Dubai agent commission: the 2% and 5% are market custom, not a legal rate

A Dubai property listing or brokerage site will usually quote a commission of 2% of the sale price, or 5% of a year's rent, as though those were official figures set by a regulator. They are the industry default, repeated so consistently across agency pricing that they read as settled law. They are not. Dubai's broker regulation leaves the fee to agreement between broker and client, and only falls back to custom when the brokerage contract itself says nothing. That one distinction, rate as custom rather than rate as law, runs through almost everything else that gets asked about Dubai agent commission: who owes it, what licence a broker needs to earn it, what Forms A and B actually commit each side to, whether you can skip a broker altogether, and where a fee dispute actually gets heard.

The 2% and 5% figures are custom, not a legal rate

Dubai's broker regulation is Bylaw No. (85) of 2006, Regulating the Real Estate Brokers Register in the Emirate of Dubai. Article 27 of that Bylaw leaves a broker's remuneration to whatever the brokerage agreement between broker and client sets out, and turns to prevailing market practice only when the agreement is silent on the fee. There is no clause fixing a percentage for either a sale or a rental.

That also answers a related question that gets asked almost as often: what happens if a brokerage agreement is signed without a commission figure written into it? Article 27's fallback is "prevailing practice," a reference to custom, not a published rate card. No RERA-set percentage automatically fills that gap.

Market custom is where the familiar 2% of the sale price and 5% of a year's rent come from. Those figures recur across the Dubai brokerage industry commonly enough to function as a default price point, but they were not located, in this review, in any Dubai Land Department or RERA rule fixing them. A brokerage is free to quote a different figure, and a client is free to negotiate one, because the underlying law treats the number as a matter of agreement, not regulation.

Who owes the fee, and when it's actually earned

Article 33's general rule is that a broker is paid by the party that appointed it, so on a deal with a separate buyer-side broker and seller-side broker, each side owes its own broker's fee. Article 33 also says the fee survives a private agreement to the contrary, but that override is written for a single broker appointed by both sides; with two separate brokers the same result follows from ordinary contract principles rather than from that clause. A seller who pays their own agent in full has not necessarily discharged the buyer's agent's bill if the buyer used a different one; that depends on what the buyer and their broker agreed, not on what the seller arranged.

Timing has its own rule. Under Article 28, a broker earns its commission once the sale contract is signed and registered with the Department, unless the brokerage agreement itself sets a different trigger. If the sale is conditional on a term written into that agreement, the broker is paid only once the condition is satisfied. The opposite case is covered too: Article 30 denies a broker any compensation or reimbursement of costs if its efforts do not produce a concluded contract, unless the brokerage agreement specifically provides otherwise. A broker who spends weeks showing units and arranging viewings has no automatic claim to recover those costs from a client who ultimately buys nothing, or buys through someone else.

Two further provisions can strip the fee even after a deal closes. Article 23 removes a broker's right to remuneration, and to expense reimbursement, if it has breached its duty of good faith to the client, including by acting in the other side's interest or accepting an undisclosed benefit from them. And Article 20 bars a broker from stepping in as the other contracting party to a deal it is brokering unless a party has expressly authorised that; even with that authorisation, the broker forfeits any right to a fee on that specific deal.

What has to be in place before someone can legally act as your broker

A person acting as a real estate broker for reward in Dubai has to be licensed and registered under Article 3 of the Bylaw. Once registered, the Department issues that broker a Real Estate Broker Card showing their name, address and registration number, and that name and number has to appear on all correspondence and reports the broker issues. Ask to see it, and check the number, before you sign anything.

RERA's November 2024 Real Estate Brokerage Practice Guide adds two more conditions that sit upstream of the broker card. A brokerage office's trade licence must first be registered in the Trakheesi system before an application for a broker card can even be submitted. And every real estate advertisement or piece of marketing material has to carry a permit obtained through Trakheesi, with the permit number displayed on the advertisement itself. A listing or social media post with no visible permit number is a sign the advertising side of the rules is not being followed, whatever the broker card situation looks like.

The same Practice Guide describes a Trakheesi "green list" of property owners who have consented to broker contact. A broker who approaches an owner who is not on that list is issued a violation and risks suspension of its operations. That protects owners from unsolicited approaches, but it also means a broker working a deal properly should be able to show that the owner's consent is on file.

Licensing carries a liability consequence that matters when you are deciding whether to use a broker at all. Articles 17, 19 and 22 of the Bylaw make a registered broker liable for fraud, honest mistake, and failure to disclose material facts to either side of a deal. That is a statutory backstop that exists specifically because the broker is licensed and regulated.

Buying, selling or renting without an agent

Nothing in the Bylaw requires a buyer, seller, landlord or tenant to engage a broker to complete a transaction. Article 3 licenses and registers only the people who act as brokers for reward; it does not impose any equivalent obligation on the other parties to a deal. RERA's Practice Guide confirms that Dubai Land Department-authorised registration trustee offices process sale registrations directly, which, combined with the fact that the licensing requirement attaches only to the broker, means a direct deal between an owner and a buyer can be completed without any broker in the chain.

What a direct deal gives up is the liability layer described above. The fraud, mistake and non-disclosure duties in Articles 17, 19 and 22 attach to a registered broker; they do not exist as a statutory matter when a buyer or tenant transacts directly with an unrepresented owner. Going without an agent is legal and, for a straightforward transaction with a counterparty you already trust, can be a reasonable choice. It also means that if something goes wrong with the disclosure of a defect or a material fact, there is no broker-liability framework to fall back on, because no licensed broker was involved.

Forms A and B, and the unofficial "Form I"

RERA's own November 2024 Practice Guide names exactly three contracts it calls "smart marketing and sales contracts": Contract A, signed between the property seller and the real estate brokerage, which is the agreement to market the property; Contract B, signed between the buyer and the real estate broker representing them, which records the buyer's intent to purchase; and Contract F, between seller and buyer. The Guide does not name any contract called Form I.

A "Form I," describing a co-broker split agreement between a listing broker and an introducing broker working the same deal, is commonly described across Dubai brokerage and property-portal content. That description could not be confirmed against any primary RERA document located in this review. It should be treated as unconfirmed industry terminology for a co-broker arrangement, not a regulator-named form, until a RERA source naming it turns up.

VAT on the commission itself

A broker's commission is a service, and in Dubai that service is taxed separately from the property transaction it relates to. Professional tax-advisory commentary interpreting the Federal Tax Authority's real estate VAT guidance and a related public clarification states that commission is charged at the standard 5% VAT rate, even when the underlying residential sale or lease is itself VAT-exempt or zero-rated. That directly contradicts the common assumption that commission on a rental is VAT-exempt because residential rent is. The commission is a separate taxable supply; the VAT treatment of the rent it relates to has no bearing on it.

This rests on consistent professional interpretation of the FTA's published guidance rather than a verbatim quotation of the guide's own text, which was not directly retrieved in this review, though it is corroborated by the FTA's own published position that residential property supplies generally carry exempt or zero-rated treatment while the commission sits outside that category. Ask your broker whether a quoted fee is VAT-inclusive before you sign Contract A or Contract B, because a 2% or 5% headline rate and a rate "plus 5% VAT" are not the same number.

Two worked examples show the gap in practical terms.

On the sale, the gap between the quoted 2% and the amount actually invoiced is AED 2,000. On the rental, it is AED 300. Neither figure is large relative to the transaction, but a client who assumes the quoted percentage is the final bill will be short by exactly the VAT amount when the invoice arrives.

Can one owner list with more than three brokers?

A claim that circulates with some regularity is that a "three-broker rule" caps how many brokers a property owner may engage at once. That cap is real: a Dubai Land Department circular effective 1 October 2022 limits a property to a maximum of three active Form A listing contracts at once, which caps it at three brokers. It is not written into Bylaw No. (85) of 2006 or the November 2024 Practice Guide; those documents only govern joint liability and fee-splitting once more than one broker is engaged.

What those articles actually do is allocate the fee when more than one broker is involved. Where several brokers work the same deal for one party, Articles 24 and 31 treat them as sharing liability and splitting the fee as though they were a single broker. Where an owner has instead engaged several brokers severally, on the basis that whoever closes the deal gets paid, Article 32 awards the entire fee to whichever broker alone succeeds in closing it. An owner deciding how many brokers to list with is choosing between a shared-fee arrangement and a winner-takes-the-fee arrangement, not running up against a legal ceiling on the number.

Where a commission dispute actually goes

Decree No. (26) of 2013, which created the Rental Disputes Settlement Centre, defines the Centre's exclusive jurisdiction in Article 6 as disputes arising "between landlords and tenants." It does not extend that exclusive jurisdiction to a broker's claim for unpaid commission against either side. A tenancy dispute and a broker's fee claim are two different kinds of case, even when they arise from the same rental, and the RDSC's remit covers only the first.

Bylaw No. (85) of 2006, in Articles 34 to 37, creates the Department's own Real Estate Brokerage Dispute Council. That Council takes up a brokerage-fee dispute only if the brokerage agreement itself provides for amicable settlement by the Department, or the parties later agree to refer it there. Where neither of those conditions is met, the claim is not channelled to the Council and it is not channelled to the RDSC either; it proceeds as an ordinary civil claim before the Dubai Courts. That is narrower than saying RERA has no role at all in commission disputes, and also narrower than saying every commission dispute automatically goes to RERA. Whether the Department's Council is even available depends on what the brokerage agreement itself says, or on both sides later agreeing to use it.

What to check before you sign a brokerage agreement

• Ask to see the broker's Real Estate Broker Card and confirm the name and registration number match what appears on their correspondence.
• Confirm Trakheesi registration for the brokerage office, and check that any listing or advertisement carries a visible Trakheesi permit number.
• Get the commission figure written into the agreement rather than relying on a verbally quoted percentage; Article 27's custom-based fallback only applies if the agreement is silent.
• Ask whether the quoted rate is VAT-inclusive, and get the answer in writing, since commission carries the standard 5% VAT rate regardless of the VAT treatment of the underlying sale or rental.
• Check what the agreement says about amicable settlement by the Department's Brokerage Dispute Council; that clause determines whether a fee dispute has a route other than the Dubai Courts.
• If you are buying, selling or renting directly without a broker, recognise that the fraud, mistake and non-disclosure duties that apply to a licensed broker do not apply to an unrepresented owner.