Tenants in Big Cities Could Save Thousands if “Broker Fee” Reform Passes

On The Market

BiggerPockets

Investing, News, Education, Business

4.8 • 858 Ratings

🗓️ 19 August 2024

⏱️ 21 minutes

🔗️ Recording | iTunes | RSS

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Summary

New “broker fee” reform could help tenants save thousands of dollars when finding their next apartment or home to rent, but it could come at a significant cost to landlords. In big cities like Boston and New York, it’s not unusual for landlords to hire a broker to help bring in more potential tenants. The problem is that, unlike the rest of the United States, landlords in these cities DON’T have to pay the broker—the tenant does. But this isn’t some small fee. These broker fees range from eight to fifteen percent of the annual rent, and in pricey Boston or New York City, that could mean thousands of dollars in fees to move into a new place. We brought on StreetEasy Senior Economist Kenny Lee to explain why this antiquated system is still in place and whether or not the reform will go through and help renters. What are the economic implications for the rental market if these reforms are passed? Will this help renters, landlords, or both, and could it actually increase competition in already competitive markets by lowering the barrier to entry for finding a new rental? In This Episode We Cover Boston and NYC’s “broker fees” explained and why they’re so different from the rest of the US How the broker fee reform could change the rental market in big cities The cost of moving and how high broker fees restrict renters who are already struggling What broker fee reform could do to rental property demand in these big cities Broker fee negotiation and what the future looks like for landlords who have to pay these finder’s fees And So Much More! Links from the Show Join the Future of Real Estate Investing with Fundrise Join BiggerPockets for FREE Find an Investor-Friendly Agent in Your Area See Dave at BPCON2024 in Cancun! Dave's BiggerPockets Profile New York City’s Real Estate Brokerages Could Be Destroyed By a New Law Connect with Kenny Grab Dave’s Newest Book, “Start with Strategy” Jump to topic: (00:00) Intro (02:22) Tenants Forced to Pay Fees (05:18) Why in NYC? (08:47) New Reform to Help Renters (12:09) Will This Change the Rental Market? (15:16) Better for Everyone? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-244 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	A lot has been made recently about the cost of rent right now. And for good reason, because
0:05.9	rental affordability is a very serious issue. There's more rent burdened people, which is defined
0:11.9	as people who spend more than 30% of their income on a rent than there have been in recent years.
0:18.7	And often we talk about some commonly acknowledged sources like the cost of building or
0:24.4	under supply of housing.
0:26.9	But today we're going to look at an example of Boston and New York City and how certain
0:33.0	legislation and frankly some antiquated policy are also contributing to rising rental costs.
0:44.7	Hey guys, it's Dave. Welcome to On the Market. Today, I'm here with economist Kenny Lee.
0:50.9	Kenny and I are talking about two bills that are currently on the table in New York and Boston that would reverse a antiquated law that requires tenants to pay some fees to landlords when they're moving.
1:06.1	And I'm bringing Kenny on because I think this highlights how complex a situation affordability is, right?
1:11.3	Like it's easy to point and say, landlords are being greedy or, you know, there's not
1:16.2	enough construction or public policy, you know, there's too much regulation on zoning.
1:20.7	But there are all these other things that are contributing to this complex problem.
1:24.9	And today with Kenny, we're going to dig into one that may not
1:28.2	exist in your particular market. This is mostly in New York and Boston, but I think just showcases
1:33.2	how we can start cleaning things up to make rent more affordable and to make the entire housing
1:40.3	industry work maybe a little bit more efficiently. So in this episode, we're going to talk
1:45.3	about why New York and Boston are the only two holdouts on this one particular issue that we're
1:50.6	going to talk about, this difference between fee and no fee markets and how these two bills
1:56.2	could affect market dynamics and pricing for rent in these big major metro areas.
2:03.3	And if you're thinking, I don't invest in New York and Boston, this doesn't apply to me.
2:06.8	I hear you.
	...

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