.
The report, released three months after the Fairness in Apartment Rental Expenses Act became law, found that citywide rents this past summer were about 6% higher than the same period a year earlier. OpenIgloo CEO Allia Mohamed said that, despite some rent increases, tenants still experienced meaningful relief compared with the one-time payments that previously ranged between 8% and 15% of annual rent.
"We heard a lot of warnings and a little bit of fear over what the FARE Act would be," Mohamed said. "Rents did increase … but it’s nowhere close to that 8 to 15% increase that some people were warning of."
The OpenIgloo report singled out sharp increases in some Manhattan neighborhoods. It said the annual cost for the average market-rate one-bedroom rose 14.6%, from $3,600 in the spring to $4,125 after the June 11 effective date. Brokers and some landlords have said that, in a tighter rental market, lost fee revenue has been absorbed into higher monthly rents.
"Right now, [rent] is up [an average of] 6% or more, and we’re talking about one year," said Kelyan Sanai of Douglas Elliman. "What about next year when your rent gets raised 3%? The question is, do you end up paying more over time? And the answer is yes."
Some brokers and industry observers said the savings could evaporate for tenants who renew leases at higher base rents. Danielle Nazinitsky, founder and CEO of Decode Real Estate, estimated that some clients are facing rent increases of roughly 10% and argued that tenants who stay for a second year may lose the one-time broker-fee savings.
Market dynamics beyond the fee ban also are affecting affordability. StreetEasy senior economist Kenny Lee noted that elevated mortgage rates have kept potential buyers in the rental pool, increasing competition. He said Manhattan rental inventory has been falling for more than a year and a half, a trend that has put upward pressure on asking rents.
Other neighborhoods with substantial new housing supply have shown smaller rent growth. OpenIgloo and market brokers cited parts of Queens such as Long Island City and Brooklyn neighborhoods including Crown Heights and Gowanus, where landlords have been more cautious about raising rents because of increased inventory.
"What the FARE Act has done is it created a very large incentive for landlords to retain their renters," Mohamed said, pointing to stronger incentives to keep existing tenants when broker commissions are no longer available.
Open listings remain thin in several coveted neighborhoods, according to brokers. Nazinitsky said neighborhoods such as the Upper West Side, Upper East Side, Brooklyn Heights and Cobble Hill have markedly fewer rental listings compared with prior years, and some renters are paying above asking price or seeking paid broker assistance despite the ban.
"People are scrambling. People are paying over asking price," she said, adding that some renters now pay a one-month fee to brokers or concierge services to secure apartments.
Lee said the longer-term effects of the FARE Act will hinge on housing supply and market cycles. "Housing cycles take a long time to play out," he said. "We expect that eventually, a lower barrier to moving, thanks to the FARE Act, in combination with increases in new housing supply will lead to a healthier market where more homes become accessible."
City Councilman Chi Ossé sponsored the Fairness in Apartment Rental Expenses Act. The law shifted the cost of broker services away from renters, a policy change supported by tenant advocates who argued the fees disproportionately burden lower-income renters.
For now, renters in New York City are experiencing a mix of immediate savings and persistent affordability pressures. Experts said whether those savings persist will depend on the interplay of landlord pricing strategies, lease renewal patterns and the pace of new housing entering the market.