Key takeaways:

• The FARE Act is expected to lower the average upfront cost for rentals currently charging a broker fee by 41.8%, from $12,942 to $7,537.
• Rent increases for properties dropping broker fees before the FARE Act have been broadly in line with market trends so far, suggesting property managers will continue to absorb much of the additional cost, as they have in the past.
• The FARE Act is unlikely to alter how property managers set asking rents based on market demand. Asking rents are primarily driven by market conditions, rather than solely by property managers’ costs.
• A large share of property managers will continue to work with rental brokers. Even during the pandemic in 2021, 80.3% of rentals that did not charge the tenant a broker fee were represented by agents. This year, a still substantial 56.9% of all no-fee rentals were represented by agents.

1. The FARE Act will substantially lower upfront costs when signing a lease

The Fairness in Apartment Rental Expenses (FARE) Act — expected to take effect June 11 — requires that a rental broker in New York City be paid by the hiring party, and that property managers or their brokers disclose and advertise any fees a tenant must pay in their rental listings and rental agreements. The new law preserves renters’ choice to hire an agent directly to represent them, in which case they would pay a broker fee for the agent’s services.  

The total upfront cost to sign a rental lease, including a broker fee, averaged $12,942 between January and April of this year, equivalent to 17% of the city’s median household income of $76,577, according to the U.S. Census Bureau’s most recent (2023) American Community Survey. This high burden has made it increasingly difficult for New Yorkers to find their next home. 

The broker fee, typically about 12% of the annual rent, is often the most substantial upfront cost. Once the FARE Act takes effect, the average upfront cost for rentals currently charging a broker fee will fall by 41.8% to $7,537. While property managers are allowed to charge other miscellaneous fees, the new law will ensure that renters clearly understand any fees they will be asked to pay — with no surprises later on.

The FARE Act is a significant step toward a more equitable and transparent rental market. Lowering the financial barrier to moving will increase housing options for all New Yorkers and help locked-in renters find their next home, whether it’s to be closer to their workplace, accommodate a growing family, or even pay less in monthly rent. 

2. The expected rent increases won’t be far beyond broader market trends

The share of no-fee rentals has already been rising as new developments, which do not charge broker fees because leasing is handled in-house, continue to fill a large hole in the city’s rental inventory. For the most part, other property managers have been waiting until the law takes effect on June 11 before they comply, relisting only 5.6% of units in April without a fee.

Despite the slow transition to the new norm, the properties forgoing a broker fee ahead of the FARE Act’s implementation did not increase rents beyond the broader market trend. The average annual growth in asking rents of the properties that dropped a broker fee was 5.3% in April, slightly above the 4.6% growth for the rest of the market in which broker fees remained in place. 

The small difference compared to the rest of the market indicates that property managers switching to no-fee rentals have been absorbing much of the additional cost incurred by bringing leasing activity in-house or covering rental brokers’ commissions directly. In January through April this year, 56.9% of the no-fee rentals were still represented by rental agents instead of property managers. Had property managers fully passed the broker fee, typically about 12% of the annual rent, onto tenants as a higher base rent, the annual increases for the properties that switched to no-fee rentals would have been 10.3% on average in April — nearly double the actual average growth in asking rents for properties switching to no-fee.

3. Property managers will likely absorb much of the additional cost, as they have in the past

Ultimately, market conditions — not property manager expenses — drive rents. After the FARE Act takes effect, property managers switching to no-fee rentals will continue to absorb much of the additional cost related to in-house leasing or directly compensating rental brokers, as they have in the past. 

While no-fee rentals tend to be pricier than rentals with a broker fee, the premium that property managers can charge has been much smaller than the 12-15% rate that tenants would have paid. Our recent analysis indicates that after accounting for location, size, and amenities, no-fee rentals were more expensive than similar units by 4.2% on average in 2024. 

Low vacancy rates amid steady renter demand favor property managers as the FARE Act is poised to take effect. While inventory has been increasing gradually, there’s still a big hole to fill. As a result, rent is still rising faster than its average growth pace before the pandemic. In April, the StreetEasy Rent Index was up 4.5% year-over-year, compared to 2.0% on average for the month of April in 2015 through 2019.

When market conditions were challenging for property managers, no-fee rentals were cheaper than units that charged the tenant a fee, pointing to the property managers’ ability to take on additional costs. During the pandemic, the no-fee premium collapsed to -3.8% in 2020 as property managers absorbed the cost of working with a broker to attract renters. While it recovered to -1.7% in 2021, it remained negative, with 75.8% of the inventory being no-fee. 

When rental demand came roaring back in 2022, the no-fee premium jumped to 6.4%. By then, the share of no-fee rentals had dropped to 49.8%, allowing property managers to charge more for no-fee rentals. The cyclicality of the no-fee premium indicates the property managers’ ability to change prices is limited by prevailing market conditions — especially when soaring rent burdens since the pandemic have made New Yorkers even more price-sensitive than usual. The FARE Act won’t change the way property managers set asking rents in response to demand.

4. Rental brokers will continue to provide valuable services for property managers

Rental brokers offer highly valued services for property managers, such as marketing the property to the broadest audience possible and facilitating tours with prospective renters. For many property managers, the services brokers provide are essential, and they continued to work with brokers even during the pandemic. In 2021, a substantial 80.3% of all listings that did not charge tenants a broker fee were still represented by agents rather than property managers. 

Contrary to concerns in the industry, many property managers will continue to work with rental brokers. Between January and April this year, 56.9% of no-fee listings were represented by agents. 

The FARE Act does not affect the value of rental agents’ work. Instead, it will minimize confusion among renters and agents regarding broker fees and who is responsible for paying them, creating much-needed clarity. In addition, renters can still hire agents to represent them for a fee, providing an opportunity for agents to grow their own businesses.

Disclosing all fees upfront will help renters quickly understand what they can and can’t afford, making it easier for agents and property managers to connect with qualified prospective tenants. Ultimately, the FARE Act will help all New Yorkers see a more transparent, affordable, and efficient rental 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, 2024. 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:

• Strengthening the enforcement of fair housing laws, as well as allocating resources to increase industry and renter education and outreach. This would ensure property owners understand their responsibilities and renters 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.

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 April 2025 and charged a broker fee to get $12,942. 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 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. Please see the methodology section in our recent report for additional details.

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