How Does An Office Broker Get Paid?

Category: Office market, Costs & commission. Reading time: 8 minutes. By the YourSpace team, tenant-side office brokers in Amsterdam.

How does an office broker get paid? If you are renting an office for the first time, that is a fair question. You want to know who gets the bill and whether it costs you anything.

This article explains how commission (in Dutch, courtage) works in the Netherlands and which payment models brokers use. We keep it concrete and flag figures that are illustrative. That way you know where you stand before you sit down to negotiate.

Short Answer: How Does An Office Broker Get Paid

An office broker is almost always paid through commission. That is a fee set as a percentage of the transaction.

For a lease, that bill usually sits with the landlord; for a sale, with the seller. As a tenant, in the standard situation you pay nothing to the landlord's letting agent.

Commission (courtage) is the fee a broker earns once a deal closes. Who pays which broker depends on who gave the assignment. The Dutch knowledge base i4housing sets out who pays the commission clearly: the landlord pays the letting agent (verhuurmakelaar), and the tenant pays their own tenant broker (aanhuurmakelaar).

That distinction matters to you as a tenant. It decides whether, and to whom, you pay commission yourself.

What Is Commission And How Is The Rate Set?

Commission is the fee for getting a transaction over the line. The broker searches, advises, negotiates and guides you to signing. Only once the deal is done does the broker earn the fee.

According to a Dutch real estate law guide from Jarnias Cyril, in the Netherlands there is no legally fixed commission percentage, and none set industry-wide either. The broker sets its own rate, and that rate is negotiable. So always ask up front about the level and the basis of the commission.

The rate depends on the assignment. A large or complex deal takes more work than a short search, and that shows up in the price. The calculation basis also differs per broker, so put the agreement on paper before you start.

Commission carries VAT (btw). The Dutch tax authority (Belastingdienst) charges 21% VAT on services, so it applies to broker commission too.

If you are a VAT-registered business, you can in most cases reclaim that VAT as input tax (voorbelasting). Check with your tax adviser for your own situation.

Who Pays The Office Broker: Landlord Or Tenant?

By default, the landlord pays the letting agent. That broker works on the landlord's assignment and represents the landlord's interest.

If you want someone on your side as a tenant, you hire your own tenant broker. That adviser works only for you and is paid by you, unless you agree otherwise.

The law forbids one broker from billing both parties. This is the prohibition on "serving two masters" (het dienen van twee heren, art. 7:427 in conjunction with 7:414 paragraph 4 of the Dutch Civil Code).

The Dutch Supreme Court (Hoge Raad) confirmed this on 16 October 2015 (ECLI:NL:HR:2015:3018). The same principle applies to commercial real estate.

A tenant-side broker therefore sits at the table without a conflict of interest. Their assignment is to improve your rent and terms, in the interest of your team.

That difference counts when you negotiate. If your broker works for the landlord, they are paid to let the property on good terms for the owner. So always ask whose side the broker is on before you rely on their advice.

Commission On A Lease Versus A Sale

For a lease in the Netherlands, you usually calculate a percentage of the first year's annual rent (jaarhuur). The total rent over the whole term does not enter into it.

According to the commercial-brokerage platform OnlineBedrijfsmakelaar, letting commission sits around 16% of annual rent. That is market practice, not a legal or NVM standard.

Internationally, the math works differently. According to the reference work Wikipedia, in the United States people often use internationally 3 to 6 percent of the total lease value over the full term. That is a different basis from the Dutch annual rent, so do not compare the two figures one to one.

For a sale, it is a percentage of the sale price. The commercial broker ProRanje puts the commission on selling a business property at usually 1–3% of the sale price, excluding VAT.

The trap is the difference in basis. Anyone who lines up a Dutch and a US percentage side by side is comparing two different things. So always check what the percentage is calculated on before you compare two quotes.

Each row points to the source linked above in the text. The figures are market practice and illustrative, not a quote.

A Worked Example

A worked example makes it concrete. Say you rent an office for 40,000 euros of rent per year. The letting agent charges 16% commission on that first year's rent.

The commission then comes to 6,400 euros, plus 21% VAT. These amounts are illustrative, not a quote. In this example the landlord pays the bill, and you as the tenant pay nothing.

If you use a lower or higher annual rent, the commission scales with it. That is why the annual rent is so decisive for the bottom-line amount. Ask your broker for the percentage and the calculation basis in writing.

Payment Models: Commission, Fixed Fee And No Cure No Pay

Commission as a percentage is the best-known form of payment, but far from the only one. Brokers use different models, depending on the assignment and the risk.

Which model fits depends on the job and on who carries the risk. A fixed fee gives certainty up front, while no cure no pay puts the risk with the broker. The common forms are set out below.

• Key point: Commission or success fee. You pay a percentage of the annual rent or sale price, and only if the deal goes through.
• Key point: Fixed fee. You agree a set amount in advance, regardless of the outcome.
• Key point: Hourly rate. You pay for the hours spent, useful for a well-defined advisory question.
• Key point: No cure no pay. You pay only when there is a result on the table.

No cure no pay is common in Dutch commercial brokerage. The commercial broker MVGM, for example, works on renegotiations with a no cure no pay model, because advice is worth more when a result stands behind it.

Whichever model you choose, agree in advance what the percentage is calculated on. That prevents a discussion at the moment you are about to sign.

How It Works At YourSpace

At YourSpace, your cost picture depends on the type of search. Within our serviced and managed network, the guidance is free for your team, because operators and landlords pay us.

If you search more broadly, for example for conventional space, we work on an exclusive assignment with a success fee based on no cure no pay. We base that fee on the annual rent and on the savings we negotiate for you.

That way our interests line up with yours. We only earn once you sign, and a lower rent or better terms work in your favour. Up front, we set out the model and the basis of the fee clearly.

You get a single point of contact from the first requirement to signing. See commission as one part of the real cost of office space.

Our own supply counts more than 175 offices, and within that network we guide teams to a serviced office in our network. We guided Raxio Data Centres to 225 m² at Co-Office, at no cost to the tenant.

For a broader search you see that approach in a completed tenant search. And in guiding a growing team you can read how we reached a signature together.

What To Check Before You Sign

• Key point: Ask about the model. Do you work with commission, or with another arrangement such as no cure no pay?
• Key point: Check the VAT. Does 21% come on top, and can you reclaim it?
• Key point: Choose tenant-side on purpose. Does the broker work for you or for the landlord?
• Key point: Fix the basis. Which annual rent and which savings is the success fee based on?

Frequently Asked Questions

How does an office broker make money?

An office broker earns commission, a fee they receive once a lease or sale deal closes. Usually that is a percentage of the annual rent or the sale price.

Who pays the commission: the landlord or the tenant?

The landlord pays the letting agent. If you hire your own tenant broker, you pay that adviser yourself, unless you agree otherwise.

What is a common commission percentage for offices?

There is no legal or industry-wide rate, so the broker sets its own price. For a lease you usually work with a percentage of the first year's annual rent, which you ask about and fix in advance.

How is commission calculated on a lease versus a sale?

For a lease in the Netherlands you use a percentage of the first year's annual rent; for a sale, a percentage of the sale price. Internationally, a lease instead uses the total lease value over the term, which produces a different figure.

Can a broker also work on a fixed fee or hourly rate?

Yes, besides commission there is a fixed fee and an hourly rate. Which form fits depends on the assignment and the arrangements you make.

Conclusion

Commission is the heart of how an office broker gets paid: a percentage of the annual rent or the sale price. For a lease the landlord usually pays, and in the Netherlands there is no legal commission percentage. Whether you pay anything yourself depends on the model and on whether you hire your own tenant broker.

So ask up front about the payment model and your broker's interests. Also check whether VAT comes on top, and put the agreement on paper before you give an assignment. That way you negotiate with confidence and no surprises afterwards.

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