Most renters are still paying in Boston

Over the years, city and state lawmakers have done just that periodically pushed to change brokerage feeswhich charge real estate agents for acting as an intermediary between potential tenants and landlords, with tenants typically footing the bill. But such efforts have yielded little more than lip service on Beacon Hill, where state lawmakers would have to greenlight any kind of structural change in how the fee is charged and who is responsible for paying it at the local level.

Here’s what you need to know about the bill in New York, the situation in Boston, and what impact such a change could have.

A real estate agent charges a real estate agent’s commission for his services in establishing a landlord lease agreement for an apartment. Boston and New York are two of the few cities in the United States where the fee is almost universally charged to the potential tenant – even though in most cases it is the landlord who hires the agent to market their units in the first place.

Roughly 71 percent of the listings were up on Thursday the rental website Boston Pads required the tenant to pay the full agent fees, while about 20 percent said the owner would pay them.

In Boston, a real estate agent’s commission is usually equal to one month’s rent. In New York – at least before this week – this is often somewhere between 10 and 15 percent of an entire year’s rent.

The cost adds to the already enormous cost of renting around here. The costs arose decades ago, when there was a glut of additional rental properties, so landlords began hiring real estate agents to track down tenants who wanted to rent out their units. But lately, as home prices have risen and most apartment hunters find their listings online, criticism of the costs has increased.

If it were to become law, the measure in New York City would tip the balance in favor of tenants: if a real estate agent works on behalf of a landlord, the landlord would have to pay all associated costs. It also requires that prospective tenants be provided with “an itemized written disclosure of all fees payable by the tenant to the landlord or to any other person at the direction of the landlord in connection with such rental.” Violations may result in a fine or civil action.

For the amendment to become law, it would either have to be approved by Mayor Eric Adams – who has expressed concerns about the bill – or, if he rejected it, the City Council would have to override his veto, which seems a likely outcome given the fact that its overwhelming passage.

Supporters of the measure in New York say the change will improve housing affordability for renters, who often have to pay a hefty sum, including first and last month’s rent, a security deposit and real estate agent fees, before getting the keys. Opponents, including New York’s powerful real estate industry, say the policy would disproportionately hurt small landlords and that if forced to pay broker fees, property owners would likely simply raise rents to compensate.

Brokerage fees are usually charged more often by smaller landlords — property owners who own one or a few buildings and find it more difficult to include the costs of using a real estate agent in their budget. Large landlords are more likely to include agent fees because they generate more revenue, or avoid agents completely if they are large enough to run their own rental agencies.

New York tried this before, in 2020with state legislation largely shifting reimbursements to landlords. But it was short-lived: Real estate groups sued And the state officially reversed the change the following year.

Yes. Earlier this year, the Senate released Governor Maura Healey’s version of the housing bond bill contained a provision that would have required any party “Originally engaged and contracted with the licensed real estate agent” – usually the landlord – to pay the fee.

But inside the final version of the $5.2 billion bill that Healey signed the law in August, the language about brokerage fees was gone.

Before that, after New York’s short-lived ban on broker feesannounced then-Boston Mayor Martin J. Walsh he would convene a ‘working group’ to “study real estate agent fees in Boston, and how they impact renters in the city of Boston.”

That was in February 2020. Needless to say, this one also fizzled out as the pandemic turned the rental market upside down just weeks after the announcement.

One reason this policy hasn’t worked: as in New York, the real estate industry here isn’t happy with the idea.

Greg Vasil, CEO of the Greater Boston Real Estate Board, said real estate groups have opposed the change in the past because they worry about its impact on smaller landlords. But it beforehand the cost of renting an apartment has become too expensive for tenantshe said, and the Legislature should consider other ways to cover those costs.

“From the tenant’s perspective, it’s too much money: the first month, the last month, the deposit and the agent fees,” Vasil said. “It is worth investigating how we can reduce those costs, but we do not want to implement policies that could be harmful to small landlords.”

The catch for Boston policymakers is that they can’t change the way the fees work through a simple City Council vote, as the New York City Council did. Like almost every other housing policy Boston is trying to implement, eliminating real estate agent fees in the city would require a petition for home rule, and thus approval from the state legislature.

That extra hurdle may have kept city officials from making a full-fledged effort to get rid of the fees. Beacon Hill rarely condones controversy petitions on municipal self-government – ​​in particular petitions focusing on housing policy.

The latest several housing-related home rule petitions that Boston officials have sent to the Legislature, including Mayor Michelle Wu’s rent control proposal last yearhaven’t gone anywhere and often haven’t even gotten a hearing.

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Dana Gerber can be reached at [email protected]. Follow her @danagerber6. Andrew Brinker can be reached at [email protected]. Follow him @andrewnbrinker.