Navigating Dubai's Rental Commissions: What to Know

Rental Commissions in Dubai: What You Should Know

The real estate market has always been a hot topic in Dubai, especially in recent years, as rental prices have skyrocketed. However, the rent is only part of the total amount a tenant has to pay, since commissions and other fees significantly affect overall expenses. So, what can you expect when looking to rent an affordable apartment in the city?

Commissions and Costs During Renting

Generally, the rental agent's commission in Dubai is 5% of the annual rent. This amount does not include the 5% value-added tax (VAT), so the final cost may be higher. For apartments rented under 100,000 dirhams a year (approximately 10 million forints), it is common for real estate agents to charge higher commissions, possibly exceeding the standard 5% (5,000 dirhams). This is because, for lower-value leases, a fixed fee or a higher percentage rate offsets the lower income from the transaction.

Why Might Commissions Be Higher for More Affordable Properties?

Landlords and real estate agents often argue that renting properties under 100,000 dirhams requires more time and effort to find clients and handle the paperwork. As a result, agents often raise their commissions to compensate for the lower income derived from lower rental fees. Agencies may also set a fixed fee for rental commissions, independent of the apartment's price, leading to higher charges than the 5% commission would suggest.

What Extra Costs Can You Expect?

Beyond the rent and agent commission, other costs must be considered. These include the DEWA (Dubai Electricity and Water Authority) registration fee, the fee for registering the lease contract through the Tawtheeq system, and the cooling service registration fee. Additionally, if renting a furnished apartment, the deposit amount may be higher.

How Can You Reduce Expenses?

1. Negotiate the Commission:

Try to negotiate the agent's commission. Agents might be willing to reduce their fee, especially for long-term leases.

2. Rent Directly from the Owner:

Renting directly from the owner can help avoid agent commissions, leading to significant savings.

3. Compare Rent Prices:

Use online platforms to compare rent prices to get a realistic view of market rates and avoid overpaying.

Conclusion

In the rental market, the 5% agent commission is generally standard, but higher rates can often occur for lower-value apartments. It is worth thoroughly reviewing the terms, negotiating with the agent, and saving on additional costs whenever possible. This way, you can prevent a seemingly advantageous rent from leading to much higher expenses in the end.