Moving to a new home is usually a stressful and expensive process, but starting Aug. 1, it’s going to look a little different for renters across Massachusetts.
As of that date, renters will no longer be required to pay a fee to the realtor who brokered their lease which is often a couple thousand dollars or more as long as they are not the ones who hired the broker.
Housing advocates say the change will help renters with the cost of moving to a new home, which is critical at a time when rents are at record highs.
When moving into a new apartment, tenants are generally expected to pay four times the monthly rent before getting their keys, including first and last month’s rent, a security deposit and a broker fee, the latter two each typically equal to one month’s rent.
That’s despite the fact that in many cases, the tenant is not the one who hired the broker, and in some cases, barely communicated with them until the end of the leasing process.
“Renter-paid broker’s fees have added to an up-front cost that can put moving into a new apartment out of reach for individuals and families even when they can afford the rent,” Housing and Livable Communities Secretary Ed Augustus said earlier this month.
Many landlords, however, are not enthusiastic about taking on additional costs. Some predict that the change will only lead to higher rents to compensate, even if the upfront costs of moving decrease.
Will new law cause rent increases in Massachusetts.?
Multiple people in the real estate industry who spoke to MassLive for this story cited a New York Post report that, after New York City implemented a similar ban on renter-paid broker fees on June 11, rents in the city increased by 15%.
“Landlords are probably going to raise the rent to cover costs,” said Demetrios Salpoglou, CEO of real estate website BostonPads, adding that property owners have many other increasing costs already.
“Taxes have gone up. Utility costs have gone up. Electricity costs have gone up,” he said.
However, an analysis released last week by StreetEasy, an apartment search platform, differed from the 15% estimate. Data from the website’s listings showed that the average rent on properties that had previously been listed with required broker fees increased by less than 1% more than rentals that had not.
Some in Massachusetts argue that the new rules will have little to no effect in the state.
Doug Quattrochi, executive director of MassLandlords, noted that even previously, state law technically only allowed landlords to collect first and last month’s rent, a security deposit, and payment to change the locks when signing a new tenant. That didn’t stop brokers’ fees from being common throughout the state, he said.
“When you look at the problem that people were experiencing in Boston, Cambridge, Somerville and other really tight real estate markets, it was noncompliant behavior,” Quattrochi said.
The only thing the new law would do, aside from clarifying the requirements, he said, was “scare some people who weren’t following the law already into compliance.”
Massachusetts broker-fee law spurs confusion
One of the most significant problems for real estate agents, according to Greg Vasil, CEO of the Greater Boston Real Estate Board, is confusion over how their jobs will change come Aug. 1.
Vasil and his organization initially supported the ban as a way to improve affordability for tenants. However, he told MassLive that the laws only two sentences within the 2026 state budget signed on July 4 — didn’t provide much time for preparation.
In New York City, the FARE Act, as the law governing broker fees is known, went into effect about seven months after it was passed, giving brokers, landlords and property managers time to learn its requirements. In Massachusetts, the turnaround was less than 30 days.
“We’re basically trying to educate a whole lot of people in three weeks. It’s a monumental task,” Vasil said. “And because it’s two sentences, there’s a lot of questions, and we’re concerned that there’s going to be a number of lawsuits to respond to this instead of giving everybody a chance to work on this, educate people and try to flesh out a whole bunch of issues.”
While some conversations about the change have implied that it will completely ban renter-paid broker fees, the rule, as written, says only that the party who initially “engaged and entered into a contract” with the broker should pay the fee. In most cases, but not all, it is the landlord who hires the broker, and they would therefore be responsible for the fee.
Some of the confusion arises from the phrase “entered into a contract,” which fails to specify whether this means the broker must have a written contract with the landlord or tenant, or if an informal, oral contract would also be applicable, Vasil said.
The law also complicates situations where both the landlord and the tenant are represented by a broker: Who pays then? Typically, each party pays half of the total fee to their respective broker; however, the new law does not clarify how these situations will be handled.
“There’s a couple of things like that, that depending which attorney you talk to, you might get a different interpretation,” Vasil said. “That’s what worries us, because Sept. 1 in Boston is a crazy, crazy moving day.”
Increase housing to bring down rents
Instead of focusing on broker fees, Salpoglou said Massachusetts should concentrate on increasing the supply of housing to bring costs down.
He often hears from property developers who seek to sell a project before it is even completed, because they believe the costs of the development will outweigh any future financial benefits, making it difficult to create new housing.
Housing advocates, too, say the change is only one small step in bringing down housing costs to a level that residents can afford.
“While reforming broker fees is a positive step forward, it’s far short of the significant relief that struggling Massachusetts renters need,” Carolyn Chou, executive director of Homes for All Massachusetts, said. “Broker fee reform won’t do much to help you if you’re pushed out of your apartment by an excessive rent hike so your landlord can flip the property and turn your unit into high-end housing. And it won’t help you much if you then can’t find an affordable apartment in the community you call home.”
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