Massachusetts lawmakers have passed a new state budget that eliminates renter-paid broker fees, a move that could significantly reduce up-front rental costs for thousands of tenants. If Governor Maura Healey signs the bill into law, the change will take effect on August 1, shifting the responsibility for paying broker fees away from renters.
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What Are Broker Fees?
In competitive rental markets like Boston, landlords typically require tenants to pay the first and last month’s rent, a security deposit, and often a broker fee, usually equal to one month’s rent. This can push up-front costs to four months’ rent, a steep hurdle for many. “That is a lot of money to come up with, especially if you are just starting out in this world,” said Lina Kriva, a real estate agent at Lina Kriva Homes.
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Law Aims to Help Renters
Governor Healey, who called these fees “unfair for the renter,” is expected to sign the budget into law. If approved, renters will no longer be responsible for broker fees starting August 1, lightening the financial load for tenants entering leases across the state.
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Who Pays Now?
With the new legislation, the burden of broker fees will likely shift. “Two things that could happen. One that whoever hires you pays the fee,” explained Kriva. “Could also be that to be competitive, the landlord will pay both sides, but right now we don’t have that competitive area.”
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Fear of Rent Hikes
Some industry insiders and landlords warn that the change may lead to higher rents. “That could easily happen. As in New York, I think they saw a 15% to 20% hike when this type of legislation went in. Someone is going to get their money back,” Kriva said.
Landlords Push Back
Manuel Londono, who is both a renter and a landlord, expressed concern that the change won’t relieve financial pressure for tenants. “I think it would not shift the burden to the landlord, it would only increase prices,” he said.
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Supply Still the Issue
Londono pointed to a bigger structural challenge: “The real issue is the supply of housing is not growing.” Without more available housing, he believes prices will continue to rise regardless of changes in fee structures.
Double-Edged Reality
Londono said he plans to raise rents on his properties to make up for the loss in broker fees. At the same time, he expects to face higher rent prices when he’s searching for his next rental. “As a landlord, I expect a certain return. If it’s not giving it to me, I would sell the property,” he explained.
What Comes Next?
If signed, the new rule would go into effect on August 1. While intended to make renting more affordable, the long-term impacts on pricing and market behavior remain to be seen. The real estate community is watching closely to gauge how landlords adjust.
