Property agent demands 20 per cent commission on Dubai Marina apartment
We have a sea view apartment in Dubai Marina which is being handled by a Dubai rental agent who now wishes to increase their rental commission from 15 per cent to 20 per cent. The apartment is let out on a short-term basis to business professionals at Dh14,000 per month – ranging from one month to several months. One tenant rented it for over two years on a monthly business. Anyway, we are not happy about this increase in rental commission and will have to find another rental agent. But the truth is, we were happy with the existing arrangement and it’s a shame to have to change it. NB, Dubai
Real estate commissions, whether for sale or for rent, are always contentious. I can quote the industry norm, which for short-term rentals is 10 per cent, but at the end of the day the fee for any such discipline has to be agreed upon. This is where your answer lies. The Real Estate Regulatory Authority states that an agent can effectively charge what he likes as long as there is an agreement between the parties.
You are obviously not happy about this increase, but you do have some options as to what to do next. I suggest firstly to speak to the agent and ask why he thinks he should get an increase at all. He needs to justify his actions to you. If you are not happy with his explanation, I suggest you let him know that you will seek other agencies.
Please remember that the laws changed a while ago and to rent out on short-term basis, one has to be registered to do so at the Dubai Tourism Commerce Marketing (DTCM). The DTCM will allow individuals to register, whereas before one could only do so if they had 20 properties. Now either the real estate company or the owner can register for short-term rentals.
The cost to register varies depending on the size of the apartment. A one-bed is Dh1,870 per annum, a two-bed Dh2,170, a three-bed Dh2,470 and a four-bed is Dh2,770. There is a further tax of Dh15 per day to a maximum of Dh450 for the month. This charge depends on the area.
My rental contract is expiring and last year we paid Dh68,000 in one cheque. This year, however, my circumstances have changed and we cannot afford one cheque. My offer to the landlord will be to pay on a monthly basis, but I am not prepared to enter into any kind of post-dated cheque scenario. We are not refusing to pay the rent, we just want to use a different method. But if my landlord refuses this offer and decides to start the eviction process, how long would that take? EB, Dubai
Any changes to a rental contract have to be communicated in writing to the other party giving 90 days’ notice. A change to the number of cheques paid or how the rent is received (monthly cash now/one cheque before) would be regarded as a material change under this clause. By law, therefore, if you have not given this 90 days’ notice you will not be able to effect it. That said, if your landlord agrees to the changes in payment as suggested above, then that is no longer relevant. If the landlord refuses the offer, he does have the right to file a case at the rental committee, but the decision as to who will win the judgment is very difficult to predict.
You are right that you are not refusing to pay the rent, which might be your saving grace, but it all depends on the judge of the day and his interpretation. Cases are normally heard within 30 to 60 days, depending on workload.
Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for the past 32 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to email@example.com
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