Off-plan commission: What you should know about it
Off-plan commission refers to the brokerage fee payable when buying off-plan property in Dubai. Off-plan properties are properties that are still under construction or where construction work has not yet begun. This form of property investment has grown in popularity in recent years, mainly due to the potential for capital appreciation and flexible payment plans.
What is an off-plan property?
Off-plan properties are properties that are still in the planning or construction phase. Buyers have the opportunity to purchase the property at a lower price because it is not yet completed. However, this means that investors also take certain risks, as construction delays or other unexpected problems may occur.
The role of the commission off-plan
Off-plan commission is a fee charged by estate agents who help buyers find and purchase off-plan properties. This commission is usually agreed as a percentage of the purchase price and can vary from project to project. A typical commission is between 2% and 5% of the total amount of the transaction.
Why is the commission important?
- Transparency: The commission ensures that the buyer knows exactly what costs will be incurred before signing a contract.
- Market access: An experienced broker can give a buyer access to the best off-plan projects available on the market.
- Negotiations: A good estate agent can help the buyer negotiate a better price and explain important clauses in the contract.
Tips for dealing with off-plan commission
When buying an off-plan property, it is important to clarify the terms regarding the commission off-plan in advance. Here are some tips:
- Compare different estate agents and their commission rates.
- Ask about any additional fees that may apply.
- Choose an agent who has experience with off-plan properties.
Tax treatment of commission
In Dubai, property commissions are generally not taxable, which makes buying off-plan property more attractive to investors. However, buyers should be aware that some other property licences may have different rules according to the Dubai Land Department.
Link to property valuation
The level of off-plan commission can also have an impact on property valuation. A higher price may indicate the demand and attractiveness of the project, while a lower commission may indicate a less sought-after project.
Illustrative example on the topic: Commission off-plan
Imagine Sarah is an investor from Germany who wants to buy an off-plan property in Dubai. She visits several projects and finally decides to buy a flat in a newly planned complex in Dubai Marina. The purchase price is AED 1 million and her estate agent charges a commission of 3%. Sarah agrees and expects a commission of AED 30,000 on top of the purchase price.
During the buying process, Sarah realises that the estate agent gives her access to exclusive information about upcoming developments and helps her with the negotiations. Thanks to his expertise, Sarah is able to negotiate a better price and integrate additional services such as a Dutch rental service.
In the end, Sarah is not only satisfied with the buying process, but also with the amount of the commission, as she understands how important it was for her investment and the support of her agent.
Conclusion
Off-plan commission plays an important role in the purchase of off-plan property in Dubai. By choosing the right agent and conducting comprehensive research, buyers can reap the benefits and better understand the costs involved. Investing in off-plan property can prove lucrative, especially if you have the right support.
