Property managers are a valuable asset to landlords looking to alleviate themselves from the day to day duties of a rental property. When deciding on getting a property manager and which to choose, the property manager fees play a big part.
Pay too little and you could be entering into a sub-par service that potentially isn’t going to fulfill your needs.
Pay too much and the profitability of the rental property diminishes.
Property managers approach their fees in different ways. Some prefer to lump all fees for a wide range of services into one monthly lump sum.
Others charge a reduced monthly fee, but have a list of specific fees for specific services.
The list of services property managers charge for are below:
1. Property manager early cancellation fees
You will enter a contract with a property manager which will define the terms and length of an agreement.
Agreements generally are over the course of a year. However landlords looking to exit their agreement early with their property manager, may face an exit fee.
Obviously for a property manager this creates a lock in for landlords on their books.
Adversely for landlords, it creates a financial hit should they want to exit an agreement early.
If landlords do feel that their property manager isn’t performing as expected or worse, breaking the terms of the agreement, there is room for action to be taken.
There a host of regulatory bodies’ property managers require to be signed up with, The Property Ombudsman & ARLA, for example. These regulatory bodies can be reached out to in order to push through any complaints.
2. Rent collection fees
Collecting & tracking rent is another service property manager’s offer, usually tied into a bundle package.
There is a slight nuance landlords need to be careful of for this type of service.
Rent due vs rent collected are often the basis on which property managers determine their fee for rent collection activities.
Ideally, landlords want to select ‘rent collected’.
For example, if a property manager charges 10% of ‘rent due’ and a tenant owes £1,000, then the property manager’s fee would equate to £100.
However lets say the tenant doesn’t pay, or only provides a partial payment, your fee payable to the property manager would still be £100.
With ‘rent collected’, the fee for this service is based on the actual rent collected from the tenant, regardless of what was actually due.
3. Tenant find fees
Finding tenants for vacant rooms or properties is of course a vital duty for property managers.
Right Move & Zoopla are the best places to find tenants. However costs to use these portals are extremely high for landlords who have only one or a handful or properties.
Using these portals are only cost efficient if you have multiple properties on offer, creating an advantage for property managers.
Finding a tenant services offered by property manages will usually cover the cost of posting on Zoopla & Right Move, conducting viewings, drawing up the tenancy agreement & collecting the first month’s rent.
Fees property managers charge for finding tenants vary in terms of their construct.
Some charge landlords a whole month’s rent, whereas others take an ongoing commission of the monthly rent for that tenant.
With the influx of online letting agents, a fixed one off low fee is often available, a factor that is seriously squeezing the margins of traditional letting agents & property managers.
4. Viewing fees
As stated above, the cost of conducting viewings is usually factored into tenant finding fees.
However if you’re going with a low fee online agent, the burden of conducting viewings often falls with the landlord.
Viewing fees are usually confined to only online letting agents. If a landlord hasn’t got the time available to show potential tenants a property, a fee to the online agent can be paid to takeover this activity.
5. Premium advertising fees
As an incentive to get a property let out quicker, property managers offer the chance for landlords to get a ‘premium’ listing.
This basically means that on property sites such as Zoopla & Right Move, a landlord’s property stands out from other listings (usually in the form of bold wording or different colour schemes).
6. Tenancy renewal fees
A tenancy agreement between the property agent/yourself and the tenant usually is over the span of 12 months.
When renewal time comes, property managers usually charge a fee to get the new agreement signed.
Much to the annoyance of landlords, the tenancy agreement commonly hardly charges if the same tenant is involved, except for dates & updated signatures.
Landlords need to be wary that if changes need to be made mid-way through a tenancy agreement (i.e. change in rent amounts, terms or personal details), property managers may charge an admin fee.
7. Property manage charges for maintenance
Inevitably, things go wrong with rental properties. Boilers break, keys are lost and leaks occur.
The property maintenance small print must be looked into by the landlord. There are some key questions that need to be addressed, that cause a risk of substantial costs being assigned to landlords.
If there is an issue, the property manager usually gets it fixed and sends you a bill later.
However will a property manager be looking after your best interests and get quotes from various contractors?
We’ve all been in need for a plumber in our lifes, but usually we shop around for a decent cost rather than picking the first plumber we call.
Does the property manager get a kick back?
If a property manager is getting a referral fee from a contractor, they are incentivised to use that contractor as opposed to shopping around for a better price & quality.
Once a price has been given for a particular fix, will the property manager call the landlord first?
Ideally, landlords want to be told of potential costs before they have been incurred. A courtesy call, giving the landlord the opportunity to find an alternative contractor or solution is favorable.
8. Property manager fees for evictions
Evictions are part and parcel of a managing a rental property.
Whether a tenant is behind on rent, causing damage to the property, conducting criminal activity or being a nuisance to neighbors, eviction services are needed in the lifetime of many landlords.
Evictions can however be expensive.
On occasions to process an eviction, solicitors & courts need to be involved which will incur a cost.
Then further fees are going to be incurred when getting an eviction team to remove the tenant & their items.
Landlords should check what fees property managers charge for eviction services & if they are already included in packages undertaken.
9. Guaranteed rent fees
Guaranteed rent is an insurance policy that ensures landlords gets their rent paid (subject to terms & conditions). This means if a tenant refuses to pay or vacates early without notice, the policy provides the rental payments.
Landlords must look out for how long these policies take to pay out. Some landlords can be waiting 6 months, therefore during this period landlords still need to make sure mortgage payments etc. are still kept up with.
Property managers usually charge a fee for this service over and above basic packages.
10. Property manager fees for inventory
If you have a furnished rental property, an inventory will document what furnishings are in the property and their condition.
If there is ever a dispute, then the inventory can be looked back upon.
This is a key document that can clarify where should cost be assigned, should items go missing or they break.
Property manager fees comparison
The positive for landlords is that property managers must display their rental fees, both in their offices & website.
This increases transparency in the market and helps landlords navigate through property agent fees & various services on offer.
To save landlords even more time, Rent Round can be used to compare property manager fees.
Landlords just need to enter the postcode of their property. Rent Round then shows property agent fees in proximity to the postcode alongside ratings & services offered.
The property manager fee comparison is free for landlords and takes less than 30 seconds.