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Commissions drop, rent rolls grow

By Steven Cross
04 June 2014 | 8 minute read

Despite commissions dropping, the average national rent roll size has increased by 15 per cent according to the latest Residential Real Estate Benchmarking report from Macquarie.

According to the biannual report, the national average rent roll size increased from 436 to 508 properties, however commissions dropped slightly – from 6.8 per cent to 6.76 per cent in metro areas, and from 7.71 to 7.57 per cent in regional markets.

Speaking with Residential Property Manager, Vasili Hadzellis from Core Property Management Consulting said it was disappointing to see property managers working harder with lower fees.

“We’ve had the lowest interest rates on record and increasing rental returns, so the last two years has been a great time to get into the investment market,” Mr Hadzellis said.

“But it’s a shame to see property managers taking on more, but not demonstrating value and protecting their fee.”

Victorian property management departments saw the largest jump in rent roll size, increasing from 558 in 2009 to 587 in 2012, and leaping to 745 in 2014.

Western Australian rent rolls decreased in size according to the results, dropping from 401 in 2012 to 341 in 2014.

Rent roll growth in small agencies has remained flat since 2009 with an average of 185 properties under management, however medium sized agencies saw growth from 385 to 431 properties.

Large businesses saw a slight decrease in the number of properties under management, dropping from 1,043 to 984.

While an office may not feel the financial brunt of reducing fees if their rent roll grows by 15 per cent, Mr Hadzellis believes it’s still unsustainable.

“Irrespective of rent roll size property managers need to maintain their fee," he said. "If you add on more properties, that’s more tenants, more inspections and more risk.

“While the business should evolve to adapt, the fee shouldn’t go down.

“You need to demonstrate value for your offering, because if you’re going to win a management and you don’t bring value to the customer, you’re going to have to bring a low fee.”

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