Massachusetts landlords adjust pricing ahead of new broker fee rule

BOSTON — A new rule on broker fees in Massachusetts is set to take effect on August 1 and will shift the responsibility from the tenant to the landlord.

Massachusetts Governor Maura Healey signed the bill into law on Friday.

It eliminates renter-paid broker fees except when the tenant specifically hires a broker.

Critics of the new rule believe landlords are going to offset the cost by raising rent prices.

Several real estate agents told Boston 25 News that’s already happening with rental listings about to hit the market in the coming days and weeks.

“You’re going to see an uptick of rent right out of the gate,” said Mark Ruane with MGS Group Real Estate. “Speaking with landlords over the last few days, they’re already planning on this.”

Ruane said renters have reluctantly accepted the extra upfront cost of a full month’s rent in recent years to keep their applications competitive in a tight housing market with limited inventory.

“Landlords used to cover all broker fees and then over time it balanced out,” said Ruane. “It has a lot to do with our inventory issues and lack of quality inventory.”

Boston area renters in some of the most desirable neighborhoods often pay a total of four months’ rent just to move in.

That includes first, last, security, and a broker’s fee.

“People who are just starting out their careers, that extra one month of rent on top of everything is cumbersome and keeps them from getting ahead,” said Colin Flynn, who lives in Boston’s South End. “There’s certainly a risk now this gets baked into the rent.”

Broker fees support a network of rental brokers who facilitate leases.

A broker is responsible for screening applicants, conducting background checks, making sure housing laws are being complied with as well as additional administrative work.

Renters have complained that they are usually forced to interact with a broker to schedule a tour despite doing most of the apartment search legwork themselves.

New York City and Boston have historically been among the few major US cities where broker fees are routinely passed onto renters.

The New York City Council voted last year to outlaw the practice which helped propel similar legislation in Massachusetts.

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