Navigating the NYC FARE Act: How To Adapt Leasing Without Broker Fees

On June 11, 2025, the FARE Act (Fairness in Apartment Rental Expenses) took effect, eliminating a $400+ million annual cost transfer from NYC landlords to tenants. Broker fees, typically 12-15% of annual rent, can no longer be passed to renters unless they hired the broker directly. For operators managing thousands of units, that's potentially millions in costs shifting from tenant-paid to owner-absorbed overnight.

This law marks a structural reset in NYC’s rental market, where two-thirds of households are renters and the average New Yorker moving to a new apartment spends nearly $13,000 in upfront costs. Broker fees are traditionally paid upfront by renters, and have served as a financial workaround for landlords, helping to offload leasing labor without impacting NOI. That cost shield is now gone.

For multifamily professionals, the message is clear: this isn’t just a policy change. It’s a shift in the economics and operations of leasing. The competitive edge will go to those who modernize quickly: those who see this as a catalyst for operational advantage.

What the FARE Act Actually Changes

The FARE Act introduces three immediate, enforceable shifts:

• No more tenant-paid broker fees (unless the tenant initiates the relationship).
• Transparent fee disclosure across all marketing and leasing materials.
• Enforcement by the Department of Consumer Protection, with fines starting at $750 and escalating to $2,000 for repeat violations.

Landlords are already reacting. Early market indicators suggest rent adjustments are beginning, with landlords feeling compelled to raise rents to offset broker fee costs, though comprehensive post-FARE pricing data won't be available until after full implementation. Others are cutting brokers out altogether, opting to handle leasing through in-house teams or word-of-mouth referrals.

Yet across the board, the FARE Act is forcing a reexamination of internal leasing infrastructure, especially for operators who leaned heavily on brokers to carry leasing performance.

What Broker Fees Were Really Covering

For many NYC operators, broker fees have been treated as a tenant burden, not an operational cost. But that framing masked a more complex truth.

Broker fees were outsourcing mechanisms.

By passing leasing duties off to external brokers, many properties sidestepped the need for internal leasing capacity. Brokers handled tours, follow-up, application management, and tenant screening. In exchange, operators avoided the overhead and renters picked up the tab.

Now, that external scaffolding has collapsed. And operators are left facing the true cost of leasing inefficiency:

• Missed leads due to delayed response times
• Poor conversion from lack of structured follow-up
• Prolonged vacancy due to uncoordinated showings

The removal of broker fees is changing who pays and revealing what wasn’t working to begin with.

FARE ACT Impacts by Asset Type

While the law is universal, the pressure points vary dramatically across asset classes:

• Class A Luxury: These buildings already offer high-touch, concierge-level leasing. For them, the cost shift is real, but the operational foundation is stronger. Many will internalize the broker role, retrain existing staff, or pass costs through subtle rent adjustments or amenity fees.
• Workforce Housing: Here, the margin for error is much smaller. These operators often rely on lean staff models and high unit turnover. The sudden addition of leasing labor and the removal of a cost pass-through can significantly pressure NOI. For this segment, automation and lead routing are no longer optional, they’re necessary for sustainability.
• Value-Add & Repositioning Assets: Timing is everything in a value-add strategy. Without brokers to smooth partial lease-ups or pre-leasing gaps, leasing must be tightly coordinated with construction. Operators may need to recalibrate underwriting timelines, increase marketing spend, or plan for longer stabilization.

Across all asset classes, one principle holds: the stronger your leasing operations, the smoother this transition will be.

The complexity deepens when you consider regulatory constraints. Forty-seven percent of homes for tenants in New York City are rent-stabilized, making it illegal for landlords to simply bake broker fees into rent. This means nearly half the market can't use the most obvious cost-recovery strategy, forcing operators to absorb costs or find operational efficiencies instead.

The Three Pillars of Operational Readiness

To adapt effectively, operators must invest in the three core areas of leasing modernization:

1. Leasing Labor

• Audit capacity: Who owns lead response, tour scheduling, and follow-up?
• Centralize or scale: Larger operators may invest in centralized leasing hubs; smaller ones may look to tech partnerships that replicate broker-like support.
• Automate the obvious: Speed-to-lead is critical. Automation can pre-qualify prospects, handle tour booking, and triage guest card volume.

2. Renter Experience

The broker was often the renter’s point of contact. Now that responsibility moves to the internal team. That means:

• Instant response expectations
• Mobile-first leasing flows
• Clear, simple communication around fees and availability

The properties that deliver fast, modern experiences will convert more leads and lose fewer prospects to competitors.

3. Marketing ROI

Without brokers fronting the cost of leasing, every marketing dollar counts. Operators must:

• Shift to performance-based lead sources
• Track conversion rates by channel, not just leads generated
• Integrate platforms (like Apartment List) that sync lead engagement and leasing performance in one place

Financial Impact & Portfolio Strategy

The disappearance of tenant-paid broker fees has clear implications for NOI, but the ripple effects go much deeper, touching everything from refinancing assumptions to long-term portfolio strategy.

NOI Sensitivity: Modeling the Hit

Let’s take a simple model:

• 100-unit Class A property
• 60% of leases broker-assisted
• $4,000/month average rent
• 15% broker fee

That’s $432,000/year in leasing fees, previously passed to the renter, now hitting the owner’s P&L if absorbed. For many buildings, this could amount to a 4-6% NOI hit, depending on their operating margins.

This is a direct margin compression that could delay stabilization, increase break-even occupancy thresholds, and shrink investor distributions or debt service buffers. While Class A properties may recoup some of that through higher rents or service fees, workforce portfolios will feel the margin squeeze much more acutely.

But the impact doesn't stop at individual property performance. When margin compression hits across multiple assets simultaneously, it forces a fundamental reassessment of portfolio-wide assumptions. The 4-6% NOI hit we modeled above becomes a portfolio-level recalibration when multiplied across dozens or hundreds of units. For institutional owners, it's about whether existing investment theses still hold, and how quickly operational changes can restore projected returns.

Investment Thesis Implications

For institutional asset managers, this change demands updated assumptions around:

• Leasing cost models
• Rent growth trajectories
• Stabilization timelines
• Exit cap rate positioning

Assets acquired under the assumption that brokers would remain an off-sheet line item may now fall short of projected yields unless operators act quickly to modernize leasing infrastructure.

If you’re underwriting deals in NYC or similar policy-prone markets, the days of modeling broker fees as renter-paid line items are likely over. They should be built into operating expenses, alongside technology, marketing, and team investment that make leasing efficient at scale.

Portfolio-Level Planning

For owners with multiple properties, or exposure across metro areas, the FARE Act offers a clear signal: build adaptable systems now. Geographic diversification may soften risk, but it won’t eliminate policy exposure.

• Operational centralization becomes more valuable, especially in managing leasing at scale across asset types.
• Leasing tech maturity should be assessed like any other core infrastructure, especially for portfolios seeking institutional capital or preparing for exit.

Leasing inefficiency is no longer just a cost center, it’s a valuation risk.

FARE Act Induced Competitive Dynamics: A Market Reset

This isn’t just a compliance issue, it’s a competitive reshuffling.

Operators Positioned to Win

• Have in-house leasing agents or centralized teams
• Use AI or automation to respond instantly and route leads effectively
• Rely on performance-based lead platforms like Apartment List with transparent ROI
• Benchmark funnel performance: lead-to-tour, tour-to-application, application-to-lease

These operators already run leasing like a system, not a series of one-off tasks. The FARE Act simply widens the gap between them and their peers.

Operators Most at Risk

• Rely heavily on third-party brokers to fill units
• Lack internal leasing accountability or CRM infrastructure
• Still operate with reactive, manual follow-up processes

This group faces the dual challenge of cost absorption and capability building. Without systems in place, they risk longer vacancies, higher churn, and a reputational hit in the renter market.

The First-Mover Advantage

Acting now isn’t just about being compliant, it’s about locking in a competitive lead:

• Attract top leasing talent seeking future-proof orgs
• Streamline operations before peak leasing seasons hit
• Position your brand as modern, transparent, and renter-first

Operators who test, refine, and scale their new leasing model now will be harder to catch later.

Your FARE ACT Roadmap: What to Do Now

This is both a moment to react and an opportunity to lead.

Next 30 Days

• Audit leasing touchpoints and team capacity
• Identify broker-dependency bottlenecks
• Model NOI scenarios with/without fee absorption
• Ensure full disclosure across all listings and lease docs

Next 90 Days

• Pilot new workflows: faster lead engagement, AI tools, streamlined applications
• Train leasing teams for speed, consistency, and full-funnel accountability
• Centralize lead management to remove gaps in follow-up

Next 6–12 Months

• Build scalable systems across your portfolio
• Benchmark lead-to-lease metrics by property type
• Recast your leasing org as a driver of NOI and renter satisfaction

The strongest operators won’t just absorb change. They’ll turn it into momentum.

Turn Regulatory Disruption Into Competitive Advantage

Six months from now, the NYC rental market will have two types of operators: those who absorbed the FARE Act as a cost burden, and those who transformed it into a competitive moat.

The difference isn't just operational efficiency, it's market positioning. While competitors scramble to replace broker relationships with internal capacity, forward-thinking operators are building systems that deliver faster response times, higher conversion rates, and measurably better renter experiences.

At Apartment List, we're the leasing infrastructure built for the post-broker world:

• Instant AI-powered responses that engage prospects within minutes.
• Transparent ROI that tracks lead-to-lease conversion across your entire portfolio.,
• Centralized reporting that manages guest cards, tours, and follow-up from one platform.

The window for first-mover advantage is narrow. Schedule a time with our team to see how you could turn regulatory change into revenue growth.