Broker Fees And Security Deposits Could Be Capped With New Bills

NEW YORK — City Council lawmakers want to ease the hefty financial burden that often comes with finding a new apartment. A package of legislation introduced Wednesday would limit the prices of brokers' fees and security deposits, which can cost tenants thousands of dollars before they even move into a new place.

The set of five bills, introduced by Manhattan Council members Keith Powers and Carlina Rivera, would also let renters pay security deposits in installments, give landlords a deadline for returning them and set rules governing application fees.

"With this legislation, New Yorkers will not only be able to make more informed housing decisions, but tenants — particularly young and low-income tenants — will no longer have to pay thousands and thousands of dollars to build a home here," Powers, a Democrat, said in a statement.

Two of Powers' bills would cap the cost of brokers' fees and security deposits at one month's rent. While brokers' fees have historically cost that much, tenants sometimes have to pay up to 15 percent of the annual rent, the equivalent of almost two months of rent.

Security deposits for rent-stabilized apartments are already capped at a month's rent, which is also the typical cost for other homes. But Powers's office says the legislation would extend the protection throughout the city.

Low-wage renters often have to pay deposits twice or triple what their higher-income counterparts are charged, according to Powers's office. Other states and cities such as Seattle and Washington, D.C. have already placed limits on security deposits, the office said.

Under one of Rivera's bills, renters could pay their deposits in up to six monthly installments instead of forking over all the money up front. Another would require landlords to return the deposits within 60 days of the end of a lease.

A third bill of Rivera's would force brokers who charge applicant fees to itemize what they use the money for. The fees may cover the cost of credit checks or gathering other information, but brokers sometimes just pocket them, Powers's office said.

Housing advocates applauded the proposals as a vital protection for low-income tenants, whom they say pricey move-in fees disproportionately impact.

"Given the disparities in wealth, the difficulty to maintain a savings account, or the reality of working households living paycheck-to-paycheck, it is critical that we remove this barrier," Spencer Williams, the director of housing policy at the Association for Neighborhood and Housing Development, said in a statement.

But the president of the Real Estate Board of New York, an influential trade group, worries the legislation would "interfere with the way hardworking New Yorkers earn a living."

"Real estate agents rely on commissions to feed their families, they offer a valuable service for both renters and owners," John H. Banks said in a statement. "The decision to use a real estate agent is optional and the fees are negotiable."

(Lead image: An apartment building is seen in Chelsea in January 2018. Photo by Drew Angerer/Getty Images)