Title: Iran’s Cabinet Approves New National Framework for Real Estate Broker Commissions
In a significant regulatory move, the Iranian cabinet has approved a new, standardized national framework for determining real estate broker commissions, shifting the basis of calculation from fluctuating daily market prices to a fixed, government-defined transactional value.
A New System for Broker Fees
The decision, based on the “Law Mandating the Official Registration of Real Estate Transactions,” establishes that real estate consultants’ fees will now be calculated using a coefficient applied to the “transactional value” of properties as defined in Article 64 of the Direct Taxes Law. This fundamental change means the day-to-day market price of a property will no longer directly influence the broker’s commission rate.
Kianoush Goodarzi, Head of the Real Estate Consultants Union, confirmed the development, stating that the new rates are to be determined and implemented within the next three months by supervisory commissions in each of the country’s approximately 400 counties.
Addressing Regional Disparities
Goodarzi explained that the new system was necessary to create a fair and sustainable model. Initial proposals from relevant ministries faced criticism for attempting to apply a single national index, which failed to account for the significant variations in property values across different regions and even within cities like Tehran.
“The previous tariff structure was pushing real estate consultants toward bankruptcy,” Goodarzi noted. “Thankfully, state officials and the Ministry of Industry, Mine, and Trade listened to our reasoning.”
Under the new bylaw, county supervisory commissions will set a commission rate for their respective areas. A key stipulation is that this new rate should not be lower than what brokers are currently receiving on average, though it can be higher.
Enforcement and Implementation
To ensure compliance, the government has established strict penalties. Brokers who charge fees above the officially set ceiling will face fines of up to three times the excess amount they received. The new regulations explicitly prohibit charging any additional fees, even if mutually agreed upon with the client, for services like contract drafting.
Goodarzi also addressed the perception of brokers contributing to housing inflation, arguing, “If business is thriving, the commission for real estate consultants will not affect housing prices.”
This comprehensive regulatory update, passed in a recent cabinet session, is designed to bring greater transparency, stability, and standardization to Iran’s vital real estate sector.
