In New York, there's a push to cap broker fees on renters. What about New Jersey?

Published September 9, 2022
By Ashley Balcerzak

Skyrocketing rents are not the only barrier facing New Jersey tenants in their quests for apartments — house-hunters must also set aside hundreds or even thousands of dollars to cover application fees, tenant screening checks and, in some cases, the dreaded broker fee.

In New York, housing advocates and legislators are leading a renewed push to kill broker fees shouldered by tenants, which are essentially one-time “finder’s fee” commissions to a real estate agent — even if renters found the listings themselves — that could cost a month’s worth of rent or more.

“Realtor fees are par for the course … sometimes you can luck out and deal directly with the owner, but that’s getting unusual,” said Matt Shapiro, president of the New Jersey Tenants Organization. “There are no restrictions on them in New Jersey, none whatsoever, other than the market. Rents are astronomical; of course that would help if you eliminated realtor fees.”

Tanika Moss, 35, feels like she’s “basically giving money away” on application fees that could be going toward gas and groceries in her apartment hunt in Paterson. “Thirty-five dollars doesn't seem like a lot right this moment, but when you have to pay $35 seven, eight, nine, 10 times, that money adds up,” she said.

“Sometimes it's a little easier when you use a realtor because you have someone helping you out and speaking on your behalf and different things like that,” Moss, a shelter aide, said during a press conference earlier this summer. “Those realtor fees are insane. These are thousands and thousands of dollars coming out just to try to find safe, affordable housing.”

Rent prices in New Jersey continue to rank among the highest in the U.S., but lawmakers have not introduced bills capping these additional housing costs. The Legislature’s database of bills does not show any results with the words “broker fee,” “realtor fee” or “renter fee.”

"It would be unfair and hypocritical to prohibit fees to cover costs for products and services when government does the same thing, charging for requests for information and registrations," said David Brogan, executive director of the New Jersey Apartment Association, a landlord trade group. "Landlords incur costs when they are doing background checks, which are required by the federal government for affordable housing. And if a broker is providing a service to a tenant and the fee is not hidden, I don't see a problem with that."

New York banned tenant-paid realtor fees for a week in February 2020, until a lawsuit brought a halt to the ban. The state Legislature had passed landmark rent protection laws in 2019, and among the sweeping measures was a rule that housing applicants could not be charged more than $20 in fees, including background and credit checks. The rules also capped security deposits at one month's rent.

The New York Department of State issued guidance on the law, saying it prohibited tenants from paying broker fees, but soon after that, the Real Estate Board of New York City, a real estate lobbying group, filed a lawsuit and won: Broker fees could not fall under the $20 fee limit.

This summer, the New York Post and New York news startup Hellgate published reports of egregious broker fees — such as $10,000 and $20,000 fees for rent-stabilized apartments renting for $2,250 and $1,725 a month, respectively. Last week, New York state Sen. Jabari Brisport, D-Queens, tweeted: "Tenants should not pay brokers fees. The landlord hires the broker. The landlord should pay the broker," and pointed to a bill he sponsored that would ban tenant-paid fees.

NJ housing advocates must get creative
Social workers and advocates in New Jersey must show creativity with funding and try to build relationships with landlords to keep costs lower for the low-income families they assist.

In Hudson County, social workers will ask landlords, "Is this rental really going to happen?" before a client submits an application, said Monica Yeng, social work director for the Office of Social Services. While the county sets aside some funds to cover application fees, there isn’t enough money to pay dozens of application fees per person.

“Up until about a year and a half ago, most Sussex County rentals were not associated with a realtor, but now it's almost impossible to find that apartment that does not have a realtor linked to it,” said Chris Butto, executive director of Family Promise of Sussex County, which works as a housing navigator to try to find rentals for those with government assistance. “Sometimes we are able to work with a landlord to have them cover the realtor fee, though some of our programs do cover those fees.”

While New Jersey housing advocates are not rallying behind legislation that deals with realtor fees, they are pushing for a handful of other measures meant to reduce rental costs, make the application process easier and improve families’ chances of finding a new place to live.

Searching for affordable housing in New Jersey “is incredibly Byzantine and difficult to navigate,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey. “It’s a full-time job, calling your housing authority, realtors, people who live in the town where you want to live. We’re talking about providing for people who need shelter, so we’d like to make it easier for people and streamline the process.”

Legislature to the rescue?
Under S858/A2760, New Jersey would create a single online application for families to apply to multiple affordable housing programs and subsidies at one time, such as Housing Choice Section 8 vouchers, assistance to cover energy bills and supportive housing for veterans. Currently, renters must keep track of multiple waiting lists and fill out similar applications for different programs.

The bill has not made it out of committee in either chamber, though the Senate passed the legislation last session.

Another bill, A1668/S515, would set aside $400,000 to help very low-income families pay for security deposits in a three-year pilot program in Passaic, Union, Essex, Hudson, Gloucester, Atlantic, Camden and Mercer counties. The Assembly housing committee moved the bill forward, but it has not been introduced in the Senate.

Under New Jersey law, a landlord cannot charge a tenant more than a month and a half’s rent for a security deposit.

Tenant advocates are also pushing lawmakers to pass A669/S934, which would ban landlords from considering credit scores and other risk assessments in most cases for applicants with government assistance. For renters without public subsidies, landlords could consider credit if they also weigh other factors, such as the tenant’s history of employment, rent payments, health and other factors. The bill has not moved out of committee.

As for limiting the biggest apartment expense — the rent itself — close to 100 towns have some form of rent control that caps the amount landlords can increase yearly payments for older and smaller buildings.

But state statute exempts newly constructed buildings that have four or more units from any local rent control for 30 years after being built. The law was originally a temporary measure to encourage new development, but the Legislature made it permanent in 1997.

Assemblyman Benjie Wimberly, D-Passaic, introduced a bill to end this exemption, as well as a bill imposing statewide rent control limiting increases to 5% plus inflation, or 10%, whichever is lower, but the legislation hasn't moved out of committee.