BOSTON — Boston Mayor Marty Walsh is taking a cue from the Empire State.
On the heels of New York’s decision to eliminate broker fees for renters in the city in an unexpected addendum to last year’s rent laws, Walsh has announced the creation of a group that will study the idea of doing the same in Boston.
In both cities, the housing market has grown incessantly competitive throughout the years, forcing most renters to deal with brokers as they look for a new home. The luxury of having someone help you out in your search, however, comes at a steep cost - but that may soon come to an end.
When renting in Boston, apartment and home renters know they need to be prepared, making sure they have at least three, sometimes four times the cost of rent if they want to sign a lease. That’s because landlords often ask for 1st and last month’s rent, a security deposit and, oftentimes, a broker’s fee if the landlord decides to delegate the rental process to a realty agency.
That means that, for an apartment where the rent is $1,000, a renter would need to have between $3,000 to $4,000 upfront or they cannot move in.
The same goes for apartment complexes managed by companies.
Renters in Boston say they’re ready for big changes like this to come to the housing market.
“It’s part of the reason you don’t want to go from place to place because you have to break and put another broker’s fee into it, it’s a disruption and it’s unfortunate really,” said Patrick Donlin, a former renter.
Websites like PlacesForLess.com aim at bringing down the cost for consumers - instead of charging one month’s rent for their search fee, they charge a flat rate.
“It’s a really big shock to anyone moving to Boston for the first time and this whole concept of broker fees is only specific to Boston and New York,” said John Puma, the COO for Places for Less.
Puma says that, if Walsh decided to cut broker fees altogether, this would potentially save renters thousands of dollars.
On average, Puma says a 2-bedroom apartment in Boston will cost you about $2,500 a month. Landlords will require you to pay first and last months rent upfront, taking that number to $5,000. Add the broker fee and you’re already up to $7,500.
Renters also have to factor in application fees and security deposits.
Some say the added fee, which can include finding the renter a unit, showing them the space and sending in the application is an outdated model for how Boston’s real estate works in 2020.
“If I like the listing then I should be able to go directly to the realtor, to the person who owns the property and give them the money, you don’t need the middle man,” said Donlin.
Brokers and industry insiders argue that eliminating the fee will only cause landlords to pass the cost back to the tenants by raising the rent prices.
Walsh is set to name the members of his study group by the end of the month.
“[This] is another tool we are putting forward to tackle the underlying challenges of housing affordability in Boston," said Walsh.