How-To: Rent. Who Pays The Broker's Commission Fee?

 

When should the broker's commission fee be paid?

The broker’s commission fee arises only with the signing of the contract between the tenant and the landlord (tenancy agreement). If the tenancy agreement has not been signed, the broker is not entitled to receive his/her commission fee.

 

What is the difference between “Provision”, “Maklerprovision”, “Courtage” and “Maklercourtage” in Germany?

There is none!

 

Who should pay?

In June 2015 there was a new tenancy law reform introduced called the “Bestellerprinzip”, which directly translates to “orderer principle”. This reform means that the broker’s commission fee has to be paid by whoever has hired the broker. The „Bestellerprinzip“ only applies for residential property.

In commercial real estate this law reform does not apply, leaving the question of who needs to pay the brokerage fee open. Traditionally, it is the landlord who takes over the costs. However, in areas of high demand the tenant can sometimes be asked to pay the broker’s commission fee.

 

How much is the commission fee?

The amount a broker can ask for is, again, negotiable. Usually brokers ask for 3 net rents (VAT is typically not included). If the tenant is required to pay the commission fee directly, it is clearly stated in the invoice and/or the terms and conditions of the trade agreement.

When looking for an office space, it is therefore advisable to check whether a space is “provisionsfrei” (free of commission) or “provisionspflichtig” (subject to commission). Especially, since in order to charge the fees, there is no distinct contract required.

On the other hand, a broker needs to prove that a deal has been closed due to his/her broking efforts. It also counts as a success, if it is not the original contact person who signs the lease, but a family member or someone who is under company law closely connected to that person.

 

Tip:

For startups the broker's fee is typically quite a reasonable amount of money. But don't forget: there is always room for negotiations! Sometimes landlords agree, for example, on payment by installments. So be creative!

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Read this article in German!