Tenants in Dubai called for a supervisory authority over the offices of "real estate brokerage" to control them
RIRA: The brokerage fee is determined according to agreement or custom
Tenants in Dubai complained of overstating the commission value of real estate brokerage offices.
Emirates today
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The Real Estate Regulatory Agency (RERA), the regulatory arm of the Dubai Land Department, has stated that the real estate brokers' commission is determined according to the agreement in the brokerage contract, or calculated according to the prevailing custom in force in the emirate, if it is not mentioned in the contract.
Tenants in Dubai complained to Emirates Today that the real estate brokerage offices' commission is overvalued for indication services for the tenant, which in some cases reaches 5% or more, although it is charged from the owner in exchange for mediation, demanding a supervisory authority to control Perform those offices.
In addition, the opinions of real estate and legal experts regarding the commission of brokers diverged between those who saw the necessity of controlling the work of the brokerage offices by determining the commission, and those who considered it a custom in the market.
High percentage
In detail, the tenant Mustafa Kemal said that when he wanted to rent an apartment in Dubai, he was surprised by the real estate rental office informing him of a 5% commission of the annual rent value, indicating that he had informed the office that this percentage was high, and that there are intermediaries who do not charge it from the tenant, but the response of the office was That the housing unit he wanted to rent was cheap, and he insisted on taking it, which made him look for another rental office that might take a lower percentage, he said.
Kamal called for the necessity of a supervisory authority to control the real estate brokerage market in Dubai and the commissions charged by brokers.
Tenant Youssef Haj Ali considered that the 5% rate that real estate rental offices in Dubai charge in exchange for providing a housing unit is considered relatively high, calling on the concerned departments to reduce the commission.
He said that the presence of a supervisory authority on real estate brokers will lead to more control of the market in Dubai, given the great discrepancy between real estate rental offices in determining commission rates within the emirate.
Unspecified percentage
As for the lessee, Mahmoud Nasr, he indicated that the 5% commission is not defined by law, which raises disputes between tenants and the real estate broker, calling for the existence of a legal framework that controls this commission.
Nasr was surprised by the existence of laws governing the entire rental process, except for this commission, which is a permanent source of disagreement between the tenant and the real estate broker, considering that the mediator does not make a great effort, on which he deserves this commission.
Agreement or custom
For its part, the Real Estate Licensing Department of the Real Estate Regulatory Agency (RERA), the regulatory arm of the Dubai Land Department, in response to tenants' complaints about the exaggeration of real estate brokerage offices regarding the commission when renting a residential unit, stated that according to Real Estate Brokers Regulation No. (85) for the year 2006, the value of the commission is determined according to the agreement in the mediation contract, and if the value of the commission is not mentioned in the contract, it is calculated according to the prevailing custom in force in the emirate.
The administration pointed out that the client is expected to agree with the mediator, and to specify the percentage in writing in the contract, to avoid falling into any subsequent disagreement.
She added that if the broker asks for an amount exceeding the agreed percentage in the contract, the client can file a complaint in the Real Estate Violations System (RVS.dubailand.gov.ae) in RERA, to enhance transparency and guarantee the rights of all.
Legal text
In addition, the Vice President of the International Union of Arab Realtors, Dr. Mahmoud Al-Burai, said that "there is no legal text that determines the value of the commission, and therefore it is left to negotiation and custom." The owner became the one who pays the commission to motivate the tenants, and in some cases the broker takes a commission from both parties.
Al-Burai stressed the importance of a prior written agreement between the owner and the tenant on the percentage of the office, specifying who pays the commission and who is responsible for it, in the additional clauses of the lease contract.
He added that in the event of a complaint, the complaints department at the Real Estate Regulatory Agency (RERA) is the competent authority to adjudicate it.
The real problem
In turn, the CEO of Standard Real Estate Management, Abdul Karim Al-Mulla, said that the 5% that real estate brokerage offices charge is the main income for these offices, pointing out that the real problem is the exaggeration in commission, as well as what he described as the "deception" practiced by him. Some brokers get the commission twice, once from the owner, and once from the tenant.
Commission Legislation
In the same context, the real estate expert, Hisham Al-Asaad, confirmed that there is no text from the Dubai Land and Property Department that stipulates the commission charged by the broker in return for renting a housing unit.
But he explained that there is a custom in the market on the basis of which dealings are made, which is that the tenant must pay 5% of the annual rent, and that the commission may reach 10% in cases of furnished housing units, indicating that the broker can reduce or increase the commission in agreement. The two parties.
He added that determining the commission for real estate brokers is an important step, if the proposal is made by the official authorities, pointing out that it is possible to specify the currency in minimum and maximum limits, to control the market and improve transparency within procedures that are approved.
He knew
In addition, the legal advisor, Shawq Al Kathiri, said: “It is customary for real estate brokerage offices to impose a commission estimated at a percentage of the lease contract upon renewal as a condition for renewing the contract, but this condition was not enforced by the law, especially in the renewal phase, and then for the affected person in In this case, resorting to the Land and Property Department to deposit rent checks at the Department's Dispute Resolution Center to force the owner to renew without paying the commission, given that the work of the mediator has ended with the conclusion of the first contract.
Regarding the extent to which this issue is subject to the Consumer Protection Law, Al Kathiri explained that, “By extrapolating the law (No. 24/2006), we find that the legislator has assigned the Consumer Protection Department the authority to monitor price movement, work to limit its rise, receive consumer complaints, and take action in this regard.” , Indicating that «the legislator extended control powers, to control the price of services rendered to consumers, and defined service as every work provided by any party to the consumer, whether that was done with or without pay.
She added, "Since the brokerage business is considered a service provided to the client, it is also subject to the supervision of the Consumer Protection Department. However, the provisions of the law after that lacked an explicit text that can be relied upon in the matter of the commission of real estate brokers."
Stakeholders
For his part, General Manager of Araa Law Firm, Advocate Saleh Al Salih, said: As for determining the commission of a broker, or a real estate brokerage office, it is not found in the laws of the Emirate of Dubai, such as (Regulation No. 85/2006), and the regulatory order Internal No. (32/1987) regarding the regulation of the real estate brokers registry, meaning a reference to determining the broker or real estate broker's commission rate, but the law left its determination to the concerned parties according to the circumstances of each case and each transaction, according to what is agreed upon between them.
Salih added that in the absence of an agreement specifying that percentage with absolute certainty, then customary practice becomes in accordance with Article (27) of the aforementioned regulations, and Articles (5) and (6) of the aforementioned regulatory order, pointing out that custom has been established to be The ratio of 4% is in favor of the real estate brokerage office, equally between the landlord and the tenant.
He continued: «It is desirable, and in order to control the commission rate, to be agreed upon in writing before contracting, and not to postpone that until after the contract, in order to avoid any dispute that may arise from it.
A proposal to end the commission
The legal advisor, Shawq Al Kathiri, called for the necessity of issuing legislation, or including one of the existing legislation, such as the law (No. 26/2007), regulating the relationship between landlords and tenants of real estate in the Emirate of Dubai, as an explicit provision that sets a ceiling for commission, and prohibits any condition requiring the right of the broker to Obtaining a commission upon renewal, and permitting the Land Department to have the authority to renew the contract on behalf of the lessor, as long as he refuses to renew it unnecessarily, according to the following proposal:
1- In the event that the lease contract is concluded on behalf of a licensed broker, the broker has the right to obtain a commission not exceeding a percentage of (..)% of the value of the contract, with a maximum of (...) dirhams.
2- For the purposes of contract renewal, the broker may not obtain any fee or commission in exchange for renewal, and every condition stipulating otherwise shall be invalidated.
3- In the event that there is no objection or default on the part of the lessee, the department has the authority to renew the lease contract on behalf of the lessor, after notifying him legally for the renewal, and for the tenant to deposit the rental checks on the responsibility of the lessor.
Real estate experts and legal experts emphasized the necessity of determining the value of the commission, or considering it a custom to be applied in the market.
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