Written by Lewis Ridley
Updated over a week ago
If you’re a landlord, you may be curious how much a property management company is going to charge you.
In short, property management companies typically charge between 8-20% of the monthly rent plus VAT. Some management companies will also charge a flat fee of around £100. However, this too can vary.
The reason this figure is so varied is because management companies will price their services based on properties in your portfolio, area, and how stiff the competition is.
There are quite a few different pricing models management companies will use when charging landlords:
- Percentage of Monthly Rent: this is the most standard pricing model you’ll see. It involves taking a percentage of monthly rent. As stated above, this can be anywhere between 8% and 20%.
- Guaranteed Rent: this is where the management company will offer the landlord a fixed, guaranteed rent each month at a discount. The company will then “sub-let” the property out under a management contract for a higher figure then what they’re paying the landlord – making money on the difference.
- Fix Fee: this is where the management company will offer a flat fee per month for management services. This is attractive as they are no hidden costs.
- Revenue Share: this is where the management company will take a share of the revenue generating from the properties of the landlord. This is typically done with commercial units of services accommodation. Sometimes hybrid models are set up with a fixed fee and a revenue share.
There are different factors which impact the price of their services. These include:
If you have more properties in your portfolio, you might be able to get a discount per property. This is because the property management company will be making more money overall with all the properties on their books. So, they’ll be happy to offer a discount.
Obviously, if you’re only using them for one property, you may be receiving a higher monthly fee. Whether that’s as a percentage or a flat fee will be dependent on the management company.
Of course, you’ll be paying a higher price per month if the property management company you’re using is offering a higher level of service.
Ideally, these are the companies you’re going to want to be hiring. They will look after tenants, make sure the correct referencing is obtained (if you’re paying for tenant finding services), and will ensure the property remains tidy and presentable.
Although they warrant a higher fee, they are worth the money. You’ll have peace of mind, and you won’t have to deal with the day-to-day tasks involved in property investing.
Other service levels include: - Tenant-find only (flat one-off fee) - Tenant-find and rent collection (8%/month typically)
Location is going to have a considerable impact in several ways.
Firstly, location will determine what your rent is, meaning the higher the rent the more money you’ll be spending with the companies. This is especially true if you’re being charged a percentage of the rent per month.
Secondly, the location will impact how stiff competition is between property management companies. If there is a lot of competition, you may be able to haggle a discount as the company may fear you’ll wander over to their competition.
Thirdly, the amount property management companies charge will vary depending on whether your properties are in the South or North of the UK. Companies charge more in the South, especially London. Whereas Northern companies will charge significantly less.
Property management companies charge between 8-20% of the monthly rental income. However, there are a ton of other creative options they can use to charge landlords. Depending on your situation, some may be better than others.
If you need further help with property management companies, we suggest you read more of the useful information contained within our knowledge centre.
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