New York City’s much-dreaded broker fees are here to stay. 

The New York Department of State on Wednesday updated guidance to the real estate industry to acknowledge what most in the profession already knew: Last month, a judge ruled that a ban the department had placed on broker fees early last year was an “abuse” of the department’s regulatory powers, and struck it down. 

That judge had already placed an injunction on the ban shortly after it was put in place, meaning that brokers have been within their rights to charge up to several thousand dollars for the work of acting as an intermediary between prospective tenants and landlords — and can continue to do so.

But new legislation pending in the state Senate could clarify the law to specifically outlaw landlords from forcing tenants to pay broker fees, effectively doing away with the costs for tenants who don’t hire their own broker.

The state announced the ban when it released guidance for two pieces of housing legislation from 2019, which also limited to $20 the application fees that brokers could charge prospective tenants.

“The guidance was issued in error of law and represents an unlawful intrusion upon the power of the Legislature and constitutes an abuse of discretion,” Albany Supreme Court Judge Susan Kushner said in her April decision. 

The updated guidance incorporates Kushner’s decision, saying that the 2019 laws “do not, in and of themselves, prohibit a landlord’s agent from collecting a ‘broker fee’ from a prospective tenant nor do they authorize the Department to commence a disciplinary proceeding against a landlord’s agent for doing so.”

The news of the updated guidance came as a new report from New York University’s Furman Center found that rental debt owed by New York City’s low-income renters increased by two-thirds during the pandemic. 

The real estate industry welcomed Kushner’s decision. 

“This decision ensures that thousands of hardworking, honest real estate agents across New York State can earn commissions without fear of unwarranted discipline” from the state, James Whelan, the president of the Real Estate Board of New York, said last month. 

But news of the state finally updating its guidance drew scorn on social media, with many sharing that their broker fees — sometimes more than a full month’s rent, on top of first and last month’s rent and a security fee — represented a tremendous financial burden.

Mayoral candidates quickly weighed in as well. 

Renters without deep pockets may see some relief from pending legislation in both the city and at the state level. 

Council member Keith Powers introduced legislation in 2019 that capped broker fees at a month’s rent. 

But Powers said that the council pumped the brakes on the legislation after strong pushback from the real estate industry, and that they have been waiting for the outcome of the lawsuit over the state ban, as well as for the worst of the pandemic to pass, before revisiting the legislation.

Powers said that the cap was a compromise between the needs of renters and of brokers, who make their living off the commissions. 

“I recognize that the brokers need to make money here, and that there's income involved,” Powers said. “I tried to say, ‘The landlord should play at least a piece of this.’ ”

However, Powers added, he believes having the landlord pay the broker fee — how the system works in every other state — would be the “cleanest” system. 

State Sen. Jabari Brisport, who represents parts of Brooklyn, also introduced legislation last month that would clarify the 2019 legislation to specifically ban landlords from requiring tenants to pay the fees.

The bill, in its justification, argues that the state was accurately interpreting the tenant legislation when it banned broker fees, and that passing the bill could recoup the legal fees paid by the state to defend its regulations in court. 

“I have people emailing me now like this is something new,” Brisport said. “We’re clarifying what’s been the law for two years.”

Brisport argued that his proposed legislation would not prevent brokers from making a living. 

“A landlord can still pay the broker,” he said. “This is just saying the landlord can't hire a broker and make the tenant pay for it.” 

Brisport said he expects the bill to pass both houses before the legislative session closes June 10. 

“Since we’re clarifying something we already passed, I think we'll be fine getting it through,” he said.