Key Takeaways:
- The Fairness in Apartment Rental Expenses (FARE) Act, approved by the New York City Council and awaiting review by Mayor Eric Adams, requires the hiring party to compensate agents and rental listings to disclose any fees to be paid by tenants.
- Once the FARE Act takes effect, we anticipate the average cost to sign a lease on rentals currently charging tenants a broker fee will fall by 41.8% to $7,537 — lower than the current average upfront cost for a rental without a broker fee.
- Rental properties that stopped charging tenants a broker fee in the past did not increase rents beyond broader market trends. Units that switched to no-fee between 2022 and October 2024 saw a 4.2% average annual increase in rent following a tenant turnover, while units that continued to charge a broker fee saw a 6.1% jump. The lock-in effect of high upfront costs made it easier for landlords to raise rents faster.
- Market conditions and amenities drive rents in addition to landlord expenses. After accounting for these factors, the average no-fee premium was 4.2% in 2024 — far lower than 12-15% of annual rent if the landlord were to amortize the broker fee into the monthly rent fully.
- Once the FARE Act takes effect, a no-fee rental will no longer be a marketing tool and the associated premium will likely disappear, making the NYC market more aligned with the national market.
The average upfront cost to move into an NYC rental with a broker fee rose to $12,951 this year — a record-breaking high equivalent to 17% of the city’s median household income of $76,577 in 2023, according to the U.S. Census Bureau’s most recent American Community Survey. High upfront costs, which usually include a broker fee, first month’s rent, and security deposit, make it difficult for New Yorkers to move to a new home within the five boroughs. However, the recent passage of the Fairness in Apartment Rental Expenses (FARE) Act by the New York City Council on November 13, once enacted into law, could significantly reduce these upfront costs and improve affordability across the NYC market.
The broker fee, typically about 12% of the annual rent, is often the most substantial upfront cost. This year, the average upfront cost of a rental with a broker fee was 48% more than the average for rentals without the fee.
Broker fees disproportionately affect New Yorkers looking for a more affordable home to rent. This year, 46.8% of all NYC rentals charged tenants a broker fee. By comparison, 57.3% of rentals priced below the city’s median asking rent asked tenants to pay broker fees.
Average Upfront Costs
| Rentals With Broker Fee | No-Fee Rentals | |
|---|---|---|
| 2017 | $10,007 | $6,695 |
| 2018 | $9,741 | $6,505 |
| 2019 | $9,984 | $6,678 |
| 2020 | $9,835 | $6,438 |
| 2021 | $9,201 | $5,971 |
| 2022 | $11,793 | $7,967 |
| 2023 | $12,667 | $8,745 |
| 2024 | $12,951 | $8,769 |
Once enacted into law, the FARE Act will greatly lower upfront costs and level the playing field for renters looking for more affordable homes. The legislation ensures agents are compensated by the party that hires them. Upon taking effect, the average upfront cost of a rental currently charging a broker fee would fall by 41.8% to $7,537 — lower than the current average upfront cost for a no-fee rental of $8,769.
Moreover, the FARE Act requires rental listings to disclose any fees to be paid by tenants. Ensuring transparency in the rental market will help renters better understand what they can afford and give them a true choice in agent representation.
StreetEasy® and Zillow® believe the FARE Act will benefit not only renters, but all industry participants. The city had a rental vacancy rate of 1.4% in 2023, its lowest since 1968, according to New York City Housing and Vacancy Survey data. This lack of inventory significantly affects rental agents, with 85% reporting that the housing shortage has had an impact on their business in a recent StreetEasy survey.
Lowering the financial barrier to moving will help locked-in renters — who may want or need to move, but have been unable to due to burdensome upfront costs — find their next home. As more units become available on the market, agents will see more opportunities to work with both landlords and tenants to help New Yorkers unlock their next rental.
Manhattan Rentals Under $3,500 on StreetEasy Article continues below
What Will Happen to Asking Rents Once the FARE Act Takes Effect?
Opponents argue that a sharp increase in asking rents will occur following the FARE Act, but history suggests this is unlikely. StreetEasy analysis of rental data between January 2012 and October 2024 shows that rental properties that stopped charging tenants a broker fee did not increase asking rents beyond broader market trends. By contrast, units that continued asking tenants to pay broker fees have shown sharper rent increases following tenant turnover in recent years.
For this analysis, we identified non-luxury properties that were previously listed with a broker fee but listed again as no-fee following a tenant turnover. We then calculated the change in asking rents between these listing pairs for the same unit, to measure how landlords responded to the additional expense associated with compensating brokers directly. To account for different lengths of rental contracts, we annualized the percent changes between the pairs.
Before the pandemic, there was no meaningful difference in rent growth between rentals that stopped charging tenants a broker fee and those that continued to charge one. The average annual rent growth of properties that previously charged a broker fee but were relisted as no-fee between 2012 and 2019 was 2.3%. By comparison, the average annual rent growth of properties that continued to charge a broker fee was 2.1% over the same period.
However, during the pandemic, properties that relisted as no-fee saw sharper declines in asking rents from the previous time they were listed, compared to rentals that continued to charge a broker fee. Units that switched to no-fee between 2020 and 2021 saw a 3.1% annual decline in asking rents on average, but rents on units that kept charging a broker fee fell just 1.6% on average.
As the city’s rental market heated up in the years following the pandemic, rents increased faster in units that continued to charge a broker fee. Between 2022 and 2024, asking rents for units that switched to no-fee grew 4.2% annually on average, while rentals that continued to charge a broker fee grew 6.1% per year.
The discrepancy in rent growth between the two groups is likely due to the lock-in effect of high upfront costs. It’s easier for landlords to raise rents faster if tenants have paid a high upfront cost before signing their lease, as the high cost paid upon move-in encourages tenants to extend their lease to amortize the upfront costs over a longer period. As a result, asking rents on units that continued to charge a broker fee declined less during the pandemic, and rose faster once demand returned.
Brooklyn Rentals Under $3,000 on StreetEasy Article continues below
Asking Rents Are Driven by Market Conditions, Not Just Landlord Expenses
Once the FARE Act takes effect, some landlords could conduct leasing activity in-house and cover the associated expenses directly. Depending on their individual needs, some landlords will continue to hire rental brokers and compensate them directly for their services.
In either situation, landlords are unlikely to fully amortize the additional costs associated with this change, as history suggests that landlords set asking rents based on market conditions rather than the expenses of this activity.
While no-fee rentals tend to be more expensive than rentals with broker fees, our analysis indicates that the difference in asking rents is predominantly driven by location, size, and the presence of popular amenities such as in-unit laundry and doormen. After accounting for these key aspects, no-fee rentals were more expensive than rentals that charged a broker fee by just 4.2% on average in 2024 — far lower than 12-15% if landlords were to amortize the broker fee into the monthly rent fully.
This “no-fee premium” changes dynamically depending on market conditions. The premium turned negative in 2020 and 2021 as landlords quickly adjusted to cooler market conditions, and more rental properties offered to pay the broker fee during the pandemic. The negative premium of no-fee listings during this time indicates that such rentals were cheaper than similar rentals with a broker fee. The no-fee premium then peaked at 6.4% in 2022 when the rental market was unusually competitive. As competition cooled this year, it declined to 4.2%.
As the rental market continues to moderate in 2025 due to rising inventory, the no-fee premium will likely decline from its current level. As all NYC rentals become effectively no-fee, which has traditionally been used as a marketing tool to attract renters, the premium will likely disappear completely from the market.
StreetEasy and Zillow Are Advocating for a More Affordable and Efficient Housing Market
StreetEasy and Zillow believe the FARE Act is just one step of many toward a more transparent, affordable, and efficient housing market. Here are other efforts we’re supporting to address NYC’s housing crisis:
Lowering upfront costs: In addition to broker fee reform, StreetEasy and Zillow are collaborating with policymakers and advocates on policy and product solutions to help mitigate upfront costs, including:
- Allowing tenants to pay their security deposit in installments over the full term of a lease rather than in full upfront, which can significantly reduce the burden of upfront costs.
- Increasing transparency around fees to help renters better understand what they can afford when searching for a new home.
- Making it easier for renters to report positive rental payment history to credit bureaus, helping them build credit through regular rent payments and unlock a path to homeownership.
- Supporting closing cost and down payment assistance programs to reduce the upfront financial burden on buyers and help make homeownership more accessible.
Increasing housing supply: As we aim to lower upfront costs and reduce friction in the process, there simply aren’t enough homes to meet demand. To alleviate the supply shortage, StreetEasy and Zillow are working with industry partners and housing affordability advocates to push for policy solutions such as:
- Adopting tax incentive programs and zoning laws that allow the creation of accessory dwelling units (ADUs), basement-apartment conversions, and commercial-to-residential conversions to bolster housing development across income brackets, especially in hard-to-develop areas.
- Ensuring consumers have fair and transparent access to all real estate listings, enabling them to make informed decisions and find the home that is their best option.
Additionally, we supported the City of Yes housing plan — a citywide zoning reform proposal expected to create 82,000 homes over 15 years — passed by the New York City Council on December 5. The plan is a monumental step in the right direction to address the city’s dire housing shortage.
Reducing friction in the process: Even if we’re successful in lowering upfront costs and building more housing, friction still holds consumers back. StreetEasy and Zillow are pushing to remove or reduce this friction by:
- Empowering renters by strengthening the enforcement of fair housing laws, as well as allocating resources to increase industry and renter education and outreach. This would ensure tenants understand their rights and the resources available to them, thereby enabling better enforcement and reporting of violations.
- Supporting additional funding for housing vouchers and rental assistance programs, ensuring renters have more access to housing opportunities.
- Supporting requirements for consumers and real estate agents to enter into written representation agreements in all real estate transactions, ensuring consumers know the services they’ll receive from agents, how much they’ll pay for those services, and who will be paying for those services.
We’re actively working with legislators to bring about policy changes in these areas in New York and across the country. Read more about our efforts here: https://advocacy.zillowgroup.com/.
Queens Rentals Under $2,500 on StreetEasy Article continues below
Methodology
How we calculated average upfront costs
We calculated the upfront cost of each rental listing that was on the NYC market. Following common industry practices, we assumed each rental requires a tenant to pay the first month’s rent in advance, one month’s rent as a security deposit, and 12% of the annual rent as a broker fee unless a listing is marked as a no-fee rental. We then took the average upfront cost of the listings that were on the market between January and September 2024 and charged a broker fee to get $12,951 as of 2024. For equivalent comparison, we compared this estimate to the average upfront cost between January and September of each year before 2024. We excluded rentals with unusually high or low prices to estimate the average upfront costs New Yorkers are likely to encounter. The methodology in this report is the same as our previous report on upfront rental costs.
How we calculated the changes in rent between listing pairs for the same unit
We identified 764,395 rental units that rental agents or property management companies relisted between January 2012 and October 2024 following a tenant turnover. We excluded the most expensive 10% of these relisted units to reduce the influence of highly-priced but less common rentals. Among the remaining properties, we identified units that were previously listed with a broker fee and then listed again as a no-fee rental. On average, 12% of these non-luxury properties were relisted as no-fee rentals each year.
How we estimated the no-fee premium
We analyzed more than two million rental listings that appeared on StreetEasy between 2017 and 2024. To calculate the average effect associated with no-fee listings (namely, the “no-fee premium”), we used hedonic regression to account for the differences in physical characteristics of housing such as the number of bedrooms and bathrooms, amenities, location, and building type. As asking rents tend to vary based on the month of year, we introduced additional variables to account for market seasonality. Moreover, we introduced interaction terms with an indicator variable corresponding to no-fee listings to capture how much the premium associated with no-fee rentals changes each year, in addition to the baseline lift associated with no-fee listings.
The hedonic model was solved using a robust regression method with Huber’s T as an M-estimator. The solution was found through an iterative weighted least squares (IWLS) method that iteratively estimates weighted least squares until a stopping criterion is met. Although the hedonic model in this research explicitly accounts for variation across homes, a robust regression accounts for any additional unobserved variation by down-weighting the influence of unique rentals and up-weighting more typical homes.
Estimated No-Fee Premium by Year
| No-Fee Premium Over Rentals With Broker Fee | Standard Error | Lower CI (0.025) | Upper CI (0.975) | |
|---|---|---|---|---|
| 2017 | 2.882% | 0.068% | 2.748% | 3.015% |
| 2018 | 2.959% | 0.160% | 2.645% | 3.272% |
| 2019 | 3.387% | 0.161% | 3.072% | 3.703% |
| 2020 | -3.836% | 0.165% | -4.158% | -3.513% |
| 2021 | -1.701% | 0.166% | -2.027% | -1.375% |
| 2022 | 6.406% | 0.168% | 6.077% | 6.735% |
| 2023 | 5.962% | 0.165% | 5.638% | 6.286% |
| 2024 | 4.229% | 0.168% | 3.900% | 4.559% |
StreetEasy is an assumed name of Zillow, Inc. which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy Concierge team members are real estate licensees, however they are not your agents or providing real estate brokerage services on your behalf. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property.
