Charging landlords extra fees

Western Australian property managers lead the nation in property management commission rates, charging an average of 10.8 per cent.

According to the Macquarie Relationship Banking 2012 Real Estate Benchmarking Report, WA was followed by South Australia (8.4 per cent), Queensland (8.1 per cent), NSW (6.5 per cent) and Victoria (6.3 per cent).

However, some agencies are charging both higher management rates and a creative array of one-off fees to boost their revenues.

Property management consultant, Darren Hunter, has put together a report describing how some agents charge extra fees for services such as routine inspections, exit inspections, condition reports, taking photographs and providing end of financial year statements.

Some of the more creative fee ideas include:

  • A repairs and maintenance fee as a percentage of what the tradesperson charges, with a suggested cap of $55 per job.
  • A rent increase fee which charges a percentage of any rent increase over a year – for example a property where the rent has gone up $20 a week or $1040 a year might charge $114.40 (including GST) or 11 per cent of the total.
  • An extra fee to create video footage at the ingoing inspection with a suggested charge of $55 per tenancy.
  • An ‘outside of duties’ fee of $55-110 an hour charged to discourage landlords from getting PMs to oversee renovations.
The guide warns that any fee must be disclosed to and signed off by landlords unless there’s a clause in the management agreement allowing for fee adjustments without written consent.

The head of residential real estate at Macquarie Relationship Banking, Shaun Bassett, has been quoted as saying that agencies that charge a commission rate considerably lower than the average “simply can’t survive”.

Property management by numbers

  • Property managers with more than three years of experience are paid an average of $58,068 – including 5 per cent paid over $80,000 – while those with less experience pulled in $45,182.
  • 42 per cent of agency revenue comes from property management.
  • The average rent roll contains 436 properties, but some have over 5000.
  • The average property manager across Australia looks after 99 properties but large agencies have an average of 135.
  • The average ongoing property management commission rate is highest in WA (10.8 per cent) followed by South Australia (8.4 per cent), Queensland (8.1 per cent), NSW (6.5 per cent) and Victoria (6.3 per cent).
  • Letting and other ancillary fees accounted for 22 per cent of property management income with ongoing commissions making up the other 78 per cent.

Source: Macquarie Relationship Banking 2012 Real Estate Benchmarking Report