Many rental providers (previously known as landlords) pay an agent – either a dedicated property manager or a real estate agent – to manage the day-to-day running of their rental property. If you’re a rental provider who wants to have your property managed by an agent, there are a few things you need to know.
On this page:
Finding and choosing an estate agent to manage your property
The agent you choose should have experience in property management. They should also be able to give you a comprehensive list of the services they offer and tell you how much they charge.
Use the internet and local newspapers to research agents, and speak to at least two or three in the local area.
The Real Estate Institute of Victoria (REIV) can provide details of its members who have property management skills but a licensed agent does not have to be a member of the REIV.
Engaging the services of an agent
When you engage an agent to manage your rental property, you will need to sign an ‘exclusive leasing and/or managing authority’ (often called ‘the authority’). This is a binding contract signed between you and the agent. In signing it, you are giving the agent exclusive rights to find a renter and authorising them to manage your rental property.
However, in most circumstances, once your property has been let, you are not exclusively tied to that agent.
What services an agent provides
You can expect the agent to find a suitable tenant and collect the rent; any further terms should be specified in the authority (contract).
It is common for an agent to attach an ‘instruction form’, which will also be considered part of the agreement.
The authority should state that the agent will notify you of any damage to the property, or of unpaid rent. It should specify how often they will inspect the property. Write any further terms into the contract.
Read more about rent.
Costs for using an agent
You can negotiate all fees and expenses with an agent, except those that are fixed by law. You must record who is responsible for paying what fees and expenses on the authority (contract), including any GST liabilities.
Letting (or leasing) fee
Generally, this is the initial set-up cost for vetting and finding a tenant. It is negotiable and usually charged at the beginning of each rental agreement. Some agents also charge a re-leasing fee (also subject to negotiation) if current tenants sign a new rental agreement.
This is an ongoing fee that is taken out of the rent each time it is paid. If the management fee is worked out as a percentage of the rent, make sure it is also included as a dollar amount on the authority (contract).
These are costs you may be charged by the agent for advertising your rental property. Marketing costs will depend on how you choose to advertise the property.
Examples of other costs you may be charged by an agent include statement fees, administrative and/or postage costs. If you need to go to VCAT to resolve a dispute, there will be fees associated with this process.
Agents can pay bills on your behalf
You can ask the agent to arrange for municipal rates notices and bills for utilities such as water, gas and electricity to be redirected to their office and paid from the rent. This arrangement should be made in writing.
Other costs the agent may deduct from the rent on your behalf include insurance, owners corporation fees or special levy costs associated with ownership of a flat, unit or apartment.
You should also take out rental provider insurance (also known as landlord insurance), which will help to insure you against a defaulting renter or damage caused by the renter. Shop around for the most suitable policy.
Receiving rent from the agent
The agent should forward the rent to you within a reasonable time. This can depend on whether the renter pays on time and how often the agent distributes payments from their trust account.
The agent should explain their accounting timelines as part of their service to you.
Read more about rent.
Managing repairs and maintenance
As a rental provider, you can authorise your agent to arrange for urgent repairs up to a specified amount. Your authority should be written into the contract.
You must give the renter a written statement that explains whether or not the agent can arrange urgent repairs. If the agent is authorised to arrange urgent repairs, the written statement to the renter should include the maximum amount the agent is authorised to spend on repairs.
You (or your agent) must also give the renter the agent’s phone number or email address, so the renter can contact the agent if they need an urgent repair.
If you do not authorise the agent to arrange repairs, then you must give the tenant your contact details.
Find more information about repairs.
The agent’s role in re-letting your property
Once a renter has given the agent their notice to vacate the property, the agent should consult you about the process of re-letting it. This may include advertising and showing prospective renters through, which your agent can only do:
- within 21 days before the end of the rental agreement
- if they have given the renter at least 48 hours’ notice before entering to show the property to prospective renters
- up to twice a week and for no longer than one hour.
There are also rules about showing a property to prospective renters when the current renter is a protected person under family violence or personal safety legislation. Find more information for rental providers about family violence.
The agent will also arrange an inspection and completion of a final condition report once a renter moves out.
Read more information about what happens when renters vacate a property.
Repayment of bonds
At the end of the tenancy, you (or your agent) and the tenant need to agree on how the bond money is to be disbursed. This should be set out in the bond claim, submitted to the Residential Tenancies Bond Authority (RTBA).
If the renter refuses to pay or cannot be found, you or your agent must apply to VCAT for an order directing the RTBA to repay all or part of the bond. You or your agent have 14 days from the end of the rental agreement to make this application. You or your agent may also claim compensation over and above the amount of the bond (a fee will apply for that application).
Read more about claiming the bond.
Selling a managed property
If you want to sell your rental property with the existing rental agreement, your agent should notify your renter. If your agent wants to show prospective buyers or conduct open for inspections, you must follow the law about entry rights.
If the rental agreement extends beyond the proposed settlement date following the sale of the property, the contract of sale should specify that the property is being sold ‘subject to rental agreement’.
Ending a property management contract
In most cases, you can immediately end your agent’s management of your rental property by notifying them in writing. Check the conditions of your authority (contract) first.
You should arrange to collect keys and relevant documents from the agent or for your new agent to do so on your behalf.
Whether you choose a new agent or manage the property yourself, your tenant will need to be formally advised of the new arrangements.
Your agent may also terminate management of your property by giving written notice to you.
If you want to know what the law says about using a property manager or real estate agent, you should refer to the Estate Agents (Professional Conduct) Regulations 2018.