Why are UAE property agency fees paid by tenant and not landlord?

Mario Volpi advises on the protocol for paying agency fees, and why it is different in the UAE to other countries.

Mario Volpi advises on the latest property issues. Antonie Robertson / The National

I’d like to know why agency fees are paid by tenants and not landlords as in other countries. It seems unfair that agents are appointed by landlords and, make no mistake, are working for their interests to ensure the landlords contact them when the properties become vacant again. Is that right? Anonymous, UAE

In most countries, the person requesting a service is the one that pays any commission or fees related to the transaction. In Dubai, however, as in some other countries such as India and the US, it is the tenant that pays the commission and fees, depending on geographical areas.

I agree that this procedure would appear different to the norm but that doesn’t mean that it is wrong to conduct business this way. As long as there is transparency and full disclosure by agents and or landlords as to who is responsible for what fees and that this is communicated in a timely manner to the respected parties, this works perfectly well.

Agents tend to charge the person they are representing, whether this be buyer/tenant or buyer/seller and in some cases both parties are charged. RERA has said that it is not illegal for all parties to be charged by the one agent as long as full disclosure of the same is communicated to all parties.

I can only think that this precedent of buyer/tenant paying the agents’ fee was started when the Dubai freehold market was first introduced back in 2002. This is when the Dubai property market was effectively created. In this time and leading up to the heady days of mid 2008, the market was awash with buyers wishing to grab a piece of the Dubai property market. Given that there were so many buyers and tenants around at that time maybe meant that they did not mind footing the bill to acquire property in Dubai. I wish to stress that this is just my opinion and not true confirmation as to why tenants/buyers are the ones who pay the agents commission/fees.

I disagree with your last statement. The Dubai government has worked very hard to approve laws and regulations that govern the relationships between landlords and tenants. It is these laws that uphold the rights of all and are not biased in any way towards landlords. In fact, it could be argued that they favour the tenants, which would explain the frustrations some owners face when renting out their properties.

Our landlord gave us an eviction notice upon renewal of our contract to vacate one year from the said date. Over the last few weeks, I have been dealing with the agents, asking them to send me proof of the letter being notarised. Also I asked if they could return our last rent cheque so that we can move out. But despite my phone calls and emails I am not getting email responses nor valid answers. KL, Dubai

If I am understanding your query correctly, your landlord sent you a 12-month eviction notice to vacate although you do not mention the reason for eviction nor if this was sent recently ie you still have one year to move out. Either way you will know that the eviction notice has come from the notary public by virtue of the stamps placed upon it. For an eviction notice to be served legally, it has to be sent in one of two ways; either via notary public or registered mail. Check the notice - even if it doesn’t have the notary stamps on it, it could still be legal if it was sent via registered post.

If you have now decided to vacate earlier than the notice period allows, you must organise an exit strategy with the landlord which could end up costing you a penalty. If the company is not responding to emails I suggest you go to their offices to arrange a meeting with them and the landlord to be able to move forward. Please note that any monies owed from the landlord to tenant are only normally returned along with the deposit once a check out has been carried out and the property has been assessed for good condition and or if any repairs/repainting is required.

Mario Volpi is a real estate professional who has worked within the industry for the past 31 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 [e-mail].