Real estate: EU Court approves 4 percent cap on agency commissions

Brussels – With home prices generally increasing across the European Union, significant support for those seeking to buy or rent property on the Old Continent could come from real estate commissions. In this matter, the Court of Justice of the European Union (CJEU) ruled that EU law is not opposed to imposing a ceiling on the percentage of the rental or sales price that real estate agents can collect for their brokerage service, specifically a cap of 4 percent.

Referring the case to the Luxembourg court was the Constitutional Court of Slovenia, which had doubts about the legality and conformity with EU law of a national law imposing this limit on agencies for single-family residential buildings or apartments purchased or rented by individuals.

In its judgment, the CJEU excluded the discriminatory nature of the measure and added that setting a cap on commissions appears “to be such as to promote the accessibility of adequate housing at affordable prices, given that the commission amount is likely reflected in the sale price or rent amount.” The Court also pointed out that this is particularly relevant for vulnerable people, namely students, young people, and older people, who are more sensitive to rising property prices. It can contribute to consumer protection transparency and prevent excessive fees.

Since it is a judgment, the EU Court of Justice provision affects Slovenia and our real estate market: it is binding for all national judges presented with an identical case. Although the price of houses in Italy is decreasing, rental costs, in line with the rest of European countries, are increasing. Seven Italian regions are where the commission paid to agencies reaches 5 percent of the sale or rental value (especially Tuscany, Veneto, and Lombardy).