As Property Investment Consultants Thirlmere Deacon are often asked ‘How much does Property Management Cost?’ Whilst the answer often varies depending on location, property size and type and other variables, we can offer a breakdown of the typical cost of property management and what a landlord can expect to be included.
Property management is a service that helps landlords manage their rental properties. It can include collecting rent, overseeing maintenance issues and repairs, and dealing with legal issues.
While property management can be a valuable service for landlords, it does come at a cost that can impact net yield and profits. In this article, we will explore how much property management typically costs in the UK.
How Much Does Property Management Cost?
Average property management fees in the UK usually sit between 10-15% of the monthly rent collected. However, they’ve been known to range from as low as 5% and as high as 20%; it depends on the professional company you are engaging.
Why Do Property Management Fees Vary?
A low fee doesn’t automatically mean a landlord will receive a bad service from a property management company. In some cases, a low property management fee can be the result of a company managing an entire building of rental properties meaning they can afford to offer reduced fees to landlords in that building.
A higher fee might include additional extras so a landlord must read the small print.
Landlords need to understand the different types of fees that property managers may charge, as well as the level of service that they can expect to receive for their money.
Understanding Property Management
Property management is the process of managing and maintaining a property on behalf of its owner. The services can include marketing the property, screening tenants, collecting rent, handling maintenance and repairs, and dealing with tenant complaints. The fees for such services are most commonly a percentage of the monthly rent but sometimes they can be charged as a flat fee.
The Role of a Property Manager
A property manager is responsible for managing and maintaining a property on behalf of the landlord. They act as the intermediary between the landlord and the tenant, ensuring that both parties are satisfied with the property and the tenancy agreement.
One of the key roles that a property manager most commonly undertakes is to collect rent from the tenant on behalf of the landlord. They ensure that rent is collected on time and in full and handle any issues that arise with rent collection.
Property managers also oversee any maintenance and repairs that need to be carried out on the property. They are responsible for ensuring that the property is in good condition and that any issues are resolved quickly and efficiently.
When it comes to formalities and legal issues, a property manager can be a useful resource and support for a landlord as they can be responsible for handling evictions and enforcing the terms of a tenancy agreement and take action if necessary.
What Services Does a Property Management Company Provide?
- Rent Collection: This includes the collection of rent from tenants, handling late payments, and possibly pursuing evictions when necessary.
- Financial Reporting: Property managers usually provide detailed financial reports, such as income and expense reports, balance sheets, and rent roll.
- Maintenance and Repairs: Property managers are responsible for the upkeep of the property. This includes regular maintenance as well as responding to emergency repair needs.
- Tenant Screening/Referencing and Leasing: Finding and retaining tenants can be included in the property management services. This process includes advertising, showing the property, background checks, credit checks, and preparing leasing agreements.
- Lease Administration and Renewal: Managing the terms of a lease, enforcing lease conditions, and handling lease renewals or terminations.
- Property Inspections: Regular property inspections to ensure that tenants comply with the lease terms and that the property remains in good condition.
- Legal Compliance: Ensuring that the property and its management comply with local, state, and federal regulations, including fair housing laws and safety codes.
- Utility Payments: Managing utility payments and services, if that’s part of the agreement.
- Communication Between Landlord and Tenant: Serving as the primary point of contact for tenant concerns, inquiries, and requests.
- Emergency Response: Being available to respond to emergencies at the property at any time.
- Eviction Proceedings: Handling the process of evicting tenants if necessary, which includes legal processes and coordination with law enforcement if it comes to that stage.
- Move-in and Move-out Procedures: Overseeing tenant turnover, including inspections, damage assessments, and the return of security deposits.
Cost Factors in Property Management
Additional cost factors in property management can range from early cancellation fees that may apply if a landlord wants to exit the agreement before the contract expires to deposits to cover any potential damages or unpaid rent, to the cost of repairs or upgrades to maintain the property and attract tenants.
Maintenance and Repairs
Maintenance and repairs are an essential part of property management. Property managers must ensure that the property is well-maintained and in good condition to attract and retain tenants. Regular maintenance can prevent costly repairs in the future. Property maintenance costs can vary depending on the type of property, its age, and the location which is why many landlords choose to purchase newer properties as they typically require far less maintenance.
Property managers can hire contractors to perform maintenance and repairs from fixing leaky taps to replacing light bulbs, repairing broken windows, and repainting walls. Property managers must keep track of all maintenance and repair work and ensure that it is completed in a timely and cost-effectively, whilst regularly reporting to the landlord.
Insurance and Paperwork
Being a landlord comes with its own set of risks and responsibilities, whether a landlord is engaging a professional property management company or is opting to manage the property themselves, landlord-specific insurance can be worthwhile. Landlords can take relevant insurance policies that protect their rental properties against damage, liability claims, and loss of rental income.
Beyond insurance, there is considerable paperwork involved with owning and renting a property and it is often the case that a professional property manager will ensure everything is in place and up to date on the landlord’s behalf, which can save an investor considerable time and effort. This includes rental agreements, lease agreements, and maintenance requests.
Frequently Asked Questions about Property Management
What are the typical fees for property management in the UK?
Property management fees in the UK usually range from 8-15% of the monthly rent though some companies may charge a flat monthly fee.
Are there any additional costs associated with property management?
In addition to the property management fee, landlords should expect costs relating to maintenance, building insurance and services and landlord insurance.
How do property management fees compare to self-management costs?
Self-management costs may include advertising expenses and tenant referencing in addition to the usual property management costs of maintenance, repairs, and legal fees.
While self-management may be less expensive in terms of fees, it can be more time-consuming and may require more effort and expertise. Property management companies can provide a range of services and can help landlords save time and money in the long run.
Investing in Property
Newly built properties typically require far less maintenance than their older counterparts, in addition to being more energy-efficient, and it is for this reason that landlords are increasingly opting to buy newer investment properties.
To explore the rental investment opportunities currently available please do get in touch.