When considering property management services, understanding the associated costs is vital. Property management fees significantly influence a landlord’s profitability and the level of service they receive. Paying too little may lead to substandard service, while paying too much can erode rental income. Let’s explore the types of fees commonly charged and how landlords can manage these expenses effectively.
What Does a Property Manager Do?
A property manager handles the day-to-day operations of rental properties, alleviating landlords from responsibilities such as rent collection, tenant vetting, property maintenance, and dealing with legal matters like evictions. Their goal is to maximise rental income and maintain property value.
Wondering what is the difference between a property managers and a strata manager? Read more property manager vs. strata manager.
How Much Do Property Managers Charge?
The cost of hiring a property manager varies depending on the services provided. Some offer bundled packages covering a wide range of services, while others charge separately for each task. In the UK, property management fees typically range from 8% to 15% of the monthly rental income. It’s crucial to evaluate the scope of services included in the fees to avoid hidden charges.
1. Early Cancellation Fees
Most property management agreements last a year. If landlords terminate the agreement early, they may incur a cancellation fee. This fee protects property management companies from losing time and resources. However, landlords should review the terms carefully to avoid being locked into an unsatisfactory arrangement. Regulatory bodies such as The Property Ombudsman and ARLA can assist landlords in disputes if the manager fails to meet contractual obligations.
2. Rent Collection Fees
Rent collection is a fundamental service offered by property managers. Fees can be based on either rent due or rent collected. Landlords should prioritise agreements where fees are charged on rent collected to avoid paying for unreceived rent. For example, a 10% fee on £1,000 rent equates to £100, whether or not the tenant pays. Opting for ‘rent collected’ fees ensures fairness.
3. Tenant Find Fees
Tenant finding involves advertising the property, conducting viewings, vetting potential tenants, and drafting tenancy agreements. Letting agents and property managers often charge one month’s rent or a fixed fee for these services. Online letting agents may offer cost-effective alternatives, but landlords might need to handle viewings themselves. Using platforms like Rightmove and Zoopla is often bundled into these fees.
4. Viewing Fees
Traditional letting agents include viewings in their tenant find services. However, online agents may charge extra for conducting viewings. Landlords with limited time might find this service valuable, particularly when dealing with last-minute requests.
5. Premium Advertising Fees
Premium advertising can help properties stand out on platforms like Zoopla and Rightmove, increasing visibility. These services often involve bold listings or highlighted adverts. Property managers usually secure discounted rates due to bulk usage, which can be passed on to landlords.
6. Tenancy Renewal Fees
Renewing tenancy agreements is a simple yet chargeable service. Fees typically cover the drafting of updated contracts, often with minimal changes. Landlords should also be aware of admin fees for mid-tenancy changes, such as rent adjustments.
7. Maintenance Charges
Maintenance costs are a common source of dispute. Landlords should ensure transparency in how property managers select contractors and approve expenses. Some managers may prioritise speed over cost efficiency or use contractors offering referral fees. Clear communication and pre-approval for repairs can mitigate unnecessary costs.
8. Eviction Fees
Evictions are stressful and costly. Property managers handle legal paperwork, court appearances, and tenant removal, often charging additional fees for these services. Understanding these costs upfront helps landlords budget for unexpected situations.
9. Guaranteed Rent Fees
Guaranteed rent schemes provide landlords with consistent rental income, even if tenants default or vacate early. However, these services come at an extra cost. Landlords should verify payout timelines, as delays can impact their cash flow.
10. Inventory Fees
Inventory documentation is crucial for furnished properties. Detailed lists with photographs protect landlords during disputes over damages or missing items. Property managers charge for creating and maintaining these records, which serve as essential evidence if conflicts arise.
Property Management Fees Comparison
To navigate the varying fees and services, landlords can use comparison tools like Rentround. By entering a postcode, landlords can compare property management fees, ratings, and services in less than 30 seconds. This transparency helps landlords make informed decisions and maximise their rental income.
Understanding property management fees and services ensures landlords can make informed decisions and maximise their rental income. By comparing options and negotiating terms, landlords can achieve a balance between cost and quality of service.
Are you still wondering whether you need a property manager? Here are a few reasons why landlords need a property management company.
