When landlords compare property managers, the first question is usually the percentage. It matters, but it's only part of what you'll pay over a year, and it says nothing about what you get for it. Here's how the fees usually fit together in NSW, and the questions worth asking before you sign anything.
The management fee
This is the ongoing fee, charged as a percentage of the rent the agent collects, plus GST. It's taken from the rent each month before the balance is paid to you. It normally covers the day-to-day work: collecting and chasing rent, paying bills from the rent if you ask, handling repairs, routine inspections, the tenant's questions, and your monthly and end-of-year statements.
Two things to check. First, whether the percentage is quoted with or without GST, because a quote without it looks a tenth cheaper than it is. Second, what is not included, because that's where the other fees come in.
The letting fee
Each time a new tenant is found, most agents charge a letting fee, often quoted as a number of weeks' rent. It pays for the work of leasing: pricing the property, the photographs and listing, open homes, checking applications and references, and preparing and signing the lease. Ask whether it applies again when an existing tenant renews, and whether a lease renewal has its own, smaller fee.
The smaller charges
These vary more from agency to agency than the two big ones, so read the list rather than the headline rate. Common ones include:
- Advertising. The cost of listing on the property portals, usually passed on at cost.
- Routine inspections. Some agents include them in the management fee; others charge per visit.
- Condition reports. The detailed report at the start of a tenancy, sometimes charged separately.
- Administration or statements. A small monthly or yearly fee for postage, accounts and the end-of-year statement.
- Tribunal attendance. A fee for preparing and attending a hearing at the NSW Civil and Administrative Tribunal, if a dispute gets that far.
None of these is wrong in itself. What you want is every fee written down before you start, so there are no surprises in your first statement.
What the law says
In NSW, an agent's fees have to be set out in the management agreement you sign, and the agreement has to be in writing. Read that section carefully, and ask about anything that isn't clear. Fees for finding and managing a tenancy are paid by the landlord: tenants can't be charged for background checks or for preparing their lease.
What you can claim
For a property you rent out, the management fee, the letting fee and most of the other charges above are generally deductible expenses. Keep your monthly and end-of-year statements, and talk to your accountant about your own situation; this is general information, not tax advice.
The questions worth asking
- Is the percentage quoted with GST included?
- What's included in the management fee, and what's charged on top?
- What will I pay when a new tenant is found, and when a tenant renews?
- How many routine inspections a year, and will I get photos?
- Who will actually manage my property, and how quickly do they answer?
The cheapest percentage isn't always the cheapest year. A week of vacancy, or a repair that's left to grow, costs more than the difference between two quotes.
If you'd like to see exactly what we charge, ask us for our fee schedule. We'll give it to you in writing, with a rental appraisal of your property, so you can compare like with like.
