Fees for rent review and exercise of lease options

Hi experts,

I am about to sign a new managing & leasing agreement with a commercial agency in Victoria.
Things that caught my attention are following sets of fees:
1. $5500 (incl GST) or 11% (incl GST) of the increase in annual gross rental for "Exercise of Lease
Options".
2. $2200 (incl GST) or 11% (incl GST) of the increase in annual gross rental for "Rent Reviews".

Is this common practice for Victoria?
Given that my lease is up for both in less than 3 years, it's a pretty hefty overhead.

What are actually involved to exercise lease options from managing agent's perspective to
justify such fees? I would have thought my solicitor plays a more relevant role in lease option exercising with all the legals stuff.

Any input or experience is welcomed!!!

Thanks,
FXD

 

1. Unless you are expecting a $50k uplift on the option lease, 11% is a much smaller amount
2. Even $2200 is excessive depending upon how much work is required in performing the rent review ie the lease will state annual increase it will take a few hours (being generous) to write to the tenant/owner advising the lease clause states type of rent review eg % or CPI and to finalise negotiations, update the system and issue new charges.

The solicitor will confirm the validity of the exercise of the option (if you are using a solicitor for a registered lease or for a term exceeding 3 years).

 

Thanks Scott, what sort of figures or rates are more common & reasonable for both? Looks like
some negotiating needed with my pm.

I forgot to mention this is a GF strata retail as part of a mixed used building.

 

There are two things required.
1: calculate the rental . If you uncertain instruct a valuer . Agree on the rental.
2: draft the deed of renewal . You can draft this yourself or engage a solicitor.
When leases are registered I always use a solicitor.
Twenty five of my leases are registered all paid by the tenant .
Most I do myself.
So cost could be from nothing to $25k plus (arbitration)

 

Although management fees are generally covered by the tenants the extras like renewals can be costly or great value
Good Market rental advice ...great value for their fee.

Just a sign them up without reference to the market leaving money on the table ...even when a free service it's not good value at all

 

THanks Beano!