Can NYC’s Broker Fee Reform Withstand Legal Pushback?

Thursday, May 8, 2025

• Agents of chaos: New York City regulators are in a legal battle with the real estate industry over a new law that forces landlords to pay for residential listing brokers.

• Adiós, Miami: Trump’s tough immigration policy and changes to the FHA lending have already started to put a damper on Miami home sales.

• Bargain shopper: Brookfield has amassed an impressive war chest for their goal of buying distressed properties at significant discounts.

• Multifamily outlook webinar: Join us May 20th to learn how data and tech are helping multifamily leaders adapt to tighter margins and rising renter demands. Sign up

Editor’s Pick

Can NYC’s Broker Fee Reform Withstand Legal Pushback?

As New York City prepares to implement the Fairness in Apartment Rental Expenses (FARE) Act, a legal challenge may halt enforcement before the law takes effect next month. The new law, passed by the City Council in November, changes who pays broker fees, shifting the cost burden on landlords who hire the brokers rather than tenants.

The Real Estate Board of New York (REBNY), joined by other industry groups, sued in December to block the law, claiming it violates constitutional protections around private contracts and commercial speech. They argue the rule could backfire, raising rents, cutting into apartment listings, and upending the brokerage business model. In a recent court hearing, the industry groups asked U.S. District Judge Ronnie Abrams to block enforcement while the case proceeds. The judge hasn’t said when she will reach a decision.

Tenant advocates see the law as a long-overdue course correction. StreetEasy data shows tenants in fee-based brokerage contracts paid nearly $13,000 in upfront costs last year. With more than half of NYC renters spending over 30% of their income on housing, advocates say the fees have become an unjust barrier to housing mobility.

New York remains one of the few major U.S. cities where tenants routinely foot the bill for a landlord’s broker. The FARE Act aims to end that, requiring the hiring party to pay and mandating clear, upfront disclosure of all fees. Violators could face fines ranging from $750 to $2,000.

Industry insiders warn that landlords may simply pass broker costs into monthly rents. Brokers, meanwhile, say the bill paints them as villains in a market they help facilitate, and fear losing business under the new rules. Some critics have also dismissed the law as political theater.

Still, support for the new rule is strong in some high places. Governor Kathy Hochul and Attorney General Letitia James back the FARE Act, calling it a necessary step toward fairness in a city where finding a rental can be a difficult, nerve wracking process. If the law survives the legal challenge it will reveal that the real estate industry does not have the political capital that it once had in New York City.

Overheard

Miami’s Housing Market Takes A Hit Amid Deportation Fears

Once buoyed by foreign investment, Miami's housing market is faltering under the weight of political uncertainty. The Trump administration’s immigration crackdown, coupled with Florida’s own enforcement policies, is chilling demand from foreign buyers and renters. Home sales have plunged over 17% in Miami, far outpacing national declines, while rental prices are slipping as landlords become more wary of non-citizen tenants.

Agents report that many international clients are backing out of deals or divesting entirely, while legal service providers are seeing a drop in demand for investor visas. The federal government’s new restrictions on FHA loans for non-citizens compound the issue, locking out first-time buyers with temporary status. As immigration becomes a political flashpoint once again, Miami, a city built on global movement, finds itself caught in the crossfire.

Irvine Company Wants to Replace Its Orange County, CA Golf Course With 3,100 Homes

To help meet Orange County, California’s growing housing needs, the Irvine Company has proposed replacing its Oak Creek Golf Course with a new residential village featuring 1,500 single-family homes and 1,600 apartment units on adjacent office-zoned land. The 235-acre project, located near the Irvine Spectrum, would also include a new school, parks, traffic improvements, and lifestyle amenities, with the developer footing the bill for many public benefits. In exchange, Irvine would receive up to $96 million in fees and 2,000 discounted rent vouchers valued at $72 million to support affordable housing. City officials will begin reviewing the plan, starting with a public meeting on May 13.

The proposal comes as Irvine faces mounting pressure to add housing, especially rentals, amid skyrocketing demand and limited developable land. The city, which saw the fastest population growth among major U.S. cities over the past decade, now ranks among the least affordable. The Irvine Company has already begun redeveloping office and retail sites into apartments and homes, following a national trend of converting underused golf courses. Oak Creek, an expensive, private course rarely used by locals, is part of that shift. To offset the loss of green space, the company plans to donate nearby avocado groves to expand a nature preserve and repurpose the clubhouse into a community center for the new neighborhood.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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