Does the FARE Act hurt Brooklyn landlords financially?

Not if understood correctly. A landlord with an apartment renting for $5,000 per month who reprices to $5,500 to offset the broker fee they now pay will collect approximately $215,925 over three years after subtracting the $9,000 broker fee. Under the old system collecting $5,000 per month with the same annual increase rate, the same landlord would have collected $196,289. The FARE Act, for a landlord who understands it, is not a burden. It is a restructuring that favors patient, well-advised property owners. The longer the tenant stays, the better the math gets.

Should Brooklyn landlords self-manage their rentals to avoid the broker fee?

Rarely. A segment of landlords responded to the FARE Act by deciding to rent their apartments themselves and avoid the fee entirely. Many have discovered that pricing, marketing, showing, screening, and negotiating a lease is more time-consuming and consequential than it looks. One bad tenant costs far more than one broker fee in lost rent, legal fees, repairs, and vacancy. The rent achieved on day one is the number everything else compounds from. A broker who knows the market and generates real competition among qualified applicants will get a higher starting rent than most landlords achieve on their own.

Is the broker fee tax deductible for landlords under the FARE Act?

Yes. The broker fee is now tax deductible as a business expense for landlords in a way it previously was not, since tenants were the ones paying it before the FARE Act took effect. Worth discussing with your accountant.

The FARE Act, One Year Later: What Landlords Need to Know

The FARE Act changed who pays rental broker fees.

The market's response was more interesting than anyone predicted.

Everyone had a prediction when the FARE Act passed. Rents would spike. Landlords would self-manage. The broker would become extinct. Tenants would finally catch a break. A year in, the reality is more nuanced than any of those takes, and considerably more interesting.

Here is what actually happened, and what it means if you own rental property in Brooklyn.

What The Law Actually Says

The Fairness in Apartment Rental Expenses Act took effect on June 11, 2025. The core principle is straightforward: whoever hires the broker pays the broker. If a landlord engages an agent to market and lease their apartment, the landlord pays the fee. Tenants cannot be required to pay a broker they did not hire.

Before the law, the standard practice in New York City was for landlords to hire a broker, then pass that fee to the incoming tenant, typically 12 to 15% of the annual rent. On a $5,000 per month apartment, that meant a tenant arriving at lease signing with $9,000 in broker fees on top of first month's rent and a security deposit. The total move-in cost for a $5,000 apartment could easily exceed $19,000.

The FARE Act ended that. The fee still exists. It just moved around a bit.

How Rents Responded

The prediction that rents would spike immediately turned out to be true and then somewhat overstated. There was an initial adjustment as landlords repriced to offset the new cost. Brooklyn median rent reached $3,850 in October 2025, roughly 7% higher year over year, with two-bedroom apartments seeing the steepest increases.

Then things stabilized to some degree. Not because landlords stopped trying to recover the fee, but because the market found its level. Demand remained strong, well-priced apartments kept moving, and the rental market did what the rental market in New York City always does: it kept going up.

The Math That Nobody Is Talking About

Here is where it gets interesting, and where most coverage of the FARE Act has missed the real story.

Before the FARE Act, consider a landlord with an apartment renting for $5,000 per month. The tenant paid a $9,000 broker fee at move-in, which is the standard 15% of one year’s rent. The landlord typically paid nothing. New York City's standard for reasonable rent increases on free-market apartments, currently set at 8.79% and adjusted annually based on regional inflation, is the benchmark most market-rate landlords use for renewals. Applying that rate over three years, the landlord collected $196,289.

After the FARE Act, that same landlord reprices the apartment to $5,500 to offset the broker fee they now pay. The tenant pays nothing at move-in beyond first month and security. The landlord pays the $9,000 broker fee once, upfront.

Now follow the money. At $5,500 per month in year one, $5,984 in year two, and $6,510 in year three, the landlord collects $215,925 over the same three year period. Subtract the $9,000 broker fee and the net is $206,925.

That is $10,636 more than the pre-FARE scenario, on the same apartment, with the same tenant, over the same three years.

The broker fee didn't disappear. It was simply amortized across the tenancy, and the landlord keeps the upside. The longer the tenant stays, the better the math gets. The FARE Act, for a landlord who understands it, is not a burden. It is a restructuring that favors patient, well-advised property owners.

What This Means For Tenants

The financial burden didn't disappear for tenants either. It shifted. Instead of a large lump sum on day one, tenants are paying a higher monthly rent over time. For someone who moves every year or two, the calculus may actually favor the post-FARE world. For someone who stays five years, they may end up paying more in total than they would have under the old system.

The FARE Act is better for mobile renters and better for landlords with long-term tenants. It is most complicated for renters who stay put in market-rate apartments where annual increases compound from a higher starting point.

What Landlords Should Be Doing

The landlords navigating this well are the ones who understood from the start that the FARE Act was a pricing and strategy question, not a catastrophe. A few things worth knowing:

Pricing matters more now, not less. The broker fee is a real upfront cost, and the way to recover it is through correct initial pricing and strong tenant retention. An overpriced apartment that sits vacant for six weeks costs more than the broker fee ever would.

Tenant quality is worth more than it used to be. A reliable tenant who renews is a landlord's best financial outcome in a post-FARE world. Every vacancy means paying the broker fee again. Screening carefully and treating good tenants well is not just good practice. It is good economics.

Self-managing the rental process is rarely the answer. A segment of landlords responded to the FARE Act by deciding to rent their apartments themselves and avoid the fee entirely. Many have discovered that pricing, marketing, showing, screening, and negotiating a lease is more time-consuming and consequential than it looks from the outside. One bad tenant costs far more than one broker fee.

The broker fee is now tax deductible as a business expense for landlords in a way it previously wasn't, since tenants were the ones paying it. Worth discussing with your accountant.

Hiring The Right Broker Makes You More Money

The broker fee is not an expense. It is an investment with a measurable return.

The rent you achieve on day one is the number everything else compounds from. A broker who knows the market, knows how to present your property, and knows how to generate real competition among qualified applicants will get you a higher starting rent than you would achieve on your own. Over a two or three year tenancy, that difference adds up to far more than the fee ever cost.

The same logic applies to tenant quality. A rigorous screening process, credit history, income verification, employment stability, prior landlord references, is the difference between a tenant who pays on time, treats the apartment well, and renews, and one who does not. The cost of one bad tenant, in lost rent, legal fees, repairs, and vacancy, dwarfs any broker fee.

After fifteen years renting apartments across Park Slope, Prospect Heights, Crown Heights, Bed-Stuy, Cobble Hill, and Windsor Terrace, I know what these apartments are worth, what qualified tenants look like, and how to get both sides of that equation right. I handle pricing, professional photography, marketing, showings, screening, lease negotiation, and move-in logistics from start to finish.

The landlords I work with don't think of the broker fee as a cost of doing business. They think of it as the reason their investment keeps performing.

Bedroom at 58 St Marks Place Boerum Hill Condo

Where Things Stand Now

The FARE Act has been in effect long enough to draw some conclusions. The market stabilized after an initial period of adjustment. Rents are higher in many buildings, but demand has absorbed the increase. Landlords who understood the math and repositioned their pricing are doing well. Those who didn't are still figuring it out.

REBNY's legal challenge to the law was rejected at the lower court level and remains on appeal, but the law is fully in effect and enforceable today. There is no indication that will change in the near term.

The rental market in Brooklyn remains one of the strongest in the country. The FARE Act changed the structure of how costs are distributed. It did not change the underlying demand that makes owning rental property here worth doing in the first place.

The FARE Act, One Year Later: What Brooklyn Landlords Need to Know

The FARE Act changed who pays rental broker fees.