Massachusetts Bans Renter-Paid Broker Fees — Unless the Renter Hires the Broker

A new law in Massachusetts will ban landlords from charging tenants broker fees—unless the tenant hires a broker themselves.

Why this matters:
Renting in cities like Boston is already expensive. This change was aimed at preventing tenants from having to pay an extra month’s rent in broker fees for someone (the landlord's agent) they never chose to work with in the first place.

What’s changing:
The law clears up a gray area in the current rules, which already say landlords can’t charge broker or application fees. Now it explicitly says that if a landlord hires a broker to list and show their rental, they need to pay that fee—not the renter. 

Supporters say this helps protect renters from footing the bill for services they didn’t ask for, on top of already high move-in costs like first and last month’s rent and a security deposit. As Todd Kaplan from Greater Boston Legal Services put it: “If the landlord hires the broker, the landlord should pay the fee.”

But there’s a catch:
Some landlords might just raise the rent to cover their costs. So while renters may avoid an upfront broker fee, they could end up paying more over time. If a tenant hires an agent, they'll still be expected to pay their agent's fee. 

The bigger issue?
Some landlords are now screening tenants themselves instead of hiring brokers. Landlords may shift costs for having to absorb this extra fee - so instead of an upfront fee, they may bake the cost into the rent. As a result, rents are expected to rise in the future. New York City had a similar ban on rental fees (which ranged between one month's rent up to 15% of the yearly rent, as opposed to Boston's tradition one month's rent) but has found that rents have risen by an average of 5.3% for apartments that were previously listed with a broker fee before the new law took effect. 

Looking ahead:
Greg Vasil of the Greater Boston Real Estate Board said this change is meant to give renters a break—but also emphasized the need for landlords, brokers, and lawmakers to stay in dialogue about the impact. He added that brokers will still be compensated fairly, whether hired by landlords or tenants, because of the value they bring to the process. 

In our opinion, the change in who pays the fee is similar to the recent Sitzer-Burnett lawsuits in which sales commissions were decoupled. Real estate agents helping tenants will just have to do more explanation as to why tenants should engage the help of an agent for their rental search and show their value. Landlords may be overwhelmed by tenants coming to them directly, to bypass rental agents. There will be new forms that tenants and landlords will have to sign, but they are all in the works as of today. 

Timeline:
The new law goes into effect on August 1, just before the busy September 1 rental season, though many tenants for that cycle have likely already signed leases.