Being a landlord is great for generating income, but it can cause a lot of stress! With this in mind, many landlords opt to pay property manager fees, for someone else to run their property. But exactly what does a property manager do?
Below are the services property managers provide to make your life easier. In addition, tips to ensure you pay suitable property manager fees & don’t get ripped off.
A property manager can take on a subset of activities or you could select full management of your property where you are completely hands off.
The type of service you choose will impact the property manager fees that are charged. Rent Round offers a comprehensive search facility to compare the services & fees of reliable & reputable agents.
What does a property manager do?
The list of things a property manager does. It varies on the services selected and the property manager themselves.
Below are some of the common activities that a property manager will do.
1. Finding and screening Tenants
A guide on what a property manager does needs to start with their bread and butter. The critical role of a property manager is finding you tenants. They know the best marketing routes, handle online questions/property viewings and rent valuations
As they manage multiple properties, they also get better cost rates from online advertising agencies. It’s not just finding you tenants. The property manager needs to answer potential tenant questions, vet their history and handle the initial paper work.
So how does a property manager find tenants?
The most common and effective way is through online portals such as Zoopla & Right Move.
Thousands of potential tenants use these sites to search for rental properties. Once a tenant likes a bunch of properties they like, they’ll contact the property manager to get more information and/or arrange a viewing.
Either the property manager, or the property owner will conduct the viewing. Usually if you’re opting for an online property manager, getting the manager to conduct the viewings will incur an additional fee.
So why can’t private landlords just find tenants from Zoopla & Right Move themselves?
Unfortunately the pricing structure on these portals don’t work for private landlords. The pricing brackets are created based on advertising multiple properties. So for private landlords only advertising a handful of properties, the cost is way too high.
Finding a property manager – Quick tip
Look at current listings property managers have featured on the portals already. Keep a look at for those that have good quality pictures and include a good amount of detail of the advertised properties. These property managers are likely to fill properties quicker and may work best for you in terms of finding tenants.
The biggest stress to landlords is bad tenants; those that do not pay rent on time, damage your property and the most worrying of all, those that do not leave.
Every landlord wants tenants that
- Stay long term
- Pay rent on time
- Treat the property as a home
Without experience in the complex tenant screening process, you might end up on the receiving end of the much dreaded “tenant from hell”
Red flags during tenant references differ.
A wide view should be taken when assessing the tenants past behaviour. Examples provided by Blue Crystal property managers include:
1. Bad credit
By far and away, the single predictor of tenants who will pay their rent on time is their credit report and credit score. A bad credit score is a deal breaker in itself. Bad credit score? STOP. Don’t rent to these people! In general, we look for a minimum credit score of 620.
2. Low income.
You don’t have to be a mathematician to understand that if tenants are not making enough in their monthly paycheck, they will not be able to pay the rent. In general, look for a minimum income that is at least 2.5 to 3 times the monthly rent.
3. Criminal history.
A criminal conviction can be a huge red flag.
4. More than 3 convictions in 5 years
If applicants have more than 3 convictions for anything other than traffic violations, it is an indication that they cannot obey rules. Do not look for them to obey your lease.
4. A prior eviction
Such applicants might as well be wearing a sign that says, “I don’t care about ripping you off.” These are people who defaulted on their lease but would not make good on it by moving out voluntarily.
5. Bad landlord references
First of all, if this is your main indicator for determining the eligibility of applicants, you are making a big mistake. Far too many landlords ask tenants to leave, only to give them a great reference. Further, tenants can ask friends to pretend they are a landlord and say great things about them.
Your property manager post securing a tenant, will draw up a tenancy agreement, between them/you and the tenant.
This document will outline the terms of the agreement, fees, rent, duration of the agreement etc.
A tenancy can be referred back to in the event of any disputes.
Finding a property manager – Quick tip
Make sure you look closely at your agreement with your property manager to identify any tenancy renewal fees. Once the tenant’s term completes, your property manager may charge you a fee to renew the agreement, even if it’s regarding the same tenant.
2. Rent collection & deposit safeguarding
Rent collection & holding deposits is tedious and requires tracking & record keeping. A property agent can do this on your behalf.
A property manager will keep on top of rent payments due from tenants. Post collecting the rent, the property manager will then transfer funds into your account.
This also removes the need for you to have the awkward conversations with tenants when there are late payments, which your property agent will cover off.
Funds are usually collected by card or electronic payments and then sent to your bank account.
Finding a property manager – Quick tip
Your property manager fees may be based on the amount of rent received. This will either be based on rent due, or rent collected. If it’s rent due, then you could be left at a disadvantage. If your tenant doesn’t pay the full amount, your property manager fees will still be the same.
With rent collected, your property manager fees will be based on what’s actually collected. This safeguards you if a tenant’s rent isn’t paid in full.
A deposit needs to be taken to cover any damages etc.
Deposit safeguarding is now required by law. This is to protect all parties involved.
If you’re renting in England and Wales you as a landlord or your property manager must:
1. Protect your deposit with the scheme within 30 calendar days of receiving the deposit.
2. Send you important information about the deposit protection called the Prescribed Information. This must be done within the same 30 days.
3. Property inspections & certifications
Property inspections are vital for landlords & required by law. If not done properly, insurances could be void & you could be subject to legal proceedings.
Inspections need to happen before the property is rented out and also take place throughout the tenancy agreement.
Types of inspections include: gas & electrics, plumbing, heating, structural security, damp & leaks and smoke & CO2.
Property managers know the full list of inspections and have the ability to conduct them on your behalf.
4. Maintenance and Repairs
As a landlord, you dread being woken up in the middle of the night because your property has a burst pipe, or your weekend ruined because you have to find a plumber to fix a broken boiler.
Property managers cover general maintenance repair work and can be the first port of call for your tenant when emergencies occur.
When damages & faults occur that pose a danger, issues must be fixed immediately. If you don’t & your tenant complains to the council, you may face prosecution and/or fines.
Finding a property manager – Quick tip
Some property managers add a markup on any invoices generated from contractors working on your property. Make sure you cover this with your property manager beforehand.
If you’re already paying fees to your property manager for this service, paying markup on top of that can increase costs significantly.
5. Legal Services & Disputes
The next aspect of services property agents provide is legal documentation. Most property managers already have all legal document templates in place to easily adapt to your property. This ensures you are covered from all possible dispute angles & there are no delays in getting your property rented due to legal documentation.
Alternatives of getting your own solicitors to draw up bespoke agreements will take longer & will be far more costly.
Property managers also assist with legal disputes relating to deposits, unpaid rent, property damage etc.
6. Fully managed with guaranteed rent
This service is when a property manager will manage all tasks related to being a landlord.
You don’t collect rent, screen tenants, draw up rental agreements or maintain the property.
You get the property back in the same condition it was given to the property agent (taking into account wear and tear).
With this type of service however, landlords can expect to pay higher letting fees than the more basic levels of services. Landlords can compare letting agent fees for a variety of services using Rent Rounds letting fee comparison tool
This is a service that ensures you get your rent, regardless of if the tenant pays or not.
The agent becomes your tenant who sublets the property to others.
Breakdown of letting agent & property manager charges
How much do letting agents charge for tenant find services?
Letting agent fees depend a lot on how much leg work you’re willing to do. If you want the letting agent to do most of the work for you, opt for a traditional agent. This will cost you between £80 – £200. Letting agent and property manager fees cover finding tenants, conducting references, and arranging the tenancy agreement. Traditional agents also charge a percentage of the monthly rent. Higher fees mean more work is handled for you.
How much do letting agents charge for fully managed services?
When hiring a letting agent or property manager, expect to pay 12-18% of the monthly rent.
How much do letting agents charge for guaranteed rent?
Guaranteed rent is pretty priceless when letting a property. Rental agency fees can run anywhere from £80 to £200 per year. More expensive policies usually have fewer restrictions and lower pay-out periods.
ADDITIONAL LETTING AGENT & PROPERTY MANAGER FEES
With so many letting agents and property managers on the market, landlords face a host of additional fees. Sometimes, these fees are already included in the service agreement. If they’re not, the letting agent will charge these fees separately.
As a landlord, these are the fees to look out for and required services.
TENANT RENEWAL FEE
One of the main services already included with letting agent and property manager fees is finding you a reliable tenant. Once the tenant is secured, the duration of the rental agreement will be listed in the tenancy agreement.
Once the term ends, you and the tenant may want to continue your arrangement. If so, you’ll need to pay a tenancy renewal fee. While this can be frustrating for many landlords, the agent already did the hard part, which is finding a quality tenant.
Renewal fees cover the cost of writing up a new agreement which includes updating the dates listed and related terms. Don’t try to pass this fee onto your tenants — 2019 legislation has deemed this illegal.
If you don’t want to pay this fee and are willing to do the work yourself, make sure it’s not included in the written agreement you have with your letting agent or property manager.
Another option is to switch the tenant to “periodic” once the term in the original agreement expires. This means that the tenancy is now a “rolling” contract with no defined end date. Rolling contracts usually follow the original terms and conditions.
How much are letting agent tenancy renewal fees?
Curious as to how much these fees will run you? Most agents charge between £45 – £120 to renew a tenancy agreement. The good news is, not all agents will charge for this service so be sure to check the fine print and check for specific rental agency fees.
HOW DO RESERVE FUND FEES WORK?
In life, and in rental agreements, accidents and damages can happen. To protect themselves, property managers and letting agents create a stash of money to cover any damages to the property — this money is known as a reserve fund.
Just like landlords don’t want to chase renters for payment, your agents don’t want to foot the bill for possible damages and then charge landlords. Reserve fund fees guarantee that the money they need for repairs is available right away.
If the agent taps into the reserve fund, the money is usually returned after the agreement with the landlord is over.
How much are letting agent reserve fund fees?
So how much are agent reserve fund fees? It all depends on the property value. The larger the property and the more valuable, the higher the risk of damage (and more expensive). Fees can range from £200 – £1000.
NECESSITY BILL FEES
One of the luxuries of hiring a letting agent or property manager is not having to worry about the daily responsibilities of owning a rental property. If this describes you, paying bill fees might be well worth it.
Obviously, you need to pay for the basic necessities of owning a rental property. This includes the mortgage, gas, electricity, and other service fees. This also means the hassle of managing the bills. Landlords can eliminate the headaches by passing it onto their agents. Now, you don’t need to track which bills are paid, due, or past due.
If you want a letting agent to handle your bill fees, you can expect to pay about 1.5% – 4% of the amount billed.
Administration fees are some of the most annoying for landlords. They cover tedious things like adding your profile on a system, uploading your bank account details to your agent’s platform, setting up direct debits, and recording your contact information. But for many landlords, paying these rental agency fees are well worth it.
Other landlords speak out against these fees and try to negotiate them at a lower rate or get them completely eliminated. Chances are, the letting agent will want your business enough to wave the fee and continue working with you.
How much are letting agent admin fees?
Different agents charge different admin fees and they can range anywhere between £50 – £200.
Just like accidents happen, sometimes, you get stuck with an unreliable tenant that you’re forced to evict. A few issues can result in eviction including excessive damage or misuse of the property, not paying the rent on time, or falsifying information on the application. When these things happen, you’ll need to start the eviction process. Letting agent and property manager fees can help cover this.
The process includes notifying the tenant and in some cases, taking them to court for payment. Once the situation is settled, you may need to remove the tenant from the residence. Some tenants are more reluctant to leave than others. Agents have the expertise and knowledge about current legislation and laws regarding the eviction process. But they may charge you for their help.
Compare the cost of getting their help and the hassle of handling it on your own. If the agent can handle the eviction process faster and more effectively, it might be worth it. This is also true because the faster the former tenant is out, the sooner you can get a responsible, paying tenant in place. Remember, your mortgage lender won’t wave your monthly fees just because you’re in the process of evicting your tenant.
How much are letting agent tenant eviction fees?
Before you can decide if these fees are worth it, you need to determine what they are. Different services carry different price tags. Serving an eviction notice will run you £120. Hiring a County court bailiff could cost £250 and getting a court order might be as much as £850.
LATE PAYMENT FEES
Just like you expect your tenant to pay on time, agents expect to be paid for the work they do. If your letting agent and property manager fees include maintenance and repairs on your behalf, you may receive a bill for these fees.
The invoice your agent provides should be paid within 14 days. Delaying this payment could result in late payment fees. In some cases, the agent will tap into the reserve fund mentioned earlier.
How much are letting agent late payment fees?
Expect to pay a fixed fee of £30-100 to cover these expenses or 3 -10% of the due payment.
If you plan to maintain the property yourself, you may not have to worry about maintenance fees. On the other hand, if the agent is required to perform the maintenance work, they’ll likely charge you for this (in addition to the contractor fees). This is fair since the agent is coordinating the repairs. Not only do they need to find a reliable contractor to perform the work but they also have to pay the fees upfront on your behalf and arrange for the contractor to get access to the rental property.
How much are letting agent charges for ad-hoc maintenance?
How much can you expect to pay for these service and maintenance fees? Generally, agents charge between 10 and 15% of the total bill to compensate them for their time. Then again, if you’ve already arranged for a fully managed service (including maintenance), you shouldn’t have to pay any additional letting agent or property manager fees.
ESTATE AGENT FEES
Are you trying to sell a property that you inherited or no longer want or need? In this case, your agent will help sell the property and take a commission. The commission covers advertising the property, negotiating part and parcel services, and scheduling showings.
Online estate agents are making an appearance in the property market, giving landlords more options for selling unwanted property. Instead of a commission based on a percentage of the sale value, some online agents charge a fixed fee. This fee stays the same regardless of how much the property sells for. Be prepared though because the lower the fees, the more work falls on you.
Some landlords have the time (and patience) to do this themselves. Busier landlords can’t be bothered and would rather pay the letting agent and property manager fees for peace of mind and a quick sale. Another fee to consider is the one an agent might charge if you sell your property while still under a fixed agreement. This means that even if you sell your property using a different estate agent, you’ve now broken the terms with your current rental agent and may need to pay a penalty or exit fee (more on this later).
How much are estate agent fees?
When discussing a commission, most estate agents collect 1.5 – 3% of the property’s value when sold. When working with an online agent, the fees range from £99 to £1000.
EARLY EXIT FEES
Early termination fees are common in most agreements. And a rental agent agreement is no different. If you’ve signed an agreement with a letting agent or property manager, there’s likely a term associated with it. That means that canceling the agreement before the term is over could result in an early exit fee. This fee is in place to protect the agent against unreliable landlords. Similar to a security deposit paid by the renter to cover damages to the property or late rent, early exit fees protect the agent’s business.
If you break your agreement due to poor service, you can challenge the exit fees. In other cases, if the terms aren’t outlined specifically in the agreement, you may also get away with exiting without any fees. Some things that classify as poor service are failing to collect rent, not properly maintaining the property, or ignoring specific landlord requests. To avoid complications, make sure all stipulations are included in the agreement with your agent. List all exit fees and service costs.
In the event that the agent insists on charging early exit fees, you can follow these complaint procedures
One benefit of dealing with letting agents is that as of 1 October 2014, it’s a legal requirement that agents be part of an approved redress scheme. These schemes can help resolve disputes between you and the agent.
Redress schemes protect both landlords and agents, mediating disputes between agents and landlords as well as between agents and tenants when agents fail to deliver services as promised.
Landlords who aren’t happy with the letting agent’s internal complaints procedure or response can take your complaint to one of these schemes. Letting agents must clearly outline which schemes they’re part of. The most popular government-backed schemes are
- The Property Ombudsman (TPO)
- The Property Redress Scheme”
How much are letting agent early exit fees?
So, how much will you be charged if you exit an agreement too soon? Exit fees can run as high as 10% of the remaining rent. You’re also required to pay them for the remainder of the term. This means if you want to end your agreement with six months left (and there are no possible disputes present), and the rent is £1,000 per month, your exit fee would be £100 per month, totaling £600.
TENANT LATE PAYMENT FEES
Another part of the tenancy agreement is how much tenants must pay if they’re late on rent. These late payment fees are in place to encourage renters to pay on time. Letting agents can use a portion of these late payment fees as their commission. Because late payments must be tracked and chased, it’s only right at the agent receives payment. Landlords should negotiate this fee with the agent and include it in the agreement. You don’t want to incentivize the idea that agents can make money off of tenants who don’t pay on time.
How much are letting agent late payment fees?
Plan to pay the letting agent between 5 and 10% of whatever late fees you charge the tenant. Tenants usually pay 5% of the rent as a penalty for not paying on time.
Landlords must record a detailed list of items contained in the rental property to protect themselves against any damages. This list is essential for dispute resolution. Letting agents and property managers can help you compile these lists for a fee. It may be worth it since performing inventory also includes documenting any missing or damaged items for proof and reference later on.
How much are letting agent property inventory fees?
Having a letting agent or property manager handle inventory could cost you up to £100. Larger homes or properties that include three or more bedrooms might cost double (£200). You can find our letting agent fee calculator at the top of the page.
What does a property manager do: The fees
All in all there are a range of benefits of getting a property manager.
You can get a subset of services, or hand over full management of your property.
Now comes probably the most important part of selecting your property or letting agent.. fees!
Rent Round enables you to simply enter your postcode and the services you want.
We then provide you the best property agents in your area, based on rating, letting fees and types of properties they manage.
Our service is completely free and we never charge landlords.
Use the postcode search bar below to start the process of saving on rental costs!
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