Lease Renew Fee

Recently I have increased one my IP's rent by $5/pw, after that, the agent charged me $330 for lease renew fee. I had a review of my 'Property Management Agreement' with the agent, there is a "Lease Renew Fee" which is 'half week plus GST'. It's totally not worth to renew the lease.

Just wondering is lease renew fee common?

Thanks.

 

Yep, my agent charges for it too. Daylight robbery. I usually just let the lease roll into month to month.

 

mine is $55 incl gst so i shouldn't complain but i still don't see why landlords are charged this fee? the management fee of 7-9% should cover the pm emailing the tenant a copy of the new lease..

 

Wow that seems expensive for a lease renewal. Normally around the $35 to $55 mark plus GST.

A lot including my PM include it already

 

Yea because that's all that's involved

 

Make sure your landlords insurance policy still covers you adequately without a fixed term lease, some don't.

 

Like any contract, cost clauses in your PM agreement can be negotiated. You don't have to simply accept the standard document. Of course, the best time to negotiate is when you initially appoint the agent, but if you are unhappy then there is no harm in asking for the cost to be reviewed if you feel it is excessive for the work involved.

We never paid PM fees for lease renewals.
Marg

 

Thank you guys for the advice, will negotiate with my PM.

 

PM is easy, don't even know why you guys charge!

 

It's not a matter of whether you have adequate cover because everything remains the same irrespective of lease term and type. The problem with periodic leases is that you can only claim rent loss to the end of that month not until the property is re-let. That means that you are losing the main benefit of landlords insurance and will wear a the total arrears as a cost.

Fixed term leases are valuable documents and property investing is a business.

 

Yes, they charge, no, it should not be that much....

 

Hi Xenia

Unfortunately I've found with some insurers that once a lease has lapsed to a periodical lease, the maximum payout in the event of rental default is 2 weeks (as opposed to 16 weeks on a fixed term lease). I've tried the painful process of explaining to them the disjoint between their policies and rental laws (that landlords cannot force a tenant to sign a new lease) and request they review their policies accordingly, but of course the care factor was zero.

 

Half a week's rent plus GST for renewing a lease is too much. With that said, it is not zero work. A form needs to be filled out and posted, and a tenant communicated with. Circa $55 incl gst is reasonable. Keeping in mind that the PM wouldn't get paid for sending this lease to the tenant if the tenant decided not to sign it. Because the lease would not have been "renewed".

 

Yup, and some policies are void on periodic. Definitely pays to read the fine print on a policy.

Helping an investor avoid that situation comes at a cost.

 

I know some agents will disagree with me here however I completely disagree with charging lease renewal fees. As an agent in Brisbane we do not charge a lease renewal fee as we are firm believers that this service is included in the weekly management fee and is simply part of managing the property for the Investor. I do not see that there is a great deal of more work involved at all to justify this charge - on the contrary there is considerably less work involved - there are no applications to process, no leasing and no entry condition report to be conducted as this obviously has already been attended to prior to tenants moving in.

Yes there are often a few emails back and forth, a new lease to be drawn up and creating a current rental appraisal to ascertain if a rent increase is warranted, however generally this really doesn't take long and certainly I feel, this is simply part of managing the property and is a service included in the weekly management fee. I have previously worked for places that do charge anything from a flat fee of $100 up to 1/2 a weeks rent or more for renewing a lease and this never sat well with me or many of the landlords at the time.

As other people have mentioned here yes it is something that is usually negotiated when signing the management agreement.

 

D

Diligent Property Management agrees. We have no add on fees for lease renewals nor charge admin/sundries fees nor tribunal or inspection fees. It is all covered in our property management fee.

 

Before we got involved with PM, I would agree with you. But now I have a totally different view.
In the past months, we have gone thru some tough renewals. Multiple communications with multiple parties, multiple claims, he says she says, up or down,Tenants playing hide-and-seek... So much so that at the end of the day, I feel like waiving it, not because I did no work, but because it's an insult to the actual time spent.

I suppose one cannot just look at Renewal Fee alone. We dont charge inspection, smoke alarm ... So investors should really look into the total picture. PMs need to pay bills too, so they would still need to get their income from somewhere, so they simply cant provide free services all the time. It's just not sustainable. I would much rather they charge openly than some unknown thing behind my back.

 

I think the whole lot has to be added up. If one agency is charging a renewal fee and another is charging for monthly admin, quarterly inspections, yearly statements etc, then the fees might be same or different and the person offended just by the label on it rather than the cost.

Like everything in the world though, price of the item / service is only one factor in the decision making process.

Just like we're taught on here by the Broker crew about interest rates. Would rather be with a bank that helps my investment journey than save on %.

 

Might be a new business venture..... Property Manager Broker.