How Much Does Property Management Cost?

If you’re a landlord, shopping around for the best price for property management makes great business sense. But it can get confusing when the advertised management percentage fee doesn’t accurately reflect the total property management cost due to additional and hidden charges!

In this article, we’ll find out why so many agents are now charging extra for essential services like inspections and renewals, and explore which questions landlords need to ask when comparing fees to determine the true cost of property management. Plus, we’ll look at a cost comparison of local agencies to see who comes out on top in terms of value for money. Let’s get started!

The rising cost of property management

Before June 1st 2019, property management agents were able to charge fees to both tenants and landlords. This dual revenue stream allowed agents to keep management percentages relatively low because they were also generating income through tenants.

The introduction of the Tenant Fees Act in June 2019 changed the landscape significantly. This legislation banned tenant fees related to starting, maintaining and ending tenancies, and capped tenancy deposits in the private rented sector in England. While there were some exceptions, the majority of property management agents lost a substantial portion of their revenue.

The shift in property management fee structures

In response to the Tenant Fees Act, property management companies adjusted their fee structures. To avoid increasing the headline management percentage and putting off potential landlords at the first touchpoint, agents instead started charging separately for services that were previously included in the overall management percentage fee. For example, fees for routine maintenance, inspections and tenancy renewals are now often billed as additional costs.

This has led to confusion and frustration for landlords, who wonder what’s actually included in the management percentage fee they’re being charged.

Key questions for landlords to ask

To get a clear picture of the total cost of property management, landlords should ask agents the following questions when enquiring about their services:

1. What services are included in the management percentage fee? 
2. Are there additional fees for other services (e.g. inspections, maintenance, tenant finding, renewals)?
3. Is there a markup on maintenance work? If so, what’s the percentage or flat fee added?
4. How are emergency repairs handled and charged? 

While management percentage fees provide a good starting point for comparing agencies, they’re just one part of the overall cost equation. By asking the right questions and understanding the full range of potential fees, landlords can make more informed decisions and avoid unexpected expenses.

So, what do management companies actually do?

Still wondering how much work is involved in property management? A lot more goes into it than you might think…

Here’s what we do at Purseglove:

1. Initial appraisal
2. Staging and photography
3. Marketing
4. Enquiry screening
5. Viewings
6. Application screening
7. Meticulous in-house referencing
8. Guarantor processing (where required)
9. Deposit collection, protection and compliance
10. Move in arrangements
11. Rent collection
12. Monthly financial reports
13. Proactive maintenance
14. Compliance and licensing
15. Tenant welfare and customer service
16. Arrears management (e.g. setting up payment plans)
17. Settling in inspection
18. Interim inspections (every 6 months)
19. Rent increases
20. Notices
21. Court applications
22. Check out and renewal
23. Deposit claims and disputes

Plus:

1. Advising landlords on all matters of their property business
2. Discussing deals and areas for investment
3. Providing additional support to tenants

While most agents charge additional fees for many of the items on this list, our management percentage fee at Purseglove includes almost all of the listed services! We can manage single-lets, HMOs and serviced accommodation. Get in touch to find out more!

Weighing up the costs

Let’s run a cost comparison analysis to see how Purseglove fairs against the competition. 

This table compares the costs of property management for three agents: Leaders, For the Landlords, and Purseglove. 

The figures are based on a 3-bed single let rental property (£750 pcm) on a 12-month tenancy agreement over 2 years with one rent increase and notice being issued to seek possession at the end.

A common marketing tactic for management agents is to offer a period of free management or a reduced management percentage fee to encourage landlords to sign on with them. But this doesn’t necessarily mean the landlord is getting a better deal! 

In actual fact, the management percentage fee is a relatively small part of the overall cost when there are so many additional costs to think about. All-inclusive services like ours may well be better long-term, because they cut out all of the additional costs.

If you’re interested in comparing the property management prices of other agents in and around Nottinghamshire, check out the links below.

• Zebra Lets
• Comfort Lettings
• Newton Fallowell
• Bairstowe Eves

As you can see, it’s not uncommon for agents to have additional charges for things you would expect to be included in the management percentage fee.

Property management that goes above and beyond

At Purseglove, we’re passionate about helping landlords make the most out of their investments. We offer a personalised service at a fair price, so that we can do right by our landlords, tenants and staff. 

We even go beyond standard property management, also offering investment advice about property purchases and improvements, and providing market analysis reports with insights into rental trends and pricing strategies. These additional benefits ensure that our clients are not only well-managed but also well-informed.