Boston’s Controversial Tenant-Paid Broker Fees Are Still Going Strong

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With The Fairness in Apartment Rental Expenses (FARE) Act going into effect this week in New York, tenants will no longer be required to foot the bill for broker fees—12% to 15% of the annual rent that they used to be responsible for in one lump sum.

That financial burden added thousands to the cost of moving—so renters in NYC are celebrating. However, brokerages and landlords are sounding alarms.

Meanwhile, just 200 miles away, Boston stands alone as the last major city in the U.S. where renters are still expected to pay brokers directly, and the difference between moving costs is stark.

New York renters get relief as a new broker-fee law goes into effect

Under the new legislation, New York landlords are responsible for paying any broker fees if they hire the agent, a reversal of the traditional setup that had tenants covering these costs.

Renters are mostly happy about the change, since it will be less money they’ll have to pay upfront out of pocket.

But many landlords are less than thrilled, since they’ll now be stuck with the bill.

Landlord Jude Bernard, who owns 33 apartments in Harlem and Central Brooklyn, told Curbed he raised his rents on June 1—some by 11% annually.

“This is a direct result of this, just to cover the cost,” Bernard said, claiming other landlords are doing it. “All the groups I’m in are also stating this is the only way to combat it.”

Boston remains an outlier as tenant-paid broker fees continue

Boston still allows and expects tenant-paid broker fees, making it the last major metro to do so.

Efforts to change this stalled last year when the House and Senate failed to come to an agreement on a reform bill.

This year, the House and Senate also have proposals to get rid of the fees—but the House’s mandates that whoever “initiates” the contact for the apartment would still be responsible for the broker fee, which critics say wouldn’t change much at all.

However, pressure for more effective reform may now increase following NYC’s move.

Here’s what it actually costs to move in Boston

Current median rent: $2,968.

Average broker fee (typically one month’s rent): $2,968

First and last month’s rent, plus security deposit: $8,904

Average moving costs, according to MoveBuddha: $945

So the average cost for a typical renter to secure a new apartment in Boston is a whopping $12,817.

Now compare those costs to New York—with and without broker fees

Current median rent: $2,936

Average broker fee (12 to 15 percent of the annual rent): $4,227 to $5,284

First and last month’s rent, plus security deposit: $8,808

Average moving costs, according to MoveBuddha: $899

So the average cost for a typical renter to secure a new apartment in New York previously would have been $13,934 to $14,991 but is now $9,707 without broker fees.

That’s a savings of $3,110 over Boston, on average.

Experts weigh in on whether broker fee changes really help renters

Reactions are very mixed to the FARE Act.

“The FARE Act is constitutionally flawed on multiple accounts,” says Christopher Santarelli,
director of media relations for The Real Estate Board of New York. “Despite the rhetoric, the FARE Act will only lead to higher rents and deprive hard-working rental agents from making a living. A lose-lose for all New Yorkers.”

Real estate agent Rachel Fiegler, the co-founder of the Pinpointe Group in New York City, agrees.

“Broker fees aren’t going away,” she says. “They’re just going to be added to everyone’s rent.”

But Elijah Fox, the communications director for Chi Ossé—the city councilmember who introduced the bill—tells Realtor.com: “The FARE Act will place downward pressure on rents, because it will place bargaining power in the hands of tenants, particularly at lease re-signing. At the end of a lease, a tenant can now freely move to a different unit without paying a fee, so their option to ‘walk away’ from the negotiating table becomes real and they can negotiate better terms.”

Whitney Hu, civic engagement and research director for Churches United for Fair Housing, who worked to pass the FARE Act, says, “Shifting the cost of broker fees to landlords is a necessary step toward bringing fairness and transparency to a housing system that too often punishes tenants for simply trying to find a place to live. At CUFFH, we’ve seen rent-stabilized, affordable units held hostage by brokers demanding up to $10,000 in fees—often functioning as de facto payments to landlords for access. This is not about punishing landlords—it’s about rebalancing a system that currently allows for exploitation.”

Many people hope Boston will follow New York’s lead—including Carolyn Chou, executive director of
Homes for All Massachusetts.

“Massachusetts is unique in forcing renters to cover the cost of a broker fee when they rent an apartment,” she says. “Combined with first-month’s rent, last-month’s rent, a security deposit, the cost to rent a new apartment can easily reach $12,000 to $15,000. That’s a nearly impossible amount for someone working paycheck to paycheck to come up with. That obstacle can lead to housing instability and homelessness, even for those who can otherwise afford their monthly rent bill.”

Chou says eliminating tenant-paid broker fees would be a common-sense step to reduce the steep cost of renting a new apartment in Massachusetts, where the majority of renters pay a rent they struggle to afford.