Landlord and Tenant Savings Amid Rent Trends
Tenants in New York City are enjoying significant savings on broker fees, even though landlords are pushing for higher rents. However, experts in real estate caution that these financial benefits may not last.
Since the implementation of apartment fairness on June 11, renters have saved an average of about $1,300 thanks to the ban on broker fees, as reported by Tenant Review Platform Openigloo.
While urban rents have increased modestly this summer compared to last year, many landlords have incorporated these fees into monthly rent charges. Allia Mohamed, CEO of Openigloo, highlights this trend.
Landlords previously absorbed broker costs that typically required tenants to pay 8% to 15% of their annual rent, according to Mohamed. She adds that there have been concerns and warnings regarding the fare law, stating that while rents have gone up, increases have not been as high as many feared.
Typically, rents rise by about 8% during the summer.
However, some brokers, like Kelyan Sanai from Douglas Elliman, believe that the current savings might be short-lived. “Right now, rents are up by over 6%, and that’s just for this year,” he said, suggesting that tenants will indeed end up paying more over time.
Sanai also points out that even if renters are saving now, base rents are rising, meaning any savings might disappear in subsequent years. Reports indicate that clients are facing rent increases of around 10%.
As for the costs of one-bedroom apartments in Gotham, the average market rate jumped 14.6% from $3,600 in the spring to around $4,125 since June 11, according to Openigloo.
Particularly in trendy neighborhoods like Soho and the West Village, rent increases have been more pronounced, Mohamed noted.
Kenny Lee, a senior economist at StreetEasy, mentions that while tenants are enjoying some savings, other market factors are complicating affordability. The rental market is becoming more competitive, especially as many buyers are opting to rent amidst rising mortgage rates.
In Manhattan, rental inventory has been declining for over a year and a half, driven in part by rising rents. There has been a modest increase in rental options in areas like Long Island City and Crown Heights, as landlords hesitate to raise rents.
According to real estate sources, there’s a scarcity of available apartments in many desirable locations. Mohamed explains that the fare law has incentivized landlords to retain tenants, but some neighborhoods remain particularly tight on inventory.
In Soho, for instance, there are only 84 rentals available, compared to over 150 previously.
As people actively search for housing, some are even willing to pay a broker’s fee now for assistance.
Lee advises that tenants should remain patient to reap the long-term benefits of the fare law. “The housing cycle takes time,” he remarked, adding that there’s hope the law, combined with an increase in housing supply, could lead to a more accessible market in the future.
