WHAT IS A TRANSFER FEE?

A transfer or linkage fee, sometimes called an affordable housing impact fee, is a fee levied on transfers of real property. The proceeds are directed toward affordable housing, creating the “link” between the individual transaction and the broader real estate context in which it occurs. According to The Local Option for Housing Affordability (LOHA), nine municipalities in Massachusetts - Boston, Somerville, Nantucket, Provincetown, Concord, Cambridge, Arlington, Brookline and Chatham - have filed Home Rule Petitions to allow for local consideration of such a fee.

In the Affordable Homes Act, filed by Governor Healey in 2024, there is a provision to allow for the local adoption of a transfer fee without a Home Rule Petition, which is currently required. As proposed, municipalities could adopt a fee levied on transfers of real property above a threshold of $1 million dollars or the median single-family home price in the relevant county, whichever is higher. The fee could be 0 to 2% of the portion of the sales price above the threshold. Proceeds of a the fee would be directed toward a localities Affordable Housing Trust Fund Board. Consideration of a linkage fee is Strategy 22 of the City’s current Housing Roadmap and the City is interested in exploring this tool, following any action by the state legislature.

Recent Updates:

August 2024 | The adopted Affordable Homes Act did not include the policy element which allowed for local consideration of a transfer fee. This means the requirement of a home rule petition remains in place for municipalities that wish to consider a local transfer fee.

June 2024 | The House approved its version of the Affordable Homes Act on June 5, 2024. Notably, the bill did not include the transfer fee provision. The Senate bill, passed on June 27, also omitted the policy element. The bill now goes to the Conference Committee to resolve discrepancies between the two bills. Amendments to add the linkage fee policy to the Senate bill were unsuccessful, meaning the requirement of a home rule petition remains in place for municipalities that wish to consider a local transfer fee.

Winter - Spring 2024 | The bill moved through various committees, including the Joint Committee on Housing and the Joint Committee on Bonding, Capital Expenditures, and State Assets. Mayor Pangallo provided testimony in support of the bill, including the transfer fee provision. According to the Mayor, if the transfer fee were already in place, Salem would have received approximately $391,000 for 2023.

October 2023 | Governor Healey filed the Affordable Homes Act, which includes policy to allow for local adoption of a transfer fee without a Home Rule Petition, which is currently required. Text of the bill is available here.

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