Could a fee on high-end real estate sales on Cape Cod help housing crisis? Some say yes.

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Cape Cod residents and public officials are eager for more information about allowing towns to place a transaction fee on pricey real estate sales, based on comments at a recent county-wide meeting.

The Barnstable County Assembly of Delegates convened a special hearing Wednesday, Sept. 24, to gather input about a proposed luxury real estate transfer fee.

The fees would be used to funding solutions to the region’s housing crisis, according to a statement from the Assembly.

“From what we’re hearing from a lot of people — the devil is in the details, which a lot of people don’t have,” said Sheila Lyons, chair of the Barnstable County Board of Regional Commissioners, during the hearing.

A subcommittee of the Assembly is expected to draft a home rule petition and ordinance that will be considered by the full Assembly later this fall.

If the state Legislature passes the petition, then the Assembly would work closely with them to flesh out the finer details of the proposal, said Yarmouth Assembly Delegate Susan Warner.

Housing crisis declared

In April the Assembly formally declared a housing crisis on Cape Cod.

An optional real estate transaction fee for Massachusetts towns was on the mind of a featured speaker at the annual Housing to Protect Cape Cod conference in 2024. The state’s top housing official, Edward Augustus, told Cape and Islands housing supporters then to keep advocating for legislation that would allow Massachusetts cities and towns to adopt a real estate transaction fee on high-end home sales.

Local control ‘central’

Chatham Delegate and Speaker Randi Potash said “local control is central” to the proposal. Towns would decide whether they wanted to opt in or out through their annual town meeting or town council, said Potash.

Towns could also set their own rates between around .5% to 4% on sales of high-cost real estate transfers, Potash said.

“Clearly everyone wishes to find a way to come up with a money stream that we can help people with housing especially those people  who … can’t afford to live here but actually work here and others,” said Warner. “We must find a way to bring in a revenue stream in order to move a lot of ideas for housing.”

Daniel Gessen, Deputy Assembly Speaker and Falmouth Delegate, said the public will have more opportunities to weigh in as the process continues.

The buyer would pay the proposed transfer fee, said Harwich Delegate Elizabeth Harder.

Some Cape towns, such as Chatham, have already petitioned the state legislature for the authority to establish a real estate transfer fee through a home rule petition.

Significant funds but ‘not a silver bullet’

Cape Cod Chamber of Commerce CEO Paul Niedzwiecki said the proposed luxury real estate transfer fee could generate significant funds for affordable housing, but “is not a silver bullet.”

Niedzwiecki estimated that a transfer fee applied to Cape properties valued over $1 million could potentially generate between $14 to $16 million annually for housing, noting the statistic depends on where the rate is set.

“This is not the kind of money that will directly build large volumes of new housing on its own … What matters most is how these funds are deployed and that’s why we support a regional approach,” he said. “Pooling resources at the county level allows for efficiency, scale, and the ability to take on transformative projects, things that individual towns could not accomplish on their own.”

Niedzwiecki pointed to a deed restriction program for year-round housing as a possibility. He cited that 37% of the housing stock on Cape Cod is second homes and 12% of the stock is used as short-term rentals.

‘An occupancy problem’

“Our crisis is not just a shortage of houses, it’s an occupancy problem. By strategically buying properties into deed restrictions, we can keep more homes in the hands of working families faster than we can build entirely new units,” said Niedzwiecki. “This is high impact, cost effective use of potential transfer fee revenue.”

Andrew Gottlieb, the executive director of Association to Preserve Cape Cod, said the lack of specific details around the proposal was problematic for his organization to “be able to line up in support of this initiative.”

He noted that his organization has identified that 14% of Cape Cod is both undeveloped and unprotected and has also collaborated with housing advocates to identify areas most suited for denser housing developments, such as previously disturbed areas or downtown areas.

“If you’re going to be allocating public subsidy, it’s important to identify where that subsidy is going to be allocated and to make better policy decisions than we as a region have done in the past,” said Gottlieb. “To put it bluntly, we would want to see any such transfer tax authority be expressly limited to supporting housing in those areas that we determined collectively are most appropriate for dense housing … we’d like to see some boundaries put around how this funding is going to get allocated.”

Zane Razzaq writes about housing and real estate. Reach her at zrazzaq@capecodonline.com. Follow her on X @zanerazz.

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This article originally appeared on Cape Cod Times: Opinions aired on Barnstable County high-end real estate sales fee