The FARE Act: What’s Changing on June 11, 2025

On June 11, 2025, New York City’s rental market will undergo a significant transformation with implementing the Fairness in Apartment Rental Expenses (FARE) Act. Passed by the City Council on November 13, 2024, with a veto-proof majority of 42 out of 51 votes, the FARE Act aims to make renting more affordable and transparent by shifting the responsibility of broker fees from tenants to landlords. This landmark legislation became law after Mayor Eric Adams neither signed nor vetoed it within the allotted 30-day period. As the effective date nears, the FARE Act is set to reshape the rental landscape in one of the world’s most competitive housing markets.

What Is the FARE Act?

The FARE Act addresses a long-standing issue in NYC’s rental market: high upfront costs for tenants, particularly broker fees. Historically, renters are often required to pay broker fees, typically 10% to 15% of the annual rent, even when the landlord hired the broker. A $4,000/month apartment could mean $4,800 to $7,200 upfront, in addition to the first month’s rent, security deposit, and other fees. According to StreetEasy, the average upfront cost to move into a rental in 2024 was $12,951, with broker fees making up a significant share.

The FARE Act changes this by requiring the party who hires the broker, usually the landlord, to pay the broker’s fee. This applies when brokers represent landlords or advertise listings on their behalf. The law also mandates full fee disclosure in all listings and lease agreements, ensuring greater transparency. Additionally, it establishes a rebuttable presumption that any broker advertising a unit is working for the landlord, further protecting tenants from unjustified charges.

When Does It Take Effect?

The law takes effect on June 11, 2025, 180 days after it became law on December 13, 2024. It applies to all new lease agreements signed on or after that date. Lease renewals signed before June 11 may still follow previous practices.

However, there is ongoing legal uncertainty. In December 2024, the Real Estate Board of New York (REBNY) and several brokerages filed a federal lawsuit to block the law, arguing that it violates state law and brokers’ First Amendment rights. While two legal experts say the suit is unlikely to succeed, stakeholders should monitor the litigation for potential developments.

Impact on Renters

The FARE Act is a game-changer for renters. The law significantly reduces upfront costs by eliminating broker fees when the broker works for the landlord. StreetEasy estimates that the average cost to sign a lease for rentals with broker fees will fall by 41.8%, from $12,951 to approximately $7,537. This shift could make moving more accessible, particularly for lower and middle-income renters.

The Act also curbs bidding wars over broker fees and ensures renters only pay fees when they explicitly hire a broker to represent their interests. Renters are advised to save listings and communication records in case of violations and to report improper charges to the Department of Consumer and Worker Protection (DCWP) via 311.

Impact on Landlords

The FARE Act introduces new financial and operational considerations for landlords. Those who hire brokers must now absorb the cost, which may range from one month’s rent to 15% of the annual rent. This could be especially impactful for smaller landlords who previously relied on tenants to bear these costs.

Critics argue landlords might raise rents to compensate. However, StreetEasy’s 2012 to 2024 rental data analysis found that no-fee units experienced a lower average rent increase (4.2% annually) than units with tenant-paid broker fees (6.1%). Furthermore, nearly half of NYC’s housing stock is rent-stabilized, which often limits rent increases. Landlords are encouraged to budget accordingly and ensure complete fee disclosures to avoid fines ranging from $500 to $2,000 per violation.

Impact on Brokers

The law redefines broker roles in NYC. Brokers hired by landlords can no longer collect fees from tenants and must negotiate payment directly with property owners. This could reshape broker incentives and business models, particularly in neighborhoods where 47% of rentals in 2024 involved tenant-paid broker fees.

However, brokers who work for renters helping with apartment searches, paperwork, or negotiations can still charge fees, provided those services are disclosed. The law’s transparency requirements could help brokers better connect with renters who value and seek their services. Non-compliance risks fines and possible license penalties from the Department of State.

Market-Wide Implications

The FARE Act brings NYC closer to other major cities like San Francisco and Los Angeles, where landlords typically pay broker fees. In Boston, landlords often split or cover fees. Reducing upfront costs could unlock renter mobility and improve market fluidity, potentially leading to faster lease-ups and better landlord-tenant matches.

However, the transition may come with growing pains. Landlords may look for new ways to offset expenses, including bundling fees into higher rent. Yet in a softening rental market, not all landlords will have the pricing power to do so, which could put downward pressure on rents or incentivize more competitive pricing.

Looking Ahead

As June 11 approaches, renters, landlords, and brokers should start preparing now:

• Renters: Know your rights and report improper fees.
• Landlords: Review lease templates and update your marketing approach.
• Brokers: Rethink your fee structure and client relationships.

While REBNY’s lawsuit introduces some uncertainty, the law has broad political support and remains on track. All signs suggest the FARE Act will bring more transparency and fairness to NYC rentals.

It will also be interesting to see how the law affects rental pricing. Some landlords may attempt to fold broker fees into monthly rent, particularly in high-demand areas. However, this strategy may not work in a competitive or softening market, where renters are more price-sensitive and have greater choice.

The FARE Act is a bold step toward affordability and fairness in NYC’s rental market. Its success will ultimately depend on how well renters, landlords, and brokers adapt to the new landscape.