Tenants in Dubai are no longer expected to pay the commission fee charged by brokers, with landlords having to pay up instead, it was reported on Wednesday.
Agents have said they are now either charging the entire commission sum, normally five percent, to the landlord, or splitting their fee between the landlord and tenant, according to UAE daily Emirates Business.
The action comes amid a rental downturn in the UAE as a result of the global economic crisis.
Broker firms predict that rents will tumble a further 10 to 15 percent in next three months, as supply outstrips demand, putting the tenant in the position of power.
“All broker firms have not yet started splitting the brokerage commission between the landlord and the tenant, but are considering this option as the rental market has turned in favour of the tenants, especially as leasing is always initiated by the landlord,” said Iseeb Rehman, managing director, Sherwoods Real Estate.
“If the landlords are willing to pay up, many agents will surely waive the commission from the tenants. Either one party has to pay or both split the commission. Either way, landlords should get involved,” added Rose Marie Kilzi, leasing director at Great Properties.
Such a change would bring the UAE inline with international practice, said Walter Hart, managing director of The Agency, a property consultancy.
“The mandate to rent a property comes from the landlord to the agent, and the landlord has employed the agent to do a job for him and therefore should pay for this service when a tenant is found.
“Dubai has been different in this regard due to the previous short supply of residential accommodation and commercial space,” Hart added.
However, commission would not be waived completely as the paperwork involved in property rental had increased, Rehman added.
“We will not totally waive the commission payable by the tenant as the workload and paperwork of agents has increased,” he said.
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