New law ending broker fees for Massachusetts renters takes effect Aug. 1. Here's what to know.
Renter-paid broker fees are now a thing of the past in Massachusetts. On Aug. 1, a new law takes effect that requires broker fees to be paid by the person who hired the broker, which is typically the landlord.
When someone moves in to a new apartment in Massachusetts, the up-front costs can total four months' rent if they have to pay first and last month's rent, a security deposit and a broker fee.
New broker fee law
Massachusetts Gov. Maura Healey put forward the plan in January to eliminate broker fees for renters. The budget she signed into law recently says "Any fee shall only be paid by the party, lessor or tenant who originally engaged and entered into a contract with the licensed broker or salesperson."
"This is about saving you money, thousands of dollars that you can now spend on whatever you need or put it away for the future," Healey said in a social media video touting the new law. "And this is just one way we're lowering costs and getting after high housing prices."
According to Apartments.com, the average rents for an apartment in Massachusetts are $2,556 for a one-bedroom and $2,966 for a two-bedroom. It's much more expensive in Boston, averaging $3,540 a month for a one-bedroom and $4,466 for a two-bedroom.
Will the new broker fee law raise rents?
Last week, real estate brokers gathered on Boston Common to protest the impending law. Demetrios Salpoglou, CEO of BostonPads.com, previously told WBZ-TV that forcing landlords to cover the broker fee will likely raise rent prices and said the real problem is a lack of rental apartments on the market.
"If a landlord's forced to pay commission, they'll probably just raise their rent to cover that difference," he said. "It's misguided in a sense. I think more effort should be put on supply side, like focusing on zoning reform and other measure that bring ample supply to cities that need housing that have low vacancy rates."
A similar law took effect in New York City in June, and violators could face fines of up to $2,000 for breaking the law. The new law in Massachusetts does not detail any consequences for violators, but they could be subject to penalties under the Massachusetts Consumer Protection Act.