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A Guide to Typical Property Management Fees

Property management fees will often be the single biggest factor that puts many landlords off from outsourcing dealing with the tenancies for their rental properties. Even a property owner who don’t enjoy the idea of dealing with emergency repairs at all hours or are stretched for time might prefer to try and manage the type of property themselves, even if it's time consuming, rather than handing over a percentage of their rental income to a property agency.

Along with this, the residential properties industry is well-known for not being very transparent and it can often be difficult to get clear pricing information for a property manager who will take care of everything or even understand what type of property management service level will be best for your property type needs.

Agent fees, as provided by The UpperKey's guide, offer landlords a clear understanding of the expected costs for hiring a managing estate agent to oversee their rental property.

Managing rental properties without outsourcing
The cost of vacation rental property management varies depending on the property management services.

Property Management Fees

How much does property management cost? Property management fees would typically be charged at a percentage of the rental income that you are earning from the property. Most property letting agents offer a range of different property management packages including finding tenants, a tenant screening, managing property management contract renewals, collecting rent, additional services and it can sometimes be difficult to determine what the differences are between each service offered at different rental price points and to spot a good deal.

The typical property management fees that you can expect to pay for a service that deals with standard things such as collecting rent per month and chasing arrears, responding to tenant queries, property inspections, providing an emergency response, and repairs and maintenance of the proeprty are around 19% of the monthly rental income on average for a national agency, and around 18% for a local agency.

Depending on the offering (rent collection service for example) of residential property managers, the cost of property management will vary.

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Property Management Hidden Charges

What is the average cost of property management? Along with the 19% of the rental income from rental monthly payments that is charged by national property management agencies, you will also need to consider any hidden charges when determining how much it will cost you to hire a property management agency to look after your rental property.

Many agencies advertise their property management packages as ‘comprehensive’ or ‘all-inclusive’, which means that you might reasonably assume that the rent collection service that you pay for with your percentage of the rental earnings will include everything, but this is not always the case.

There are several additional fees that managing property letting agents charge that might increase the average property management fee you pay. Along with this, you will also find that there may be differences when it comes to what is charged for residential property management and rent property management fees.

Financial Administration Fees

What do landlords pay for financial administration? Many property management agencies will charge a range of fees or a flat fee that are related to property financial administration. Some of the most common fees include charges for reporting to HMRC on behalf of non-resident landlords, charges for monthly financial reporting, fees for the payment of fully managed service charges to freeholders, and dispute handling charges if you wish to withhold funds from a tenant’s deposit.

Most of the above would be difficult to do without any assistance from a managing propery letting agent, but it’s worth noting that they are often services that you will be charged extra for.

Fees for Arranging Work

What do most property management companies charge to arrange works on your new home or investment properties?

On average, most property agents will charge around ten to twelve percent of the invoice cost if they need to arrange works at a property that are ‘beyond the tenancy agreements scope’. However, while this might seem reasonable at first, research has shown that what is classed as the ‘scope of the property management agreement’ is narrower than you might expect. For example, some agents charge a ten percent property management fee if they are required to arrange repairs or maintenance on the property that cost more than just £300-400, which is typically the case for emergency repairs for issues such as leaks or hiring contractors for remedial work that might be required after a routine property inspection.

Often, the cost of common issues such as damp in a property that will need to be maintained and repaired will cost more than what the agent’s limit is, incurring a fee. For this reason, it is important for landlords to find out what the letting agent considers to be a reasonable cap before charges like a flat fee are applied to the invoice for arranging works, otherwise, you may find yourself paying extra to the agent for arranging essential maintenance that is required to keep the property in a tenantable condition.

Referral Fees

Some property management agencies will also receive referral fees from third-party contractors each time they book them for work that is required at a property that they manage. Although there is no direct cost to the landlord arising from these schemes, it’s worth bearing in mind that property agents who receive such fees do not have any incentive to find the best value contractors for the landlord, which could result in you paying more than you need to.

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What to Look for in a Property Management Agency

While there are lots of hidden fees and expenses to keep in mind when it comes to property management that might understandably put some landlords off from using one, the good news is that when you know what you are looking for, it’s worth using a reputable fully managed service such as UpperKey where you know that your property is in good hands. Over time, it can save landlords hassle and money and be worth investing in for your peace of mind and to free up your personal time instead of having to be available for existing tenants around the clock.

When choosing a property management company, it’s worth speaking to other landlords for recommendations and look out for transparency when it comes to average costs and fees, especially in terms of any additional charges that you might be liable for, and when these might need to be paid.

Property management can get expensive for landlords, so it is worth understanding the average cost, hidden fees to avoid, and what to look for if you are choosing a property management agency. When you entrust your vacation rental and the rental payments to an Aibnb concierge service, you can enjoy guaranteed rent and minimal work without any missed rent payments.


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