REBNY Takes Rental Broker Fee Fight To City Hall

The second battle for rental broker commissions is on. 

The Real Estate Board of New York has called for a rally outside City Hall on the day of a June 12 hearing on legislation that would upend rental agent commissions, according to a memo to its 10,000-plus residential broker members.

The bill, Intro 360, would require payment from whichever party hires an agent, as opposed to the current system, in which tenants often pay for the landlord’s agent.

The memo framed the event as a do-or-die effort to protect agents’ livelihoods, while increasing market transparency for consumers and tamping down costs. The group also pointed to 2019, when thousands of agents turned out at City Hall to protest a bill that would have capped rental commissions at one month’s rent. The measure was shelved.

“Five years ago, thousands of agents showed up to City Hall to push back against similar legislation impacting broker commissions,” reads an email blast sent to REBNY members. “This year, we must do the same.”

The showdown comes with the brokerage industry already reeling from a landmark verdict in an antitrust case that forced the decoupling of sell-side and buy-side commissions.

The saga around the City Council’s broker-fee bill started about a year ago, shortly before it was first introduced by Council Member Chi Ossé. REBNY beat Ossé to the punch by starting an email campaign against his legislation three days before it was released.

Defeating Ossé’s bill has become a litmus test for REBNY’s lobbying efficacy. The trade group suffered a string of policy defeats in the past five years as public opinion shifted against real estate. The losses include Local Law 97 and rent stabilization reform in 2019 and the expiration of 421a in 2022, although the latter was replaced in the state budget passed this month.

It’s also a chance for REBNY to demonstrate its utility to residential agents, who often allege the lobbying group favors its commercial members.

It may be a sign of the times that REBNY isn’t coming to the table empty handed. The group plans to suggest to the Council other ways to increase transparency in rental deals, ideas which could include requiring the city’s Department of Housing Preservation and Development to create and update guidance explaining to tenants that commissions are negotiable.

“I think it’s very important that when you’re working with an agent, you know what your rights are, and right now, that may not be fundamentally or appropriately transparent,” said Ryan Monell, vice president of government affairs at REBNY.

The trade group scored a victory last year when Ossé’s first bill failed to get a hearing, although the circumstances surrounding that denial have been disputed. It was originally reported that former Bronx Council Member Marjorie Velazquez, who chaired the committee overseeing the bill, refused to hold a hearing out of loyalty to REBNY, which she denied to Crain’s.

In what might be further evidence of REBNY’s waning influence, Velazquez lost her bid for re-election last year, and her successor as chair of the Council’s Committee on Consumer and Worker Protection, Julie Menin, has opted for a hearing on  Ossé’s bill.

The two sides went back and forth later that summer after Ossé’s office got its hands on a REBNY memo and “corrected” its talking points.

REBNY contends that undoing the status quo will be bad for agents and consumers, arguing landlords will pass the cost of commissions onto tenants by raising rents or not use agents, which could reduce listings on sites like StreetEasy.

Ossé, who used an agent to find his current apartment, maintains his bill won’t have any negative economic consequences. He says landlords already charge as much as the market will bear, and that tenants may prefer to pay the cost of a commission in the form of higher rent rather than upfront.

He also says landlords will be incentivized to renew leases rather than push out tenants and relist a unit and incur the cost of a commission if his proposal were adopted. However, the state’s new good cause eviction law effectively requires landlords in the city to renew leases of tenants who are paying their rent.