Real estate agents act as intermediaries when a property is to change ownership. Many of these service providers also serve as contacts for landlords and tenants. They support their clients in finding new tenants or suitable housing. They charge a commission for this. But who pays the agent’s fee? Is the commission the responsibility of the property owner or the prospective tenant?
The Ordering Principle for a Rental
Who has to pay the agent in a rental is regulated by law. In Germany, the so-called ordering principle has applied since June 2015. It is enshrined in the Act on the Regulation of Residential Property Brokerage (WoVermRG). In addition, Sections 652 to 654 of the German Civil Code (BGB) apply.
The ordering principle states, in simplified terms: Only the person who commissions an agent must pay them. This results in four possible scenarios:
- If you are looking for an apartment and contact an agent who is offering an apartment on behalf of the landlord, you do not have to pay an agent’s commission.
- If you are a prospective tenant and commission an agent to search for an apartment, you pay this service provider a commission if successful.
- If you are a landlord and engage an agent to broker your apartment, you must bear the agent’s costs. You may not pass them on to the tenant!
- If you are a landlord and an agent contacts you to arrange a tenancy agreement for a client, you do not have to pay anything. The prospective tenant pays the commission.
Before the statutory amendment, it was common for agents to broker an apartment on behalf of landlords, while the tenant had to bear the agent’s fee upon conclusion of the agreement. To relieve tenants of costs, the legislator introduced the ordering principle through an amendment to the law. Since then, the simple rule has applied: Whoever commissions the agent also pays them.
Ordering Principle for All Private Rentals
The ordering principle applies to all residential rentals, provided an agent is involved. This includes apartments and houses. However, it does not apply to commercial rentals or to the purchase and sale of real estate. If, however, the rental property is a combination of commercial premises and an apartment, the ordering principle also applies when an agent brokers the property.
Ordering principle: What does “commissioning a real estate agent” mean?
The ordering principle is linked to an order. Only if you commission the real estate agent will you later have to pay an agent’s fee. Section 2, para. 2, sentence 2 WoVermRG states:
“The brokerage agreement must be in text form.”
This means: Verbal orders or handshake agreements do not count. There must be a written order that you have transmitted at least by email or fax. Written form as a letter or signed paper is also possible.
If there is no text form, the real estate agent cannot invoke a fee. You do not have to pay corresponding invoices.
How high is the real estate agent’s commission for brokering a rental apartment?
The agent’s commission depends on their client. If you are a prospective tenant, the following applies:
- The commission for brokering an apartment or rental house is capped at two months’ net cold rent plus VAT.
- In the case of a stepped rent, the agreed rent for the first year serves as the calculation basis.
- If the agreed rent exceeds the local comparative rent by more than 20 percent, the comparative rent serves as the calculation basis.
In all cases, the real estate agent may charge you a commission only if the tenancy agreement was concluded through their brokerage activities.
If, on the other hand, you are the landlord, different calculation bases apply. The real estate agent can negotiate individual terms with you. These may be based on the net cold rent or consist of various components such as brokerage, viewing appointments, etc. In this case, the real estate agent may even invoice agreed services that are not success-based, even if they have not brokered a tenancy agreement.
However, irrespective of the ordering principle, the real estate agent may generally not charge you any fees if
- they broker social housing;
- they themselves are the owner, property manager, tenant or landlord of the residential property being brokered, or are economically closely affiliated with it;
- an existing tenancy agreement is continued, extended or renewed.
When is the real estate agent’s commission due after renting?
As a rule, as the client you only pay the real estate agent a fee in the event of success. Since advance payments for brokerage services are inadmissible, the broker usually invoices their commission after the tenancy agreement has been signed to the party that commissioned them.