Real Estate Mathematics — Fees, Commission & Service Charges

The official exam scope names “real estate mathematics” as a domain, and it is the easiest place to gain — or lose — marks, because the answers are just arithmetic once you know the rates. The rates below come from the DLD fee schedule (Executive Council Resolution No. 30 of 2013). Learn the percentages, then practise the worked examples.

The DLD transfer (registration) fee — 4%

Worked example. A villa sells for AED 3,000,000.

• DLD transfer fee = 4% × 3,000,000 = AED 120,000 (legally 60,000 buyer + 60,000 seller; often 120,000 to the buyer by agreement).

Mortgage registration — 0.25%

Registering a mortgage costs 0.25% of the mortgage amount (plus a small fixed fee). A combined sale + mortgage registration is therefore 4% + 0.25% = 4.25% on their respective bases.

Worked example. The same buyer funds the AED 3,000,000 villa with an AED 2,400,000 mortgage.

• Mortgage registration = 0.25% × 2,400,000 = AED 6,000.

Agency commission — the market standard 2% (+ VAT)

Commission is the broker’s fee, agreed in the Form A / Form B agreement — it is not a DLD fee. The market standard for a residential sale is 2% of the sale price, and brokerage commission is a taxable service, so 5% VAT is added on top of the commission.

Worked example. On the AED 3,000,000 villa at 2% commission:

• Commission = 2% × 3,000,000 = AED 60,000
• VAT on commission = 5% × 60,000 = AED 3,000
• Total to the agency = AED 63,000.

For a rental, the common market commission is 5% of the annual rent (again + 5% VAT), though it is negotiable.

Putting a buyer’s cost sheet together

For the AED 3,000,000 villa with a AED 2,400,000 mortgage, a buyer paying transfer fees and their own commission would budget roughly:

Item	Rate	Amount (AED)
DLD transfer fee	4% of price	120,000
Mortgage registration	0.25% of loan	6,000
Agency commission	2% of price	60,000
VAT on commission	5% of commission	3,000
Headline total		≈ 189,000 (plus fixed trustee/admin, title-deed & NOC fees)

Note: fixed administrative charges (trustee office fee, title-deed issuance, developer NOC fee) sit on top; the exam usually tests the percentage items above. Always confirm current fixed fees with DLD before quoting a client.

Service charges (jointly owned property)

In a managed building each owner pays an annual service charge to the Owners Association, calculated on the area of the unit relative to the total area of the jointly owned property (Law No. 27 of 2007, Art. 22 — Part V).

Worked example. A tower has a total chargeable area of 500,000 sq ft and an annual community budget of AED 9,000,000. The rate is 9,000,000 ÷ 500,000 = AED 18 per sq ft. An apartment of 1,200 sq ft pays 18 × 1,200 = AED 21,600 per year.

The rent-increase maths (Decree 43/2013)

When a lease renews, the maximum rent increase depends on how far the current rent sits below the RERA Rent Index average for similar units:

Current rent is below market by…	Max increase
Up to 10%	0%
11% – 20%	5%
21% – 30%	10%
31% – 40%	15%
More than 40%	20%

Worked example. Current rent AED 80,000; RERA Index average for similar units AED 110,000. The rent is (110,000 − 80,000) ÷ 110,000 = 27.3% below market → the 21–30% band → max 10% increase → up to 80,000 × 10% = AED 8,000, i.e. a new rent of at most AED 88,000.