How this calculator works
Letting agents and rental brokers are usually paid a commission for finding a tenant. The fee is often quoted as a multiple of the monthly rent rather than as a percentage, because that is easier to compare across units: half a month, one month, or one and a half months. To turn a quote into dollars, multiply the monthly rent by the multiple. A percentage quote usually refers to the annual rent, so one month of rent on a $2,000 unit is 8.33% of the $24,000 annual rent, not 100% of one month. Who pays depends on the market and the agreement. In many Canadian provinces the landlord pays the agent, because the agent is working for the owner to fill the unit, and the tenant pays nothing. In some cities and in some corporate lettings the tenant pays a finder fee. Read the agreement before signing and check the local rules: some jurisdictions cap or prohibit tenant-paid letting fees. The commission is normally a one-time payment at the start of the tenancy and is not refunded if the tenant leaves early, although some agreements require a rebate in that case.
Formula
Commission = monthly rent x number of months. For a percentage quote, commission = annual rent x rate. Months of rent = commission / monthly rent. Share of annual rent = commission / (monthly rent x 12). First-year rent net of commission = annual rent - commission.
Worked example
A unit at $2,000 a month with a one-month commission pays $2,000. That is one month of rent, 8.33% of the $24,000 annual rent, and leaves $22,000 of first-year rent. A half-month commission is $1,000, or 4.17% of annual rent. A 4.17% quote on annual rent gives the same $1,000.
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Frequently asked questions
Is a half-month commission the same as 4.17% of annual rent?
Yes, to two decimal places. Half of one month is 0.5 / 12 = 4.1667% of a year of rent. One month is 8.33% and one and a half months is 12.5%.
Who normally pays the letting commission in Canada?
In most provinces the landlord pays the agent who fills the unit. Some private landlords and corporate relocations pass a finder fee to the tenant. Local tenancy law may limit tenant-paid fees, so check before agreeing.
Is the commission charged again when a lease is renewed?
Usually not, because no new tenant has to be found. Some management agreements charge a smaller renewal fee. Confirm what triggers a fee in the management contract.
Should I compare commission with vacancy cost?
Yes. A cheaper agent who leaves the unit empty for a month can cost more than a higher commission that fills it quickly. Compare the commission plus the expected days vacant.