Owning an investment property can provide a valuable source of income and long-term wealth, but managing a tenancy involves considerably more than simply collecting the rent.
A professional property manager can look after the day-to-day administration of the tenancy, manage rent and arrears, coordinate repairs, conduct inspections, communicate with tenants and help the landlord navigate changing tenancy requirements.
So, how much does a property manager cost in Sydney, and what should a landlord expect to receive for the fee?
How are property management fees calculated?
In Sydney and throughout NSW, property management fees are commonly structured as a management fee calculated as a percentage of the property's rental income, together with a letting fee when a new tenancy is established and, depending on the agency, other agreed charges.
There is no single prescribed property management fee that applies to every NSW property. Fees and conditions are agreed between the landlord and managing agent and should be clearly set out in the Management Agency Agreement. NSW Fair Trading confirms that management agency fees are negotiable and that landlords should establish what is included and excluded before appointing an agent.
The cheapest percentage does not necessarily represent the lowest overall cost or the best value. When comparing property managers, landlords should consider the total fee structure and the level of service provided, rather than the management percentage in isolation.
What is included in a property management fee?
The precise service varies between agencies, but ongoing property management commonly includes responsibilities such as:
- collecting rent and monitoring rental arrears;
- maintaining rental records and landlord statements;
- communicating with tenants;
- coordinating repairs and maintenance;
- conducting routine property inspections;
- managing tenancy issues and disputes;
- monitoring lease dates and advising on renewals and rent reviews;
- paying authorised property expenses on the landlord's behalf; and
- keeping appropriate tenancy and property management records.
You can read more about what our property management service includes.
NSW Fair Trading identifies finding suitable tenants, managing tenancy agreements and bonds, arranging repairs, collecting rent, conducting inspections, managing disputes and paying authorised bills among the responsibilities that may be undertaken by a managing agent.
What other property management fees can apply?
In addition to the ongoing management fee, landlords may encounter other fees and expenses. These should be disclosed in the agency agreement so that you can understand the overall cost of property management, rather than simply comparing headline percentages.
Letting fee
A letting fee is generally charged when an agent secures a new tenant. It reflects the work involved in marketing the property, handling enquiries and inspections, assessing applications, obtaining the landlord's instructions and establishing the new tenancy.
Advertising and marketing
Advertising expenses may be charged separately when a property is offered for lease. The amount will depend on the marketing undertaken and may include online property portals, professional photography, floorplans or other advertising.
Lease preparation or renewal fees
Depending upon the agency's fee structure, a fee may apply for preparing or renewing tenancy documentation. This should be clearly identified in the Management Agency Agreement.
Routine inspections
Some agencies include routine inspections within their ongoing management fee, while others may charge separately. When comparing management proposals, landlords should establish both how frequently inspections are undertaken and whether they attract an additional charge.
Financial statements and administration
Additional administration charges may apply for particular services, depending on the agency. Rather than focusing solely on the management percentage, check which reporting and administrative services are included.
NCAT and dispute management
Where a tenancy matter requires preparation for or attendance at the NSW Civil and Administrative Tribunal (NCAT), an additional fee may apply. The basis on which this is charged should be disclosed in the agency agreement.
Management fee versus letting fee – what's the difference?
These are two different components of property management.
The management fee generally covers the ongoing management of an existing tenancy and is commonly calculated as a percentage of rental income.
The letting fee relates to securing and establishing a new tenancy.
This distinction is important when comparing agencies. A lower ongoing management percentage may not necessarily produce a lower annual cost if other services attract higher separate charges.
What should Sydney landlords compare?
Price matters, but property management is ultimately about protecting an income-producing asset.
When comparing property managers, consider:
- the ongoing management fee;
- letting and reletting fees;
- advertising costs;
- inspection and administration charges;
- NCAT or dispute-related fees;
- what services are actually included;
- the experience of the property manager;
- how repairs and maintenance are controlled;
- arrears management procedures;
- tenant selection and screening;
- frequency and quality of inspections; and
- communication and reporting to the landlord.
NSW Fair Trading similarly recommends that landlords ask prospective agents about fees and inclusions, experience, compliance systems, repairs, tenant screening, arrears procedures and Tribunal experience.
Are property management fees negotiable?
Yes. NSW Fair Trading states that the fees and conditions of a management agency agreement are negotiable.
The appropriate fee structure may also depend on the property and the services required. An owner with several properties may have different requirements from an owner appointing an agent to manage a single investment property.
The important point is to understand what you are paying, what is included and what may be charged separately.
Choosing a property manager in Sydney
A good property manager should do considerably more than collect rent.
Effective management involves protecting the property, maintaining rental income, identifying problems early, managing the landlord-tenant relationship and providing the owner with clear advice when decisions need to be made.
Wills Property provides property management services in Sydney, covering residential and commercial property, with a structured approach to leasing, tenant selection, rent management, inspections, maintenance, reporting and ongoing asset management.
If you are already with another agency and are considering changing property managers, Wills Property can assist with the transfer process and ongoing management of your property.
To discuss your property management requirements, contact Wills Property on (02) 9387 1700.