How to Retain Landlords During Property Management Fee Increases

For real estate agencies, increasing property management fees is sometimes essential to maintain service quality and adapt to rising operational costs. However, fee increases can create a tricky balancing act: while they’re necessary for growth, they risk upsetting valued landlords who may decide to seek cheaper alternatives.

This article outlines effective strategies to retain landlords even as you implement a property management fee increase. By proactively managing communications, maintaining high-quality service, and demonstrating clear value, your agency can confidently raise fees while minimising landlord turnover.

1. Transparent Communication is Key

The first and most essential step in implementing a property management fee increase is open, transparent communication. Landlords are more likely to accept a fee increase if they understand the reasons behind it. Be clear about why the increase is happening, emphasising factors like rising operational costs, enhanced services, or inflationary pressures.

Be sure to give ample notice before implementing the increase, ideally through both a formal letter and a follow-up conversation. For many landlords, the feeling that they’re “in the loop” with your agency can soften the impact of a fee change and reinforce trust.

2. Highlight Added Value and Improved Services

Landlords are often willing to pay more if they feel they’re receiving additional value. Position the property management fee increase as a way to deliver improved services and benefits, such as:

• Enhanced Communication: Regular updates and prompt responses help landlords feel secure and well-informed.

• Proactive Maintenance: Improving the responsiveness and management of maintenance requests reduces landlord stress, saving them time and energy.

• Access to Market Insights: Providing landlords with regular property market updates can boost their sense of value and justify the increase in property management fees.

If your agency has recently implemented new technology, improved reporting systems, or added services, be sure to let your landlords know. Demonstrating your commitment to service excellence can ease any reluctance around paying a bit more.

3. Create a Value Comparison to Competing Agencies

Conduct a brief review of your local market’s fees and services, and highlight areas where your agency excels. Showing landlords that your services offer more value – or are at least competitive – can make the property management fee increase seem more reasonable. If you find you’re offering services that others do not, remind landlords of these points of uniqueness.

Additionally, you can explain how a well-managed property with lower tenant turnover rates and prompt maintenance responses can save landlords money in the long run.

4. Consider Tiered Property Management Fee Structures

If your real estate agency manages a diverse portfolio, offering a tiered fee structure might be helpful. Not every landlord requires the same level of service, and a tiered approach allows you to cater to both high-touch and more hands-off property owners.

For instance, a basic package could cover essential property management tasks, while a premium package could include additional benefits such as more detailed or more frequent reporting, recommendations to improve the property's value beyond routine maintenance, or greater accessibility to dedicated property management resources. This lets landlords choose the package that best aligns with their budget and needs, making them more comfortable with any increasing property management fees.

5. Leverage Data to Show Positive Outcomes

Landlords are often motivated by data that demonstrates their properties are in good hands. Share metrics that highlight low tenant turnover, minimal vacancy periods, and quick maintenance response times. Providing data-driven evidence can reinforce your agency’s reliability, positioning your management fee increase as a justified enhancement rather than an unwelcome change.

6. Encourage Feedback and Be Willing to Negotiate

Landlords appreciate being heard, so encourage feedback on the fee increase and listen closely to their concerns. If a landlord’s hesitation is largely due to a tight budget, consider negotiating a solution that addresses their situation while maintaining the agency’s revenue goals. Small gestures, like a one-time discount for long-term landlords or agreeing to phase in the increase in property management fees over time, can help retain valued clients.

What Difference Would A Management Fee Increase Make To Your Agency's Rent Roll Valuation?

Increasing property management fees doesn’t have to mean losing landlords. By focusing on transparency, added value, tailored services, and data-driven insights, your agency can raise fees in a way that landlords understand and appreciate. Each of these strategies aims to reinforce trust and communicate your agency’s commitment to quality management.

If you'd like to compare your current rent roll valuation with what it could be if you were to adjust your property management fees, our Rent Roll Calculator makes this easy. With it, you can model the impact of fee changes, portfolio growth, or adjustments in rental income on your rent roll valuation, letting you make informed decisions that strengthen your agency’s profitability and client satisfaction. We even provide current vs comparison scenario graphs of all key rent roll valuation metrics which you can save to PDF for future reference.

Ready to see the effect of your next property management fee increase on your rent roll? Explore our calculator today to keep your agency’s growth and landlord relationships on track.

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