UK Management Fees!

[liverpoolharryk]

Just returned back form the Uk and thought this might be of some interest to people in comparision to what REA charge here in Australia for property management.

My wife's uncle owns two agencys in the Wigan area about half way between Manchester & Liverpool (go the reds!) for those who do not know. I was asking him about his fees and charges on the PM side of things and this is what he charges and is pretty standard in the industry.

15% management fee
5 pound a month statement fee
first months rent letting fee

However they only charge 1 to 1.5% for sales! It's deregulated over there, so for selling they can charge what they like but this is generally the standard fees for most EA.

Jarrod
Jarrod Lane Real Estate

 

[wish-ga]

Thanks for sharing this LiverpoolHarryK. It is always interesting to hear about the way things are done in other markets countries.

 

[XBenX]

Ahhhh deregulation.... that used to be a buzz word here once...

Now all we do to solve problems is create MORE regulations.

</end pet hate rant>

 

[Jacque]

Just returned back form the Uk and thought this might be of some interest to people in comparision to what REA charge here in Australia for property management.

My wife's uncle owns two agencys in the Wigan area about half way between Manchester & Liverpool (go the reds!) for those who do not know. I was asking him about his fees and charges on the PM side of things and this is what he charges and is pretty standard in the industry.

15% management fee
5 pound a month statement fee
first months rent letting fee

However they only charge 1 to 1.5% for sales! It's deregulated over there, so for selling they can charge what they like but this is generally the standard fees for most EA.

Jarrod
Jarrod Lane Real Estate

Jarrod,
Do you think the higher management fees are indicative of the fact that most flats (particularly in London) are leased fully furnished? I'm sure this would add to the general maintenance on the places.
Not to mention all those central heaters breaking down- London is a very cold place in the dead of Winter!!

 

[asy]

I'd reply to this thread, but I am busy packing my bags and booking a ticket to nirvana...

asy

 

[asy]

Seriously, though, That's a much better system for Agents, due to the fact that it's the Rentals department in an agency which draws the most costs, and which has an intrinsic value.

This system might actually cover the costs involved (unlike here...)

When you sell an agency, you sell the rental managements, but you don't get much, if anything, for the sales side.

Sounds a plan to me.

asy

 

[David E-Noosa]

Does anyone have info on what is the current value placed on a rent roll in their area ? It has been 1.5 - 2 times yearly income as a general rule of thumb.

eg property let for $250/wk at 8% management fee which is $20/wk so over a 52 week period that rental is worth $1040.00 to the agency. So a "sale" figure would be between $1560 and $2080.

As Asy said, that is really the only thing of value in an agency apart from fixtures and fittings, goodwill is worth about as much a piece of string in most cases.

Some Banks will loan against the rent roll but nothing else.

... he says speaking from experience

 

[JoannaK]

Does anyone have info on what is the current value placed on a rent roll in their area ? It has been 1.5 - 2 times yearly income as a general rule of thumb.

David,

When I sold my rent roll prices were around $3.50 to the dollar, but that was a while ago now. I'd say prices would be closer to the $4.00 mark now for a quality rent roll. I'm in the St George area of Sydney.

Hope this helps.

 

[Ralph]

UK PM fee's not so different

Interesting to hear the UK fee's, assuming there aren't too may hidden extra's, they aren't too far off what agents are asking in Perth.

On a couple of rates I've been offered by agents, the annual costs of employing them to manage my property come to 16.3% of the rental income, assuming one new tenant per annum.

That does however include a letting fee, and petties. So to roughly equalise on your numbers, % of rent to agent without letting fee = 12.6%, still not too far off. WA is ofcourse typically more expensive for PM.

Cheers,

Ralph

 

[duncan_m]

WA is ofcourse typically more expensive for PM.

And they're greedily feeding from both sides of the equation, correct me if I'm wrong but in WA they're also collecting a letting fee from Tenants as well, right?

 

[David E-Noosa]

David,

When I sold my rent roll prices were around $3.50 to the dollar, but that was a while ago now. I'd say prices would be closer to the $4.00 mark now for a quality rent roll. I'm in the St George area of Sydney.

Hope this helps.

Thanks Joanna, thats higher than what I have heard of here on the Sunshine Coast but its good to hear. Makes my latest purchase a bargain.

 

[Kevin Hockey]

David,

When I sold my rent roll prices were around $3.50 to the dollar, but that was a while ago now. I'd say prices would be closer to the $4.00 mark now for a quality rent roll. I'm in the St George area of Sydney.

Hope this helps.

Hi Joannak,

How's bub.

In my area they are $2.20-2.50. A mate has just overpaid on an office to get it. He would have been paying around $2.50 in the end.

Inner city is $2.80-3.20.

Kev

www.nundahrealestate.com.au

 

[Ralph]

Duncan,

That's right, letting fee is 2 weeks rent, one week from the owner and one from the tenant (if they pay it). The landlord takes the risk of the tenant accepting the payment of the letting fee, the agency agreement ofcourse requires the Agency to get 2 weeks regardless of who pays.

I changed the wording on mine to make it a payment from both the tenant and the owner, separately liable for one each. To the extent the tenant won't pay it, I don't plan to be liable.....could ofcourse affect the selection of tenants the PM puts forward

It's interesting that a letting fee of 2 weeks rent accounts for 26% of the annual income to the agency on a single tenant turn around. They ofcourse work to put a new tenant in, but not $880 worth (400pw + gst). A 26% bonus each year is a good reason for their contract showing a lease period of 6 months to one year..........

hmmmm

Ralph

 

[Kristine..]

G'Day

Actually, would you believe in all these years I've never worked these figures through?

My property manager charges 5% of the gross annual rental as a letting fee.

So for eg $200 per week that's $10,400 per annum x 5% = $520 (plus GST), which is equivalent to 2.6 weeks of rent! As GST on residential rentals is treated as input taxed, that's a whopping $572 or 2.86 weeks rent as a letting fee!

So you get off lightly in WA - and 'I wish' I could pass half the letting fee on to the tenants as 'key money' but it can't be done.

Some of my management fees are 5% plus GST and some are 7% plus GST. There is no rhyme or reason to this, it seems to vary depending on which manager instructed the bookkeeper at the time!

So on that $10,000 per annum, less 7.7% = $800.80 plus the letting fee of $572 = $1,372.80, or an effective gross expense of 13.73% per annum.

Sometimes (says she, darkly) it is better not to know these things!

Cheers

Kristine