Ever since the Fairness in Apartment Rental Expenses (FARE) Act was green-lighted by the New York City council months ago, the goal was to cut upfront costs by thousands of dollars for tenants by forbidding landlords from charging broker fees to renters. While the hope was to avoid big rent spikes — that hasn't gone as hoped since the measure first took effect this month — at least in Manhattan.
A report from real estate analytics firm UrbanDigs, found that from June 11 (when FARE first took effect) to June 23, Manhattan asking rents spiked by 15.7 percent to $5,495 versus the previous 10-day average, when it was $4,750. Also, the post-FARE number is up 19.5 percent year-over-year, which would mark the second largest rent spike seen in the borough over the past decade that occurred from June 11 to June 23.
The trends come as landlords marketed fewer listings, which saw a 35 percent decrease during June 11 to June 23 compared with the previous 10 days. Year-over-year, listings are down 55 percent.
“Despite its intention to reduce renter costs, early indications hint that the FARE Act may be increasing the overall cost of renting in Manhattan, at least in the near term,” John Walkup, co-founder of UrbanDigs wrote.
"With landlords adapting quickly to the new legal framework and limited inventory heightening competition at a busy time, affordability may be moving further out of reach, even as policymakers aim to do the opposite.”
However, UrbanDigs noted that this trend might just be temporary as landlords adjust to the new rules. Property owners could just be testing the market to see if tenants are willing to pay up.
"It remains to be seen if the higher asking rent and lower supply trend will hold, or if higher rents will be absorbed by the market," UrbanDigs wrote.
The news comes as the NYC Rent Guidelines Board has approved monthly payments on rent-stabilized apartments by 3 percent on one-year leases and 4.5 percent on two-year leases. Contrary to that thought, New York State Assemblyman Zohran Mamdani appears poised to win the Democratic nomination for New York City Mayor. Should he win the general election, the self-described Democratic socialist would likely appoint members of the Rent Guidelines Board to implement a rent freeze on stabilized apartments, which account for almost one million of the total rental units in the city. That could cause some unease for landlords.
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