Walsh shows interest in cutting broker fees

So you like that one-bedroom in Cambridge with the half-sized oven, tilted floor, and dimly lit rooms? There aren’t a lot of other options, and it’s $100 below market rent at $2,200 a month. You’ll take it. But before you can move the IKEA couch in, you’re going to have to fork over four month’s rent. First, last, security, and the broker fee to the guy who only showed you one other apartment. Why? Because that’s the way it is.

But that may change.

A move in New York to ban broker fees has turned the heads of Massachusetts elected officials who are seeking to temper the rapidly rising costs of rent in the state. Greater Boston area renters are sharing the story across social media with budding hope.

An addendum to a sweeping 2018 rental and tenant protection law went into effect in New York state Tuesday, ending broker fees for tenants. Brokers can still collect a fee, but it must be paid by the landlord “unless a prospective tenant hired them to help find an apartment,” reports the New York Times.

Boston Mayor Marty Walsh announced Thursday the creation of a group that will study broker fees and how they impact renters across the City of Boston. “[This] is another tool we are putting forward to tackle the underlying challenges of housing affordability in Boston,” said Walsh, whose administration has been searching for ways to create affordable housing and stem the rising cost of rent. (Proposed transfer fees are one example.)

Landlords hire brokers to list properties and market them to potential tenants. Tenants who want the property have to pay the broker to sign the lease, and the price is often an entire month’s rent. The median rent for a Boston one-bedroom was $2,450 a month in July, according to real estate research and listings site Zumper. Taking that into account, your up-front cost would be $9,800 (first, last, security, and broker fee), not including any background check fees.

There has been pushback in New York, where brokers and landlords through the Real Estate Board of New York are promising to challenge the new rule in court. In Boston, Jason Gell of the Greater Boston Association of Realtors told the Boston Herald it’s a “bad idea” that he said won’t work.

“There’s a reason there’s a professional in the transaction,” Gell said, adding that the use of real estate agents will continue so the fee they currently receive from the tenant will just end up being absorbed in the rental cost of the unit. “I’m expecting that this will end up increasing their cost of rents,” he said.

In New York, the government caps the rent  increases that can be set by landlords. That isn’t out of the question in the Bay State, but Skip Schloming, executive director of the Small Property Owners Association told the Boston Globe that landlords would cut corners elsewhere — on repairs, for example.

Cambridge Rep. Mike Connolly, cosponsor of rent control legislation, says his bill would give municipalities the right to eliminate broker fees.”This is important because many of us who rent don’t have several thousand dollars in cash laying around,” he said.

Walsh plans on naming members of the broker fee assessment committee at the end of February.



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