Letting agencies and property managers generally make their revenue from fees charged to landlords (and tenants) for services such as rent collection and tenancy setup.
A property management fee may be applied each time rental income is collected, or even each rental period when it is applied, and is charged to the actual property, not the landlord. However, the result is the same - it appears on the landlord's account for payment, although it is typically just deducted from rental income.
Management fees are charged when rent is received in the following ways:
- Payment of rent from the tenant to the agency
- Allocation of benefit payment received from a local authority to a tenancy
- Payments made directly from the tenant to the landlord
Define a management fee
The default management fee is defined against the property, and will then be applied to each tenancy which is set up in that property.
When adding a rental property a management fee can be specified in the Management Details section of the form.
The nature and value of the fee will depend on the agency's management fee configuration. Normally this is applied as a percentage of rent collected (default is 10%), with the fee due immediately. The fee has an associated effective date, but the initial fee will apply for all dates unless a later one is specified.
Modify the management fee
The percentage management fee may vary over time, and a schedule of fees may be set up to apply different commission rates as the tenancy progresses.A management fee may also be removed if it has been defined incorrectly.
When adding a new fee, or modifying an existing one, you must specify the date from which the new fee rate will take effect. This date will be used to calculate the fee due on the rental income on the date it is received, and is not related to the period to which the rent is applied for.
- From the property overview, go to the Management > Management Fees menu.
- The initial commission percentage, i.e. that specified during the property setup, is shown, along with an edit icon. The commission fee will be applied as a percentage of all rent receipts recorded between the tenancy setup date and when a new commission comes into play, if any.
This percentage (and indeed any fee percentage in this table) can only be edited if no fees have been applied using that configuration. If there have been fees already applied you must set up a new commission entry. A warning will be displayed.
- To add a new percentage, click Add Fee Configuration.
- Enter the date on which the new percentage comes into effect, and the new percentage, and click Save.
- All future receipts will have the appropriate percentage charged, depending on which configuration is in effect on the receipt date.
- If fees have already been applied with the incorrect percentage, you will need to modify the actual fee invoices.