The Hidden Impact of New York's FARE Act How Policy Changes Are Creating an Underground Rental Market

Written by:

Steve Marcinuk

Date:

27 Aug 2025

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New York City’s rental landscape has undergone a significant shift following the implementation of the FARE Act in June 2025, creating unexpected market dynamics that extend beyond the law’s original intent. While the legislation aimed to protect tenants by shifting broker fees from renters to landlords, it has inadvertently created what industry professionals describe as an “off-market” rental system that’s fundamentally changing how New Yorkers find housing.

The FARE Act mandated that whoever hires a broker pays their fee, ending the common practice of tenants paying the substantial 15% annual rent broker fee. However, the unintended consequences are now reshaping the market in ways that weren’t widely anticipated.

“What’s not being widely reported is that this is creating almost like a black market of off-market, rent-stabilized listings,” explains Rachel Fiegler, co-founder of Pinpointe Group, a boutique brokerage specializing in relocations and first-time buyers in New York City.

The Underground Rental Economy

The most significant impact has been on rent-stabilized apartments, a crucial segment of New York’s affordable housing stock. These properties, bound by regulations that prevent landlords from raising rents to cover broker fees, have largely disappeared from online listings.

“Rent-stabilized apartments that can’t afford to bake the fee into the rent aren’t being advertised online because they can’t charge extra and can’t afford to pay broker fees,” Fiegler notes. Instead, landlords are quietly distributing availability lists to brokers, creating an informal network where access depends on professional relationships rather than public listings.

This shift has created a two-tiered system where tenants must hire brokers to access these off-market properties, potentially negating some of the FARE Act’s intended cost savings. Ironically, legislation designed to reduce tenant costs has made professional representation more necessary than ever for accessing affordable housing.

Neighborhood Affordability Crisis Deepens

New York’s housing affordability crisis is spreading to previously accessible neighborhoods. Areas that once served as affordable alternatives are experiencing dramatic rent increases as demand pushes outward from Manhattan’s core.

“Everything is getting more expensive. Even neighborhoods you would think should not be expensive are expensive,” Fiegler observes. “Washington Heights, for example, you used to be able to find a two-bedroom apartment for under $3,000. You cannot. It doesn’t exist anymore.”

This pattern extends across the boroughs, with traditionally affordable areas like Bed-Stuy in Brooklyn and Ridgewood in Queens experiencing rent increases. The ripple effect has created a citywide affordability crisis that extends far beyond Manhattan’s luxury markets.

The solution, according to industry professionals, is politically challenging: “More housing. We need more housing. We’ve needed more housing for a long, long time. We just have a lot of regulations against it. It’s a policy issue.”

Remote Work Reshapes Space Demands

Remote work has fundamentally altered how New Yorkers think about their homes, transforming apartments from places to sleep into full-time offices.

“People want more space, which is hard to find,” Fiegler explains. “Roommates are working from home, so if there’s not enough space, it causes issues. People are on calls, it’s distracting. A lot of people are trying to find studios or one bedrooms so they can have their own space.”

This shift has created demand for larger apartments or creative solutions within existing spaces. Some renters seek buildings with meeting spaces and private work areas, while others require brokers to help them envision fitting home offices into New York’s small apartments.

The challenge is particularly acute for the city’s traditional roommate culture, where shared living arrangements that once made New York affordable are becoming less viable when multiple residents need quiet workspace.

Boutique Brokerages Navigate Market Disruption

For smaller real estate firms, the FARE Act initially threatened to eliminate rental-focused boutique brokerages, forcing many to reconsider their business models.

“We weren’t sure if it was going to destroy our company. We were thinking we might have to close up shop because a lot of our business has been focused on rentals,” Fiegler admits. “We don’t want to have all our eggs in one basket, which is kind of how we’ve been rolling.”

However, boutique firms are finding competitive advantages in their personalized approach. Pinpointe Group positions itself as “ambassadors to New York,” providing relocation services that extend beyond apartment hunting to include subway navigation and neighborhood orientation.

“When people work with us, you’re working with the owner of the brokerage or someone on our team that we work closely with,” Fiegler emphasizes. This personal touch contrasts with larger firms where clients might interact with multiple representatives.

The firm’s “no BS, just facts” approach reflects a broader trend toward transparency in an industry historically plagued by reputation issues. Honest assessments sometimes cost deals but build long-term trust and referrals.

Interest Rate Reality Check

While much attention focuses on current interest rates, industry professionals are recalibrating client expectations about borrowing costs. Creative financing solutions, including rate buydowns and seller credits, are now standard tools.

“The biggest thing is trying to explain to people that the recent history of low interest rates is not the norm,” Fiegler notes. “We are not in high interest rate territory. It’s just that housing has gotten so much more expensive that it seems extremely expensive, but that has nothing to do with the interest rate.”

This educational approach helps clients understand that waiting for a return to 3% rates may not be realistic without broader economic disruption.

Market Indicators and Future Outlook

Industry professionals are closely monitoring employment trends as leading indicators of potential rental market changes, particularly in a city where housing costs consume such large portions of household income.

“I personally look at unemployment. I look at layoffs. That’s a big indicator,” Fiegler explains. “People are going to have to move because they’re not going to be able to afford living, especially in New York.”

The challenge for market participants is that these shifts often compound slowly, making them difficult to predict or time effectively. By the time changes become apparent, market conditions may have already shifted significantly.

Looking Forward

New York’s rental market continues to evolve in response to policy changes, demographic shifts, and changing work patterns. The FARE Act’s unintended consequences highlight how well-intentioned regulations can create complex market dynamics that affect different segments in unexpected ways.

For real estate professionals, success increasingly depends on adaptability, transparency, and deep market knowledge. Boutique firms that can provide personalized service and navigate the new off-market reality may find opportunities even as larger competitors struggle with changing dynamics.

The broader lesson extends beyond New York: housing policy changes create ripple effects that can fundamentally alter market structures, sometimes in ways that contradict their original intent. As cities nationwide grapple with affordability challenges, New York’s experience with the FARE Act provides valuable insights into the complex relationship between regulation and market outcomes.

For now, New Yorkers seeking housing must navigate an increasingly complex landscape where professional guidance has become more valuable than ever, even as the cost of that guidance remains a significant barrier for many seeking affordable housing options.