FARE ACT: A Tenant Is More Likely To Be Bitten By A New Yorker Than A Shark

June 10, 2025
  • The FARE Act Will Not Result In Much, If Any, Financial Savings For Tenants
  • The Broker Fees Will Disappear As They Shift In The Form Of Higher Rents
  • The New Law Will Probably Clean Up The Rental Process Including “Key Fees”

It’s the 50th Anniversary Of The Movie, Jaws (h/t to BR) so its fitting that the FARE Act (Fairness in Apartment Rental Expenses) goes into effect today. The law faced vigorous and still ongoing opposition from the real estate industry, including the Real Estate Board of New York (REBNY), a trade group. The law shifts the responsibility of brokerage fees from the tenants to the landlords in New York City, but it really doesn’t save tenants money (more on that later). I do find that lawmakers who write bills like this that try to tackle the high cost of housing are armed with the best intentions. These laws are championed with great fanfare, but they seem to fall short of understanding basic economics. The idea that tenants are going to save thousands of dollars in fees is simply false because the tenants are going to pay higher rents. The new law shifts the responsibility of who pays the real estate agents around a bit and that will make rents rise as landlords look to recoup the new brokerage fees they will pay. Landlords are not going to eat the brokerage fee costs.

NYC’s FAQ

The FARE act (great acronym by the way) says this:

Click the above image to access a thorough FAQ on the new law.

This law probably better organizes the rental process because it lays out who pays what and will reduce the abuse of things like “key fees,” and other erroneous surplus charges that are the stuff of nightmares.

REBNY’s FAQ

Tenant Expectations Disconnected From The FARE Act

The headlines touted the passage of the FARE act, which mainly looked like this Realtor.com screamer: New Law Could Save New Yorkers Thousands of Dollars in Rental Fees. Unfortunately, I don’t think that is going to be the experience of most tenants with the new law.

Unless a tenant hires a broker specifically to find them an apartment, the tenant will not pay a real estate broker/agent; the idea touted in the headlines is that the tenant doesn’t have to pay a commission to get an apartment, so they save all that money. 

Here’s the reality. Landlords will need to raise their rents to pay the real estate agents who rent out their apartments. Apartments typically don’t rent themselves.

The Shark Is In The Data

I plan to track the change in rents very closely and I suspect we will see the impact of the FARE Act appear quickly in the data. From past experience, we saw a spike in rental listings the month after the update to the Airbnb law passed. I expect to see a quick jump in rents paid on top of the seasonal uptick we are experiencing right now. The FARE Act represents a shift or clarification in who pays the real estate agents, not a notable savings in the actual cost to the tenant.

Final Thoughts

I grew up in Rehoboth Beach, Delaware (to the unfamiliar, it is Hamptons of Washington DC and to those unfamiliar with the Hamptons, please go visit both). I saw the Jaws movie in Rehoboth just blocks off the beach. Admittedly the movie terrified me as a young teenager and took a little bit of the joy away from me when it came to swimming in the Atlantic Ocean. Fifty years later when we go visit Rehoboth later this summer, I will still have passing thoughts about that movie when I go for a swim. That shark is still renting a place in my mind.

Back to rentals. There are a lot of details in the FARE act that I am not going into here as I am more focused on the economic impact. Clarification of who pays what is a good thing for the market. However, this new law echoes the Tariff Tantrums coming out of Washington in the context of who pays what. The current administration thinks someone else (the country of origin) pays the tariffs, and the American consumer pays nothing – which is incorrect. New York City lawmakers think someone else pays the broker fees for rentals, and the tenants save a lot of money. This is incorrect. Apartments don’t rent themselves, and the brokers and agents will get paid for their services, but it will come from the landlord, who will pass that cost along to the tenants in the rent. Landlords will not absorb the additional cost so the tenants are still paying for the brokerage fees, just indirectly.

The Actual Final Thought – Shifting broker fees onto landlords ignores the fact tenants will get bitten by higher rents but probably net out the same cost. It’s like what we experienced after seeing the movie Jaws, yet there are “statistics showing that in the US a human is more likely to be bitten by a New Yorker than a shark.”

Here’s My Podcast: What It Means

Here are all the podcast feeds for all the “What It Means with Jonathan Miller (WIM).”

Apple (within the Douglas Elliman feed)   Soundcloud  Youtube

Podcasts That Capture My Attention

I listen to a lot of podcasts. So, I thought I’d try sharing what I listen to every Wednesday or as close to the middle of the week as I can get. Some of my recommendations have nothing to do with the economy or the housing market but hint at how to research or break down complex problems.

The Journal.

The Journal. – Inside ICE’s Aggressive Approach to Arresting Migrants

  • I’ve been listening to this no-nonsense WSJ news podcast since their creator Gimlet Media was launched.

Central Bank Central – Blitz Downplays Recession Risk, Sees Rising Inflation as More Lasting Problem

  • I’ve been on Kathleen’s podcast a few times. Her years of experience as a TV anchor have enabled her to know every economist on the planet. I love getting their expert takes in this highly volatile economic period.

Did you miss the previous Housing Notes?

June 8, 2025

Luxury Housing Is Poised For Better Times Than The Rest

Image: NYT

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