Who bears the real estate commission on a rental: the tenant or the landlord?

The question of who bears the real estate commission in long term rental continues to be an issue of great relevance and concern for both tenants and landlords.

For this reason, we considered it essential to prepare a comprehensive article that addresses this topic in detail, offering a complete and detailed analysis that will be of interest to our readers.

Through our website, we have received several queries from homeowners facing dilemmas related to this topic, which has motivated us to elaborate this informative guide.

We are going to share some of the most recurrent ones in order to answer them:

• Who pays real estate fees on a rental?
• When are the fees paid to the real estate agent?
• What fees does a real estate agency charge?

Throughout the article we will try to shed some light and give clear answers to facilitate your decision making in the current real estate market.

However, before we begin, let's define what real estate fees are.

What are real estate fees?

Professional fees are the fee that a company or professional charges for providing a specific service. It is essential that this service is clearly established in the service contract between the real estate company and the owner of the property, defining certain key concepts in a precise manner:

1. Precise identification of the parties involved (owner and real estate) and of the property in question.
2. Exhaustive detail of the services that the real estate company will provide, including a detailed list of the tasks that will be performed before, during and after the marketing process of the property.
3. Duration of the contract between the parties.
4. Possibility and possible penalties for early termination.
5. Fees to be charged: what amount will be paid, at what time, taxation of these fees for the property owner, etc.

In DOM Tenerife Real Estate, we understand that nowadays it is difficult to find a real estate agency that offers transparency in its rates and flexibility to the contracting party.

However, we commit ourselves to the owners of the properties by means of a contract without permanence, guaranteeing that at the end of the service they will not be affected by abusive clauses.

In addition, when drafting and formalizing the contract, we strive to provide a maximum level of detail in terms of the services to be provided and the price of each one of them.

Who pays the real estate commission by law?

The new Government Housing Law,approved Wednesday in the Senate and which will go into effect this Friday, has put the spotlight on renting. 

One of the most important is that the owners of rental properties will be responsible for paying the real estate agencies' fees. More specifically, this law indicates that "the real estate management expenses and those of formalization of the contract will always be paid by the lessor" regardless of whether they are legal entities or individuals.

The real estate service is provided to the owner and, therefore, it will be the owner who will have to assume the expenses generated by such service", the spokespersons of the political parties have pointed out.

What fees does a real estate agency charge for rentals?

Generally, only one monthly fee is charged; however, it is important to note that there are different practices in the market and this will depend on specific factors, which we will mention below:

• The rates of each company.
• The location where the real estate is located.
• The type of audience being targeted.
• The type of operation or service it provides.

From a legislative point of view, it is not stipulated how much must be paid to a real estate agency for renting an apartment. The usual percentage is between 8% and 10% of the annual rent, or one or two monthly payments, depending on the size of the property and its market value.

As with all content related to real estate commissions, when the fees are paid for the provision of the service is also not legislated in the current regulations.

The usual rule is to make the payment of such fees at the time of signing the lease contract, or at the time of signing a reservation contract with the future tenant.

We proceed in this way, since it is understood that we will only be charged if the operation is completed. As we know, this is not a written rule, but it is always complied with.

At DOM Tenerife Real Estate, we strongly suggest hiring a company that not only puts your property on the market, but also adds additional value to the service. This will allow you to obtain a wide margin of benefit both in economic terms and in the peace of mind of knowing that your property is being managed by leading professionals in the sector.

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