When it comes to property management fees, the debate rages on! Across Australia, agencies have strong opinions on what should and shouldn’t be covered by the management fee.

From Queensland to Victoria, the management fee is king, making up to 85% of total agency fee income. But in Western Australia, agencies are raking in the big bucks from ancillary fees, up to 55% of their total fee income.

Despite this, they still maintain one of the highest management percentages in the country, at around 9.35% (inc GST), thanks to some of the highest average rents in the land down under.

East coast versus west coast: What’s the management fee for anyway?

The answer to this question depends on your mindset and your location. On the East Coast, property management fees are typically seen as covering only basic services like rent collection and maintenance, while West Coast agencies charge extra for things like routine inspections and ingoing/outgoing inspections.

There are no hard and fast rules for what should be included in a management fee, so it ultimately comes down to personal preference.

So how do you unlock better fees?

To increase and improve fees, there are two essential things that you and your team must do. Firstly, you need to truly believe that you’re worth it. Secondly, you must know how to effectively justify your fees.

Property management fees charges across Australia

These are the fees that we’ve seen over the past decade of working with property management agencies across Australia:
#1 Management fee – Percentage based on rent collected
While some agencies charge a set dollar amount per month, the absolute majority prefers to charge a percentage of all rent collected. And it’s not unusual to see rates ranging from as low as 3.3% to a whopping 9.35% in capital cities and up to 11% in some regional areas.
#2- Management Fee – Percentage based on ‘all-monies’ collected

Why limit yourself to charging a percentage only on rental income when you could also charge on other expenses collected from tenants, such as water bills? A more profitable mindset is to charge a management fee on all monies collected, which is exactly what successful agencies do.

#3- Management Fee – Fixed rate per month
Charging a fixed rate per month, like $65 or $85 per property, is rare in Australia. We recommend sticking with a percentage-based fee so that your management income increases as the rents do. This style of fixed fee is more prevalent in the USA.

#4- Management Fee – The ‘All-Inclusive’ Fee
Roll all fees into one management fee for a simple, predictable owner budget. But calculate it correctly to ensure you break even (plus profit margin) on each property. Sign owners to a 12-month agreement and consult a rent roll broker on how this affects future asset worth. Rates range from 11% in Sydney to 19.5% in Western Australia.

#5- Management Fee – ‘Hybrid All-Inclusive Fee’
Why settle for just one type of management fee when you can have a hybrid? This approach involves charging a lower all-inclusive management fee but then adding on separate charges for specific services, like a letting or internet marketing fee. It’s the best of both worlds, with lower overall fees and the ability to charge for add-ons on a “user-pays” basis.

#6- Letting Fee (or Leasing Fee)
Charge a letting fee every time the property is rented to new tenants, with 1.1 to 2.2 weeks rent being the norm depending on your marketplace and state. Avoid charging half of your rate for a 6-month lease and a full rate for a 12-month lease – just charge a full letting fee for each letting regardless of lease length. In NSW, prepare to pay a Lease Preparation Fee of up to $66, which is charged separately from the Letting Fee.

#7- Internet Marketing Fee
Agencies often charge an internet marketing fee, which includes all costs associated with advertising the property online, and sometimes even includes the cost of a sign-board to secure a new tenant. While this fee is commonly waived in Queensland, it can range from $25 to $390 per letting in Victoria. Given that online advertising isn’t free, it makes sense to pass on the costs to the owner.

#8- Professional Photography Fee
Preparing the marketing material for a new property, which includes visiting the property and capturing high-quality photographs, can be costly and time-consuming for your agency. Fees for this service range from $77 to $175, and some agencies even hire professional photographers to ensure the best possible results.

#9- Video Walk-Through Marketing Fee
A video walk-through tour can be a powerful tool in marketing a property and reducing its vacancy rate. It provides a value proposition to potential clients and can enhance their experience of the property.

However, we have observed that agents who offer this type of video tour don’t usually charge extra for it. We suggest a fee of $55 to $110 per video tour in addition to the letting fee. When done correctly, video tours have been proven to rent properties faster and can justify the additional cost.

#10- Ingoing Inspection/Property Condition Report Fee
Many agencies are now charging a separate fee for the ingoing inspection/property condition report, especially in Western Australia where property management owner fees are more common. Typically, this fee is charged when a new report is completed for the first time, but some agencies are also charging for each new tenancy and update. Prices range from $99 to $220 per inspection.

A helpful tip is to showcase the level of detail in your inspection report to prospective clients by highlighting the number of photos and any video footage of the property. This will enable you to justify the fee for the report (and video) based on the value of your service.

#11- Lease Renewal Fee
When it comes to signing an existing tenant to another fixed-term agreement, agencies charge a lease renewal fee that ranges from as low as $25 to as high as 1.1 weeks’ rent. In Australia, the lease renewal fee is typically half the amount of the letting fee.

In Victoria, this fee is often charged as a percentage of the annual rent return instead of a fixed amount. For instance, instead of quoting 0.55 weeks rent, they may quote 1.1%, which is approximately the same charge presented differently.

Some agencies even charge to sign the tenant onto a non-fixed agreement once the initial fixed-term lease has expired. It’s important to keep in mind that lease renewal fees can be negotiable and should be discussed with the tenant beforehand.

#12- Routine Inspection Fee
Routine inspections of a property by agencies are becoming more common and are charged anywhere from $11 to $99 per inspection. It takes up to an hour for agencies to book and conduct the inspection, travel to and from the property, re-inspect if necessary, complete the report and email it to the client. Therefore, charging for these inspections is justifiable.

Consider this, a plumber charges between $80 and $100 to fix a leaking tap, and that only takes less than an hour to complete. These reports provide far greater value than a simple rubber washer.

Most east coast agencies do not charge for routine inspections, while all west coast agencies charge $55 or more. In Adelaide, one-third of agencies charge a fee ranging from $11 to $22.

#13- Final Inspection/Vacate/Bond Inspection Fee
The process of vacating a tenant and preparing the property for re-letting can be complicated and time-consuming, often requiring multiple inspections and conflict resolution. As such, we see fees for final inspections and bond inspections ranging from $33 to $220, primarily in Western Australia.

It’s worth noting that only a small percentage of vacate inspections are completely satisfactory on the first look, which highlights the importance of charging for the work involved. Given the level of effort required, it makes sense to factor in a fee to compensate for the time and resources required to carry out this vital task.

#14- Tenancy Database Check Fee
This fee is for checking a tenant’s application against several tenancy databases and is typically charged per letting. The cost varies from $11 to $55 per letting. Please note that most state regulators require this fee to only cover direct costs, and agencies cannot profit from it.

#15- (Monthly) Administration Fee
An administrative fee is commonly charged in addition to the management fee. This fee covers various expenses such as postage, phone, fax, and other petty expenses. Although it is one of the most common fees charged, it can be difficult for agencies to justify when challenged.

It’s important to note that referring to this fee as a “postage and petties fee” is outdated, as most statements and notices are now sent via email. Additionally, agencies must provide monthly statements to clients, so calling it a “statement fee” is not appropriate.

We see this fee charged at an average of $5.50 per property per month, with fees as low as $2.20 to $4.40 in Victoria and as high as $11 to $16.50 in other parts of the country. The highest charge we’ve seen is $22 per property per month in South Australia, where the agency only lost one owner out of 300 properties when the fee was implemented.

Other fees you might spot:

  • Annual statement fee
  • Tribunal/court attendance fee
  • Furniture inventory fee
  • Insurance claim processing fee
  • Payment disbursement fee
  • Special payment fee
  • Repairs and maintenance fee
  • Renovation fee
  • Rent increase fee
  • ‘Outside of normal duties’ fee
Darren Hunter
Property Management Trainer, Speaker & Consultant at | [email protected]

Darren Hunter - of darrenhunter.com is a national and international property management trainer, speaker, consultant and authority on property management, specialising in fee maximisation and profitability as well as time and stress management and property management productivity.