Top 15 Fees charged in Australia

If you’re reluctant to introduce news fees, fearing client backlash, it may come as a surprise to know that some of the most successful property management departments charge a variety of fees for service.

Darren Hunter explains why believing in what you’re worth is a good place to start.

Top 15 Fees Charged in Australia

If you’re reluctant to introduce news fees, fearing client backlash, it may come as a surprise to know that some of the most successful property management departments charge a variety of fees for service. Darren Hunter explains why believing in what you’re worth is a good place to start.

Speaking recently at the Florida Association of Residential Property Managers annual conference in the sunny Florida Keys, USA I met another trainer and speaker who gave me a very interesting document called “100 Things You Can Charge Landlords and Tenants”.

Yes, in the United States legislation does not protect tenants against paying service fees (tough legislation protection in Australia prevents us charging tenants any service fees), and some departments in the USA even make more money through fees from tenants than from their own landlord clients!

As a national trainer and consultant working in many departments it is my observation that most departments are not really serious about charging fees for service. (By the way, if you want a copy of the document “100 Things You Can Charge Landlords and Tenants” please email me on [email protected])

I believe, in general,”Departments charge nowhere near enough to be able to provide high levels of service, not overload property management staff and still retain a healthy profit margin.” The results are departments barely able to resource their departments and have a “revolving door” from burnt out staff and resignations. It all compounds into struggling departments, an anaemic profit margin and disillusioned principals.

So what are the fees for service being charged across the country that we see in departments? This is a comprehensive but certainly not an exhaustive list, with approximate fee amounts we see being charged. Fees quoted are inclusive of GST. I stress this list is not for you to charge every fee, just work out one or two new fees with the appropriate fee charge and give them a go. Without being silly on this issue, I believe you can sell that which you believe is necessary and can prove a benefit to the client for charging it.

1. Management Fee – we have seen the odd department charging a set dollar figure per month, however, we recommend what the absolute majority does, and charge a percentage of rents collected. We see and have heard of rates anywhere from as low as 4.4 per cent right up to 18.5 per cent (this is where all fees are rolled into one management fee).
2. Letting Fee – every department charges a letting fee for every time you need to rent the property to new tenants. We see anywhere from 0.65 weeks rent up to 3.3 weeks rent charged. However 1.1 weeks to 2.2 weeks rent is the norm, depending on your market place.
3. Marketing/Internet Advertising Fee – including internet and sometimes newspaper advertising to secure a new tenant (though everyone seems to be just doing internet advertising now). We see departments charging anywhere from $25 right through to $149 per letting. We all agree, internet advertising is not free to you so why shouldn’t you pass on the costs?
4. Photography Fee – when setting up the marketing with a new property, going to the property and taking quality photos or even paying a professional service to take photos all costs the company. We see this being charged from $77 right up to $175.
5. PCR Fee – The Property Condition Report is being charged by departments separate from the letting fee, particularly in Western Australia (WA is property management fee paradise!). Usually charged when a new report is completed for the first time, some departments are also charging for each new tenancy as well. We see charges anywhere from $99 to $175.
6. Lease Renewal Fee – I cannot believe there are still a lot of departments not charging this fee. To sign an existing tenant to a new fixed term agreement, we see departments charging anywhere from as little as $25 right up to 1.1 weeks rent. It is common that the lease renewal fee represents half that of the letting fee.
7. Routine Inspection charge – charging for conducting routine inspections we see being charged at $11 right up to $77 per inspection.
8. Bond Inspection Fee – for the work to vacate a tenant and make it ready again for letting, we see charges ranging from $33 to $155.
9. Database Check Fee – to check an application against multiple tenancy databases, this fee is usually charged once per letting. We see charges ranging from $11 to $55.
10. Tribunal Attendance Fee – to attend the tribunal, including travel time and preparation we see fees from $55 to $165 per hour, also at a fixed cost as well.
11. Insurance Claim Processing Fee – to process/assist with landlord insurance claims we see $55 to $165 per hour being charged, also at a fixed cost as well.
12. Annual Statement Fee – for the summary statement covering the last financial year we see charges ranging from $11 to $55 per statement.
13. Disbursement Fee – for arranging of payments to creditors up to $2.50 per disbursement/payment made.
14. Special Payment Fee – when landlords request to receive their rent monies outside of their normal payment cycle on a special arrangement, we see up to $22 being charged here.
15. Maintenance Fee – this one is rare, but the departments I see charging it have no problem justifying it. Charging a percentage on the tradespeople tax invoices arranged, we see anywhere from 5.5 to 11 per cent of the account, capped at $55 maximum charged.

Naturally there are market restrictions surrounding what can be charged, however, the greatest barrier of all is department mindsets saying adding new fees or increasing current fees cannot be done!

If you believe what you are worth, and you can explain it with belief and conviction you will in most cases win the fees you are after. Very few departments we have experienced have ever run into any real problems when adding or increasing some fees. In fact, most are raving about the results.

What is your service worth today? Go for it and all the best!

Darren Hunter from darrenhunter.com.au, has over 20 years property management experience and is a seminar trainer, consultant and speaker. Darren presented in the USA as a keynote speaker at the Florida Association of Residential Property Managers annual conference in 2009 and 2010 where he was awarded the title of PME (‘Property Management Expert’) being one of 30 in the USA, and one of only three outside the USA to receive this title.