Landlords charge tenants for any management fees, if they use a property management agency. The lease agreement will be inadequate if it doesn’t include a management fees clause. The tenant needs to understand costs incurred in the leasing, including management fees. Management fees are charged to the landlord. In turn, the landlord recharges the tenant for expenses incurred.
When a landlord changes property managers or begins to use a property management company, the lease agreement needs to be amended. The lease agreement needs to specify that management fees will be charged to the tenant. According to The Landlord and Tenant Act 1987, management fees must be reasonable. As long as the fees are reasonable and discussed with the tenant, prior to the lease amendment.
Management fees can be inserted in the lease agreement Service Charges section. They can be stipulated as a percentage of the service charge. We recommend that landlords keep tenants up to date with new changes in the lease. Include tenants in discussions with the property lawyer, when amending the lease agreement. It’s important that the tenant is included in all discussions.
It’s good business practice to keep the tenant aware of any new charges. Tenants should also be aware of when fees will be charged and when payment will be due. Often, tenants choose to have the management fee fixed as an annual fee. If vat is payable by the landlord, the tenant should be expected to cover this expenditure. Landlords and tenants can discuss with their lawyer, which fees should be covered and when these should be charged.
If you are a landlord who needs to amend the lease agreement for any reasons, including the inclusion of property management charges, please get in touch with us. SG
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