Burgeoning Support for Local Option Transfer Fees

July 19, 2023 - Back in March, hundreds of residents from Nantucket and Martha’s Vineyard traveled to the State House to advocate for a two percent fee for any property sales on the islands exceeding $1 million, with those funds going to a bank that could issue loans and grants to would-be homebuyers and help finance affordable housing projects. That same month, the Greater Boston Interfaith Organization (GBIO) launched their Housing Justice campaign; a real estate transfer fee was one of their core pillars. In June, the Local Option for Housing Affordability (LOHA) Coalition held a well-attended day of advocacy at the State House, the GBIO rallied more than a thousand individuals for housing justice, and The Boston Globe’s Editorial Board weighed in with support.

“We’re seeing unity across not only the MAPC region, but cities and towns of all sizes and geographies in the state are hungry for the local option tool, which really shows through the broad representation at these events,” said Matt Walsh, MAPC policy analyst and co-chair of the LOHA Coalition. “It’s incredibly encouraging to see different types of organizations calling for action as well - including municipalities, housing groups, community development corporations, employers, notably Mass General Hospital, and even developers like HYM Investment Group.”

Cities and towns across the state are grappling with the adverse effects of rapidly escalating home prices on their economies, workforce, quality of life, and social identities. Longtime local residents are being displaced by higher income buyers or speculators, and housing demand far outstrips supply in many communities across Massachusetts. A local option real estate transfer fee would be an effective, efficient, and equitable tool for raising necessary revenue for affordable housing, and it’s clear that many municipalities have already, or are ready to, buy-in on the legislation. In fact, nine municipalities – Boston, Somerville, Nantucket, Provincetown, Concord, Cambridge, Arlington, Brookline and Chatham – have already passed local home rule petitions, each of which now requires approval by the State House.

What would a local option real estate transfer fee do?

S.177, filed by Senator Comerford, and H.2747, filed by Representative Connolly, would authorizes a transfer fee between 0.5% and 2% on real estate transactions above $1,000,000 or the county median sale price for a single-family home (if a municipality's county median sales price is below $750,000). All funds raised by a local transfer fee would be dedicated to affordable housing production and preservation.

Would there be exceptions to the transfer fees?

The proposed legislation actually mandates certain exemptions, including on properties sold for less than $1,000,000 or county median sale price, and it allows cities and towns to tailor additional exemptions to meet the unique needs of their community. Every community faces its own specific housing challenges, and the real estate transfer fee local option legislation allows for flexibility. The transfer fee legislation would allow cities and towns to decide for themselves whether to enact this policy, and how to customize it.

For example, Somerville’s policy would exempt all owner-occupants from the fee, while Boston’s policy exempts all property sales under $2 million. In addition, each municipality seeking to adopt a transfer fee must first engage in a local process to determine if a

transfer fee is right for their municipality, and, if so, what exemptions, terms and conditions are the right fit for local prices, market conditions, and housing needs.

How much funding could be generated to support affordable housing?

A 2020 report envisioned the potential statewide impact of legislation. By sampling eight cities and towns (Braintree, Chicopee, Everett, Gloucester, Lowell, Quincy, Somerset, and Stoughton) in five different counties, the study examined how much revenue would be raised with different real estate markets and populations. Depending on how the local tax was structured – and the number of transfers covered – the eight communities could have raised as much as $18.2 million total over the previous five years. A separate study found that with a transfer fee of only 1%, the City of Somerville could yield between $6.6 million to $9.1 million in annual fee revenue to support affordable housing.

What can I do to support legislation for Local Option Transfer Fees?

The LOHA Coalition offers resources and the opportunity to endorse the transfer fee legislation on their website: www.realestatetransferfee.org. You can read more about the proposed bill here, use these resources to contact your legislators, and join the more than 100 organizations that also support a real estate transfer fee!

Need help finding your legislators? Click here

Need help with what to say? Check out our template testimony here 

Questions about the bill? Contact Matt Walsh at [email protected]