I am renting out my apartment for the first time and am not very sure exactly what the agent’s job involves and what services I am actually paying for.
Firstly, I understand that the tenant does not have to pay any commission if his monthly rental is above $2,500, with the landlord instead having to pay the full commission to the agent. I would like to know why there isn’t a cap on such commission to protect the landlord’s interests.
For a two-year lease, the market practice has typically been to pay one month’s rent in commission. This doesn’t seem logical to me — why should we pay an agent say, $2,600 or $10,000 or more (depending on the monthly rent amount) when the amount of work the agent does is exactly the same?
Secondly, when there are two agents involved in the transaction, the commission is shared by both. However, when there is only one agent representing the tenant, the landlord still has to pay that same amount of commission. Is this justifiable just for that bit of extra work handled by one person instead of two?
This doesn’t make sense for me as a landlord — I don’t have an agent, yet I have to spend money to place advertisements in the media, answer calls about enquiries and schedule viewing appointments.
It is worse when the agent is “pro-tenant” and protects his or her client’s interests when actually being paid by the landlord.
Lastly, why do we need to pay the agents the full commission again when we renew the tenancy with the same tenant, when the amount of work involved the next time round is a fraction of the original workload? Do we have to continue paying the full commission every time we renew the contract? Why, and what are we paying for?
With the current increase in transactions in the rental property market, could the relevant authorities provide some advice and guidelines on this?
Letter from Jocelyn Koh
Source: Today. 13 July 2007
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