Is It Reasonable for a Property Manager to Increase Their Fees?

kimba88 on 23/09/2021 - 22:44
Last edited 26/09/2021 - 12:13 by 1 other user

Hi, I've had a property manager contact me saying that they are increasing their fees due to rising costs and that they haven't increased them since I signed in 2017 so I was one of their original landlords on cheaper fees. In saying that, I don't think their fees were all that cheap to start with compared with other agents, and now they want to increase by an extra 1.8% per week, and a variety of other fees are being substantially increased too. I spoke with the property manager and they said they would review the fee increase and get back to me, however, they didn't change much at all. Laws are changing in Victoria, so I am now required to get extra checks on the property such as gas and electrical - which will cost me being the landlord extra too. It's a pretty new home and doesn't ever really have anything go wrong with it - so the property manager is just literally collecting rent for me since 2017 pretty much.

Managing fee 8.8% from 7%
Lease renewal fee $220 from $110
Letting fee 1.8weeks rent from 1.5 weeks rent
Advertising package $330 from $190
Signboard $125 from $0
Photography $150 from $0
Warrant of possession fee $330 from $150
Insurance claims $300 from $150

I've never heard of a property manager increasing fees like this before. Any thoughts on this and what I should do? Generally their service has been quite good. Last year it took 3 weeks after my last tenant vacated, to find a new tenant.. So it was advertised for a while during November, December period from what I can remember.

Thanks.

Poll Options

  • 0
    Suck it up and stay with the current property manager
  • 13
    Find a new property manager
Financial Property Management

Comments

  • thatonethere on 23/09/2021 - 22:52

    The management fee seems high for Sydney but depends what they are doing for it. ie are they paying rates, strata fees etc for you? The other fees seem ok to me anyway.

    It's a real pain to switch trust me. However, I would try to negotiate a reduced increase to the management fee as a loyal customer.

    • kimba88 on 23/09/2021 - 23:03

      The fees are for Victoria, not Sydney. I understand each state has different fees, but I just thought it was not nice form asking for the marked increases.

      I told them I wasn't happy with the increases and they said they would review and get back to me. The management fee stayed at the 1.8% increase.. The only things that changed very slightly were lease renewal fee, letting fee and advertising package.

  • jug123 on 23/09/2021 - 22:59
    +4

    Ive never had a property mgr increase their mgmt fee in over 25 yrs of using their services across multple states. Things like photos, advertising i get as theyre outside of their control but the others, never. Tell them if they want an increase to get you a higher rent from the tenant and that will increase their income. 8.8% seems high for a big city. I pay 5.5% in Syd, 6.6% in SA and 8% in QLD however qld is all inclusive (photos, lease renewal, advertising, etc). I do have multiple properties with ea of these agents tho so I do have a little bargaining power. I would be ringing around other agencies to see what theyd offer if you were to move your business

    • kimba88 on 23/09/2021 - 23:08

      8.8% is to manage a property in Geelong - not even a big city - still counted as rural.

      Unfortunately, I only have the one property with this manager, so I don't really have bargaining power with that.

      I did contact another agency, and they seem cheaper overall on a lot of things without negotiating. The difference is, my property manager is a boutique management agency.. Where as, I've compared to a real estate business where they sell and manage properties. I told my property manager that I had compared against another business and told him he was a lot more expensive with these increases - they just said you're paying for service. I wouldn't say I've received any special service in the last 4 years apart from good tenants luckily.

      • jug123 on 23/09/2021 - 23:29
        +1

        While Geelong isnt Syd size theres plenty of competiton. If you're being offered cheaper rates sounds like you've got all the bargianing power you need, a vessel to grow their revenue. If there was only a few hundred $$ p.a. differenence Id say stay where you are but it sounds like its going to be significantly more esp over the long term so I'd bite the bullet and move. While service and a good relationship count for a little if youre not getting the extra service to warrant the higher amount then get value for your money

        • kimba88 on 25/09/2021 - 00:06

          The management fee alone will be approx $365 extra per year compared with the current fee schedule. Then there's all the other expenses on top. I'm just hesitant to move because of the effort and I wouldn't say they've done anything wrong for me to want to move - I've always had good tenants which counts for something. I just feel like the fee increases are a kick in the teeth.

  • streetsmart on 23/09/2021 - 23:23

    Wow you're paying heaps! Within my circle, the range of fees are the following:

    • 5 - 5.5% management fee
    • Leasing Fee - 1 week rent
    • Advertising/photography fees - varies depending on what kind of advertising is selected, can be photo only/with video for photography then board signage + online listing with bump ups or no bump ups
    • No insurance claim fees
    • Lease renewal fee - $132 inclusive of GST
    • 6-monthly inspection complete with photos and report - $30 plus GST

    Do note the properties for above are within 20kms from Melbourne so I am really surprised they are charging so much in Geelong, what are they doing 'extra' I wonder to justify those high fees

    • kimba88 on 24/09/2021 - 06:43

      I don't feel like my property manager does anything extra to any normal property manager. I mean, they have a landlord portal where I can access everything to do with my property which is good.. But that's about it, as far as I'm concerned.

      • streetsmart on 24/09/2021 - 10:20

        Transfer your business to some other company mate. You mentioned that your house is anyway fairly new and you got good tenants too so really I don't see your agent doing anything more than the usual inspections and transferring of rent money to your account. Have that extra 1.8% towards your mortgage.

        • kimba88 on 25/09/2021 - 00:03

          That's probably a good point. The management fee alone is costing an extra $365/year..not to mention all the other increases they've added in. I'm definitely not happy signing this new agreement. They've said it will come into affect this coming Monday - but I'm not sure how it can if I don't sign it. Do you know if there is a law about this at all?

          • streetsmart on 25/09/2021 - 01:45

            @kimba88: Let them know that you are unhappy with the changes and confirm if there will be any fees if you break the contract now. If I am in your position, I'll call the agencies in your area tomorrow to get a new quote and will sign up with a better one provided that breaking the contract with the current one won't have any fees. If there will be fees, I'll suck it up until I finish the anniversary of my contract and jump ship then, I'd still cut losses long term.

            • kimba88 on 25/09/2021 - 09:21

              @streetsmart: Thanks. I tried contacting an agency yesterday but had no reply - but I just remembered it was a public holiday for them. So I'll look to try again today.

              • streetsmart on 25/09/2021 - 10:20

                @kimba88: All the best, I hope it all works out for you, keep us posted.

  • SmiTTy on 24/09/2021 - 00:33
    +3

    I'm paying 7.7 (incl gst)
    Pm me if you want to know the name of the agency I use (also in the area)

    • kimba88 on 25/09/2021 - 09:22

      Thank you.

      Does anybody else also have recommendations for property managers in Geelong/Armstrong so I can hit up a few?

  • AdosHouse on 24/09/2021 - 01:37
    +3

    I'm not a IP owner so I have no idea about the fees, but with all the fees listed, what else do they do except a annually or bi-annually inspection and ignore tenants phone calls? What does the 8.8% pay for?

    Sounds like they are increasing their rolling fee, and then increasing everything else for a double whammy.

  • rektrading on 24/09/2021 - 02:58

    The joy of being a landlord is paying weekly/quarterly/yearly fees and taxes.

    • Kangal on 24/09/2021 - 08:40

      I want to buy a small patch of land from Scotland, then I can legally use the term "Lord" before my name :D

  • garetz on 24/09/2021 - 07:45

    Find a new property manager, just like they are able to increase their fees, you are also able to get someone else.

  • Mechz on 24/09/2021 - 08:17
    +2

    Just walk, not worth it when you can probably pay less than their original rates.

  • oscargamer on 24/09/2021 - 09:21

    Find a new company.

  • weezlebub on 24/09/2021 - 11:38

    If you've got a good tenant who isn't looking to move, manage it yourself, get a copy of the last time they listed it for rent and you're good to go!

    • kimba88 on 24/09/2021 - 23:57

      I've got a good tenant as far as I know, but they're due for lease renewal.. So I wasn't sure what their thoughts were on whether they wanted to stay or go. This is where I would become stuck.. I'd much rather a property manager handle it since I live interstate too.

  • jv on 25/09/2021 - 00:05

    Do it yourself…

    • kimba88 on 25/09/2021 - 00:07

      I'm probably not organised enough to do it myself - although it might force me to get into better habits. I'd still definitely rather a property manager deal with tenants though - especially since they could go to the house and take photos with inspection reports, etc

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