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 fulfil 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.
The list of services property managers charge for are below. Alternatively, use Rentround to compare property manager fees near you. Landlords can simply enter their postcode and compare fees & ratings, potentially saving £1,000’s on rental fees.
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. Property managers use exit fees to protect themselves against wasting their time, money and resources.
Adversely for landlords, it creates a financial hit should they want to exit an agreement early. While this can be costly for landlords, that’s the price they must pay for ending an agreement before the agreed-upon date.
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. This is only fair. A landlord shouldn’t be locked into an agreement where the property manager isn’t performing the job as promised.
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. Collecting rent is one of the most tedious parts of being a landlord, which is why many choose to use a property manager to do their “dirty work”. This includes following-up with renters when payments are late.
There is a slight nuance landlords need to be careful of for this type of service.
Rent due vs rent collected is 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, let’s 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. There’s nothing worse than renting to an unreliable tenant. The vetting process can be exhausting from performing background checks to calling references. Many landlords don’t have time for this, and instead, leave this legwork to a trusted and experienced property manager.
RightMove & 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 of properties.
Using these portals are only cost-efficient if you have multiple properties on offer, creating an advantage for property managers. Think of it like getting a discount for buying in bulk. A landlord with a single tenant can’t take advantage of these savings, but a property manager can.
Finding tenant services offered by property managers 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 take over this activity.
A potential tenant may want to see the property unexpectedly or spontaneously. This can be difficult to accommodate if you’re a landlord on the side and either work another job or have other obligations.
Viewings are part of a property manager’s responsibilities, making it much easier for them to fit showings into their schedule and accommodate spur of the moment requests.
5. Premium advertising fees
Advertising is an important element of any business, and letting is no different. If potential tenants don’t know your property exists, how can they make an offer?
Similar to getting discounts on letting portals, property managers also have the means to advertise the property at a cheaper rate and more efficiently.
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
So, your tenant wants to renew their lease — that’s great news. Except your property manager will want to be paid for drawing up new paperwork and making sure the wording and stipulations are accurate and legal.
While this is an important step in the process, it’s relatively easy and doesn’t require much work on the property managers part. Unfortunately, that doesn’t mean they won’t charge you to do it.
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 midway 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 of a plumber in our lives, but usually, we shop around for a decent cost rather than picking the first plumber we call. Property managers want to get the problem resolved, and quick. This could lead to them accepting the first offer they stumble upon or, even worse, hiring a shoddy contractor because they’re receiving a kickback.
Does the property manager get a kickback?
Speaking of a kickback, 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. That means you may get a subpar contractor to perform the job because it’s in the best interest of the property manager, not you or your property.
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 favourable, but doesn’t always happen.
Unfortunately, when you allow your property manager to handle the maintenance fees and address any problems on the property, you’re paying for the convenience and for less aggravation. But at what cost?
8. Property manager fees for evictions
Evictions are part and parcel of managing a rental property. It’s not something most landlords want to do or deal with, but it happens. You shouldn’t be stuck with an unreliable or destructive tenant just because you feel bad.
Whether a tenant is behind on rent, causing damage to the property, conducting criminal activity or being a nuisance to neighbours, eviction services are needed in the lifetime of many landlords.
Evictions can however be expensive, stressful, and drawn-out.
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.
For many landlords, these fees are well worth it if it means not having to deal with the eviction process themselves.
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 get 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 payout. 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. This protects you in the event that any property is damaged or stolen over the course of the tenancy.
If there is ever a dispute, then the inventory can be looked back upon. A good property manager will create a detailed list along with photographs for evidence.
This is a key document that can clarify where should the 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, Rentround can be used to compare property manager fees.
Landlords just need to enter the postcode of their property. Rentround 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.