BOSTON (WHDH) - In Massachusetts, unlocking the door to a new apartment has meant shelling out a small fortune—first month’s rent, last month’s rent, a security deposit, and in many cases, a broker’s fee.
But starting Friday, renters could feel some relief. A new provision included in the $61 billion state budget requires whoever hires the broker—typically the landlord—to pay the fee.
Broker’s fees often amount to one month’s rent, adding thousands of dollars to move-in costs. Tenant advocates say the new law will make housing more accessible.
“Before this, the cost to rent a new apartment could easily reach $12,000 to $15,000, which is just prohibitive for many renters, particularly people working paycheck to paycheck,” said Carolyn Chou, executive director of the advocacy group Homes for All Massachusetts.
For many renters, that upfront burden has been a barrier to leaving unaffordable apartments.
“Do I think this makes housing more affordable? No. Do I think this makes accessing housing a lot easier for tenants? Absolutely,” said Mark Martinez, a housing attorney for the Massachusetts Law Reform Institute. “It allows people to find new housing and prevents them from being trapped in housing that is too expensive for them to live in, and too expensive to leave.”
Landlord advocates are raising concerns about potential ripple effects of the law. In a tight market where demand outpaces supply, especially in Boston, they argue many landlords will raise rents to offset the costs.
“Landlords are well within their rights to take the broker’s fee, divide it over 12 months, and recoup the cost through rent,” said Doug Quattrochi, the executive director of the trade association Mass Landlords.
However, tenant advocates argue rent increases are already the standard in Massachusetts, and blaming them on the new law is misleading.
“Raise your hand if your rent increased this year, last year, or the year before,” said Martinez. “Rent is already increasing, and increasing at really high rates. Pinning rent hikes on broker’s fees is really disingenuous.”
Under the new law, renters will still pay a broker’s fee if they hire the broker themselves. But if the broker has a preexisting relationship with the landlord, the cost shifts to the property owner. This change is expected to reshape broker relationships in the rental market. Some landlords may choose to screen tenants themselves, while others will likely contract with a broker more regularly for reduced rates.
“It may end up changing the market, but it may change it for the better,” said Todd Kaplan, a senior attorney at Greater Boston Legal Services. “Brokers who have a formal relationship with the landlord could have a regular flow of apartments from that landlord.”
Technically, Massachusetts law has long barred landlords from charging renters broker’s fees. By statute, landlords are only allowed to collect first and last month’s rent, a security deposit and the cost of changing the locks. But because the law was weakly enforced, and landlords have so much leverage in the housing market, tenants often paid the fee to secure housing.
This time housing advocates stress enforcement will be different. They say Attorney General Andrea Campbell has promised to uphold the law, and they’re urging renters to report violations.
Meanwhile, property owners are expressing frustrations with how the policy came together. They say the new law comes at the height of leasing season, when most renters move on Sept. 1. Landlords are also concerned the law will disrupt jobs in the real estate community, and they say they were largely left out of discussions on Beacon Hill.
“No one in the private sector or in real estate leadership was contacted to help formulate a plan,” said Demetrios Salpoglou, CEO of Boston Pads. “You need the government to come together with business leaders to craft effective policy.”
Despite their differences, both landlords and tenant advocates agree on one thing: solving the housing crisis requires addressing a key issue—supply.
“We need a lot more housing,” said Quattrochi. “That’s going to take zoning reform, public investment and smart infrastructure investment.”
“We do have to build,” said Martinez. “But we also have to help keep people in their homes now.”
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