Broker’s fees eliminated for Massachusetts renters under new budget bill. Here’s what that means for tenants.

By Mike Sullivan

Lawmakers on Beacon Hill in Boston have just passed a budget bill that includes legislation to eliminate renter-paid broker fees. The add-on is typically the cost of one month’s rent, and can be a major hurdle for renters trying to find a place to live in the city.

“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 with her namesake Lina Kriva Homes.

If Gov. Maura Healey signs the budget into law, the new rule on broker’s fees will take effect Aug. 1.

What is a broker’s fee?

Typically, a landlord can ask for first and last month’s rent, as well as a security deposit. The deposit is usually the cost of one month’s rent.

Often, the landlord will also ask the renter to pay for a broker’s fee, typically the equivalent of another month’s rent. If both the landlord and the renter have a broker, those brokers will usually split the overall fee. When you factor in the broker fee to the typical up-front costs to move in, some renters are paying a total of four months’ rent just to get a key to move in.

Healey called these fees “unfair for the renter.” Healey is expected to sign the bill into law, making renter-paid brokers’ fees a thing of the past.

Who pays the broker’s fee?

“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.”

Some renters and brokers believe landlords will simply offset the cost by raising rent prices.

“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,” said Kriva.

“I think it would not shift the burden to the landlord, it would only increase prices,” said Manuel Londono, a renter and landlord. “The real issue is the supply of housing is not growing.”

Londono is in a unique position where he rents his current place, but also owns multiple properties in the city where he is the landlord. He says he will just raise rent prices to make up for the difference, and he expects to pay a higher price the next time he is looking to rent for himself.

“As a landlord, I expect a certain return. If it’s not giving it to me, I would sell the property,” explained Londono.

This article was originally published by CBS News.