Property Management Rental Commissions, Fees, Charges and Costs – What should I expect ?

Property Management today is not as simple as it was in years gone by. Regular legislative changes to tenancy law has made what used to be quite a simple process, much more complex. Along with these more tenant friendly regulations , better reporting for tax benefits has also become more important. So the property management commissions , charges, fees and costs have increased to cater for these additional functions.

The efficient property manger today needs to be well skilled in all aspects of tenancy law, legal rights and risks, property maintenance, real estate trust accounting and more. On top of the legalities , it is vital that a good property manager have great personal skills which is required in dealings with both owners and tenants but also on site managers and other residents. Most rental agents will claim to be the best and most professional property managers in their area but it pays to do your homework and find the one that actually lives up to their claims and does an effective and reliable job for you the owner who is paying all the various rental commissions and fees , management charges and statement and accounting costs that they want to bill you for.

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How much are Property Management Commissions and Fees ?

In general , nearly all property management commissions and fees are based on a fixed percentage of the rent received. The actual percentage of the rent does vary from rental agent to rental agency. The lowest we have seen is 5% and the highest is 11%. Some holiday rental mangers will charge up to 13 % due to the more involved process in short term renting.

In arriving at the percentage of rent that forms the property management fees and commissions, the agent will take into account the amount of rent the house or unit can actually achieve. So the higher the rent the greater the possibility of you being charged a lower percentage . For example a rental property that will rent for $1200.00 per week does not usually cost the property manager any more to manage than a small unit getting $400.00 per week. So it is in the letting agents interest to sign up the more expensive property and charge say 6 % commission rather than 10 %.

So the agency will receive $84.00 per week for the higher renting property and 40.00 per week for the smaller unit. The costs to manage the properties are likely to be very similar , just more valuable for the agent to handle the larger property.

Real Estate agents will often say that you get what you pay for , but in the example above it is just purely the maths of real property management costs verses the rental income a property can achieve. Having said that , it is important to not just look at the percentage of commissions and fees charged, there is a very real and important element in choosing the right property manager. What you want is someone that works hard to get your property rented to the right tenant first off and get it rented as quickly as possible. You want a manger that is proactive and does all the correct due diligence.

Other common charges and costs for property management

For first time landlords they often get a surprise when they see appear on their rental statement the additional charges and cost that are additional to the actual rental commission or fees. These charges are usually for preparing and send the the rental statement each month and will relate to their accounting overheads in getting this information together. The other costs can relate to physically mailing out or emailing the monthly statements. Then there is the initial letting fee charged when the property is first rented out. Here are more examples of usual management costs:

  • Property Letting fee – Usually equivalent to the first weeks rent plus gst.
  • Lease renewal fee on resigning – This can be either a percentage or a fixed cost of a week’s rent plus gst.
  • Accounting and Administration fee – this is usually a fixed amount each month to cover cost associated with accounting/admin.
  • End of Financial Year Income and expenditure statement cost – This cost is usually as a fixed fee.
  • Advertising Costs – Most likley a fixed fee, dependant on the type of property and how competitive the market is.

Property Management Commission and Fee Percentage versus a Flat Fee No percentage charge – which is better?

Like all things in this world today , technology is changing everything quickly. Technology has made the costs to manage property more efficient and internet sites like www.realestate.com.au have made advertising costs for rentals lower and of course much easier to reach a large audience. Which is a better way to charge landlords to manage their property ? It looks like the % percentage of the weekly rent is winning out in this race as very few of the flat Fee models have actually succeeded and lasted for any length of time.

What is the average commission or fee charged in each state in Australia?

Every state in Australia has slightly different laws relating to real estate agent commissions and fees. Mostly they are now deregulated and property management percentage rates are what the market will pay. In a recent survey of costs of property management, it was the regional areas in Australia that had the highest costs for owners to have their property managed not the capital cities. In country and regional areas where rents are much lower , commissions of up to 12 % were being charged, where as in the main capital cities the mean average was 7.8%. So determining what is the average rental commission or fee is very dependent on where your property is located and how many agents are competing for the management rights to your house or unit.

The Home Valuation guide business has researched and partnered with property management rental agencies throughout Australia. We offer a free service to help you rent your property for more, as quickly as possible. This service can connect you with the a top Property Manager in Adelaide, Brisbane, Canberra, Darwin, Gold Coast, Geelong, Hobart, Newcastle, Melbourne, Perth, Sydney, Townsville. There is no cost for this service.

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