Renewal of Lease Fee

[brisbane 04]

Hi,
Has anybody been asked to pay for a lease renewal fee? I think it's a bit rich to ask for it as they have been receiving property management fees over the past 12 months.

 

[Lil Skater]

Hi,
Has anybody been asked to pay for a lease renewal fee? I think it's a bit rich to ask for it as they have been receiving property management fees over the past 12 months.

What's in the contract you signed?

There's a lot of fees charged over the management fee with most traditional agencies.

I see renewal fees from nothing up to 1 weeks rent.

 

[brisbane 04]

Hi Skater,
Didn't check the contract about it as I've never paid it before. The tenant approached them asking for a new 12 month lease. After paying commission for 12 months I don't believe something as simple as this should cost me $25. I have 5 properties with them so would be up for $125 a year.

 

[D.T.]

I see renewal fees as bogus. If I was a pm I wouldnt charge it as its not beyond normal duties.

 

[brisbane 04]

Hi DT,
I'm of the same thinking it's not that they are going to utilise $25 worth of paper or have to visit the tenant to sign up. These tenants have been nil issues over the past 12 months.

 

[Scott No Mates]

These tenants have been nil issues over the past 12 months.

What are your options?
a) Go to periodical (ie do nothing = no charge but greater risk to you)
b) Get a new lease (NEGOTIATE a new term = no change to risk to you)

In some instances charging a fee can be waived but there is still the lease preparation which used to be paid by both the owner & tenant, now it is only the owner (at least in commercial the tenant often picks up the tab)

 

[brisbane 04]

Hi Scott,
I believe the $25 they are asking me for is the lease preparation fee. My gut feeling is to go to them and say that I'm unwilling to pay this fee, as I have 5 properties with you. If they aren't willing to waive it I will see the tenant personally and take over the management of the property.

 

[sharpcq]

Some agents charge a lease renewal fee but it's a ridiculous charge. If you speak to them I'm sure they will waive it. $125.00 in comparison to what they will lose if you take the management(s) is not worth them biting about.

 

[brisbane 04]

Hi Sharp,
I agree hopefully they will see the light

 

[TMNT]

Thats my gripe too,

Im happy to pay a $33 renewal fee, thats quite fair,

but more then half of my agents, charge half a week or even 1 week,

which its a pet peeve of mine, and I hate it when I ask them to waive it and i get the "oh we have wages and rent here to pay" and act like they are the only agency in the country with it.

I have one in SA, and for some reason every agencys standard fees are 9.9%
I got it down to 8.8% and I they act as though they pay their staff $100k and there rent is $10k per week. Plus their letting fee is 2 weeks + GST

it just astonishes me why a new agency just doesnt start offering the standard 6-7% with 1 weeks letting fee

 

[Domus]

Renewal fees

From an agents prospective, there is a fair amount of work behind a lease renewal. In our office the procedure is as follows;
- 1-3 months prior. Speak to tenants, to gauge intention.
- Complete rent review.
- Speak to landlord, seek instructions to lease terms and rent.
- Confirm with tenants.
- Issue rent increase if applicable.
- Complete updated lease documents.
- Arrange for tenants signing, landlords signing and return copies.
- Complete routine inspection.

It is not simply a case of a issuing a new lease with new dates. At $25-$33 dollars you are on a good deal.

 

[brisbane 04]

Hi Domus,
The tenants approached the agent about renewing the lease. I don't believe they will do an extra inspection of the property just because they are renewing the lease. They will need to do new a new lease agreement. I believe it should be part of the ongoing commission they receive week in and week out, if I only paid for the services they provide each year for this particular property in hourly rate terms say $50 per hour I would be way ahead. So I'm of the thinking that it should be included in our agreement.

 

[Scott No Mates]

$50/hr?.....in your dreams.

When was the last time that you saw an hourly charge rate that low? What is the hourly rate on the agreement for attending the tribunal?

 

[Lil Skater]

Personally, I do not charge renewal fees. Yes, there's work involved, but isn't that what we're employed to do?

Also, I don't know what the laws are state to state, but you can't conduct a routine inspection because of a lease renewal. It's no more than 6 monthly, or a new tenancy you can inspect after 3 months.

Brisbane - check your agreement, or ask for a copy. You can't be charged fees that haven't been agreed within the contract.

 

[Meagf]

Hi,
Has anybody been asked to pay for a lease renewal fee? I think it's a bit rich to ask for it as they have been receiving property management fees over the past 12 months.

I kinda agree with your comment that a property mgmt fee should really cover everything, especially given it is a cost that the agent should be able to budget for - they know when the lease is going to run out and process involved in renewing it. However don't know why you would be surprised about it especially owning numerous properties - a bit silly if you don't read the terms & conditions of your leases - especially when you can negotiate most things on them. $25 seems pretty reasonable to me as far as lease renewals go.

What get's my goat, and what I have found PM's won't omit - is the $5.50 administration fee that is charged in Sydney. They can't even really explain what it is for. Gouging if you ask me......

My 2c worth......

 

[Scott No Mates]

What get's my goat, and what I have found PM's won't omit - is the $5.50 administration fee that is charged in Sydney. They can't even really explain what it is for. Gouging if you ask me......

My 2c worth......

I know I can't justify it, all of the major systems churn out statements automatically (they need to be reviewed etc) but they send the email etc.

 

[brisbane 04]

Hi Scott,
I was just guessing at what a property manager earns per hour. I'm sure it's not $50 per hour. I've never had to go to a tribunal hearing despite investing in property for over 20 years now. Hi Skater I've never had to pay a renewal fee before so this is why it's taken me by surprise.

 

[Joe D]

I had to explain the realities of life to one of my kids a while back and used the following basis.

A person works approx 2000 hours per year. (ie. 50 weeks x 40hrs /wk).

So, I then cycled through a number of occupations to give him a reality check, eg.

What does a ....<insert chosen career>...... make per hour? This equates to about ......pa

It was an interesting exercise for a 16 year old who was earning $20/hr on a casual basis and thinks this is great (which it is for a 16yo), gets to realise that this equates to an annual salary of around $40,000 and that some people have to live on this as a family.

A cleaner on a rate of $25/hr gets ...........$50k pa

A tradie on a rate of $50/hr gets ..........$100k pa

An accountant on a rate of ......

A Lawyer on a rate of .......

You get the drift......................

Actually using numbers helps put things into perspective.

Getting back to the original question from the OP, An employer will normally charge out their personnel at a rate of 2.0-2.5 times their salary, so you can see that a PM charging $50/hr means that the individual is possibly only earning $40-$50k pa ($20-25ph).

So, how can you expect the best when you pay peanuts?

 

[Scott No Mates]

Hi Scott,
I was just guessing at what a property manager earns per hour. I'm sure it's not $50 per hour.

You'd be surprised.

Resi: PM (junior) about $45k, senior PM $80k+, BDM $100K+

Commercial: >> $even more

 

[Lil Skater]

You'd be surprised.

Resi: PM (junior) about $45k, senior PM $80k+, BDM $100K+

Commercial: >> $even more

Depends on the area as well. Where I worked previously the senior PM was only on $65k. That was with a portfolio of ~170 and management of the department.

My first job in PM I was on $35k, and my very first job in real estate I started at $26k. I had to support myself on that, which wasn't easy.

Generally the PM doesn't get much, if any on top of their usual wage. ~$100 for a tenanted property, which is normally paid quarterly. Pretty cr*ppy really. This was a few years ago though, and a lot can change.

This is why (I believe) there is a large turnaround in PM employment. The wages aren't great, and you deal with a lot of PITA people on a daily basis... For a pretty average wage.

When you think about it, a PM managing 185 properties with an average management of $1,250/year, equates to ~$230k minus their wage of $50k still leaves the agency with ~$180k - plus leasing fees on top of it, statement fees etc etc.