Setting yourself up with a rental apartment in New York City requires a reality check on how much you can afford and plenty of paperwork. There are also various fees, upfront costs that you’ll need to pay to the broker and sometimes the landlord to secure the apartment. New rent laws passed earlier this year put some limits on the amounts that landlords and brokers can collect from you upfront, but there are still a host of other fees that you will be required to pay.
The number of fees will vary depending on the type of building you decide to rent in and whether you end up having to pay a broker fee. For example, there are certain websites that specialize in providing rentals that waive the broker fee or where the landlord pays it, but that means you won’t have a broker working for you and will have to conduct the search yourself.
Likewise, if you have your heart set on an apartment in a condo or co-op building rather than a rental building, there may be additional fees charged by the board as a result of the building’s specific sublet policies.
Rent reforms have capped the security deposit to one month’s rent, which means you should not be asked for the last month’s rent in addition to the security deposit, but keep in mind, a broker’s fee is a separate cost and usually ranges anywhere from one month’s rent to between 12 to 15 percent of a year’s total rent. With the current median rental price for an apartment in Manhattan at $3,500, or $3,015 in Brooklyn, you could be looking at more than $6,000 in broker fees.
While this certainly stings, a broker who puts the work in for you doesn't do it for free. Lawmakers have talked about capping the broker fee in an effort to address the overall expense of upfront costs in the rental process but it's a move that has (predictably) met plenty of resistance from the real estate community and is still up for discussion.
Stan Broekhoven, a broker with Keller Williams, says the current rental market is "very competitive" and for the standard 15 percent broker fee he is able to fully prepare clients with information about the paperwork they'll need, show them multiple apartments that fit their criteria (up to 15 in a day), be present at the lease-signing, and negotiate on their behalf.
If you do use a broker, it's worth asking them to disclose if a landlord is paying them any fees to source you—the tenant—and make sure they agree that you deduct it from your broker fee. The broker fee is a one-off payment and you don't pay again if you renew your lease or bring in a roommate.
Keep in mind you'll have more leverage with the broker fee in a slower rental market and right now landlords have the upper hand, although seasonally you'll have more negotiating power in the winter months.
Sign up here to take advantage of the corporate relocation rate offered by Brick Underground partner Triplemint. A tech-savvy real estate brokerage founded by a pair of Yale grads in response to the frustrating apartment searches of classmates and colleagues, Triplemint will charge a broker's fee of 10 percent of a year's rent versus the usual 12 to 15 percent if the apartment is an "open" listing (versus an "exclusive" listing where the fee is split with the broker holding the listing.) Bonus: The agents at Triplemint are a delight to deal with.
The application fee for a rental is capped at $20. This is separate from the broker fee and covers the cost of a background or credit check. Confusion about this fee has prompted the Department of State to issue guidelines confirming this is the only fee a landlord can charge a tenant, and that this is also the maximum brokers can charge for an application fee. If you provide current copies of a background or credit check, the law states this fee must be waived.
Broekhoven says it's not uncommon to find a landlord still asking for $100-$150 as an application fee. This is illegal but puts a potential tenant in a difficult spot. "The reality is [tenants] don’t want to lose the apartment over $80 so they are at the mercy of the landlord's requirements," he says, although he believes the fee will be scaled back as landlords get on board with the new law.
Co-op or condo board fees
Some co-op or condo boards impose fees on an apartment owner for renting out their apartment. That’s because the building isn’t primarily a rental building and within the proprietary lease of a co-op, there will be rules about subletting. The fees can be calculated as a percentage of an apartment’s monthly maintenance fees or might be based on the share allocation of the apartment. The fee might also include costs associated with your move, like elevator use for a morning to get your furniture installed. Owners are able to pass on these sublet fees to the tenant according to the Department of State memo.
Until this fee was clarified, some owners had been unsure whether it could be passed to a tenant. Brian Hourigan is a leasing manager with Bond New York. He says, "Some owners have taken it upon themselves to pay the hefty board sublet fees out of an abundance of caution." Some are simply rolling these costs into the rent.
Broekhoven says he has seen co-op and condo board fees range from $350 to $3,500. Keep in mind that some high-end NYC co-op boards also charge renewal fees so ask about this before you sign.
The security deposit is not affected by pet ownership so if you are moving into a pet-friendly apartment with your cat or dog, you still can’t be asked to pay more than a month’s security. To get around this, landlords are now rolling what was once a pet fee into the rent, usually around $50 per month per dog but up to $200. "Cats are usually fine but owners are worried about damage to doors and floors if a tenant has a dog," says Broekhoven.
The landlord makes out better with this arrangement, says Hourigan. "In the past, that deposit might be partially or entirely refundable...but moving forward, that amount structured as additional rent, will no longer be refundable, regardless of the behavior of the pet or condition of the unit."
Leasing agents and brokers have told Brick Underground that changes to the security deposit rules are making it more difficult for students and foreign nationals and those without a U.S. credit history to secure a rental. In the past, they might be taken on with extra security, but without that option, leasing agent Adam Frisch, founder of Lee & Associates Residential, says the risk is too high and owners will now insist on a guarantor, someone who promises to honor the lease if the tenant can't.
You can ask a friend or employer to guarantee your rental, but given the risks that come along with doing so, you may find that non-relatives are reluctant to shoulder the responsibility.
An institutional guarantor like Insurent (a Brick Underground sponsor), is another solution. Insurent charges renters a fee for the service, usually 70 to 85 percent of one month's rent for U.S. renters and 90 to 110 percent of one month's rent for international renters without U.S. credit history for a 12 to 14-month lease.
Rental insurance fee
Some buildings make it mandatory for tenants to take out renter's insurance. You'll be asked to supply the paperwork as part of your package at lease signing. Renter's insurance isn't a high cost, it's generally around $100 to $150 a year, says Broekhoven, but it is yet another fee you'll need to budget for.
Tenants might expect to pay for amenities in newer, luxury properties. Hourigan says some management companies will separate the costs of say the health club or the roof deck to keep the advertised base rent more affordable.
"[Amenity fees] could be charged monthly or upfront annually, and depending on the building, might be offered on an opt-in basis or they may be added to the balance of all new tenants’ rent bills, regardless of whether they choose to take advantage of the amenities the building offers," says Hourigan.
In the past, the big residential rentals might have charged a move-in fee or a fee to use the elevator when you are bringing in your furniture on move-in day. Frisch says these costs could run to anywhere between $500 to $1,000. Based on the new law and the Department of State memo, the only way a move-in fee would be permissible is if it was a fee paid to a co-op or condo board.
Late rent fee
Once your tenancy is underway, you can only be charged for late payments if you are five days late with your rent. If you are charged, it can’t be more than $50 or five percent of the monthly rent, whichever is less.
If you think you’ve been unfairly treated as you navigate any of this while getting yourself a rental apartment, you can download a form and make a formal complaint against a broker or salesperson.
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