Many property owners choose to delegate the management of their property to a real estate agency. One common question then arises: what are property management fees and what exactly do they cover? To avoid unpleasant surprises and to accurately assess the profitability of your investment, it is essential to understand these fees in detail.
Understanding Property Management Fees and Real Estate Agency Commissions
Definition of Property Management Fees and Agency Costs
Property management fees refer to the management commissions paid by the owner under a management agreement with a professional (agency, agent, or property manager). This professional handles the day-to-day administration of the property: rent collection, monitoring of charges, reminders for unpaid rent, and coordination of interventions.
On average, these fees represent between 5% and 10% of total collections. Contrary to popular belief, they are not always calculated solely on the rental amount. Depending on the agency's practices, they may also apply to all amounts received on behalf of the owner: rents, service charges, taxes, etc. The calculation method can therefore vary from one manager to another.
Why Delegate Management to a Real Estate Agency and Pay Fees?
Entrusting property management to a professional offers many advantages for landlords:
Time savings
The manager handles all time-consuming tasks: rent collection, issuance of rent receipts, reminders, etc.Regulatory expertise
Management is carried out in compliance with regulations, including the Hoguet and ALUR laws, helping to avoid costly errors.Professional oversight
The landlord benefits from expert service: advice, quick tenant response, coordination of repairs—especially in case of incidents or damage.Peace of mind and legal security
In the event of disputes or unpaid rent, the manager provides support, reducing the owner's risk.
This delegation improves legal security, reduces rental vacancies, and optimizes rental profitability, while providing a clear and stress-free investment perspective.
What Services Are Included in Real Estate Agency Fees and Property Management Commissions?
Standard Services Covered by Real Estate Agency Commissions
When signing a property management agreement with a real estate agency or property manager, certain services are generally included in the monthly management fee. However, these services may vary significantly from one professional to another. It is therefore essential to inquire beforehand to know exactly what the management offer includes.
These services generally cover the administrative, accounting, and operational management of the property:
Rent and charge collection: The agency ensures regular monitoring of payments, automatic reminders for late payments, and updating of the owner's account balance.
Issuance of rent receipts: Each month, receipts are sent to the tenant.
Monitoring of charge adjustments: This includes calculation of provisions and annual adjustments, if necessary.
Handling of tenant requests: Minor repairs, claims, disputes… the agency acts as an intermediary between tenant and owner.
Technical and administrative property follow-up: This includes scheduling repairs (plumbing, electricity, etc.) and legal verifications (diagnostics, compliance).
These elements form the foundation of day-to-day management, essential to maintaining a rental property in good standing.
Additional Options: Agency Fees Payable by the Tenant or the Owner?
Some services are not always included in the monthly management package and may incur additional fees. These optional services are specified in the management agreement and vary by agency.
The most common additional services include:
Tenant search: In the event of vacancy, the agency charges leasing fees, which depend in particular on the property's size and location.
Lease agreement drafting: Sometimes billed separately depending on the complexity or customization of the contract.
Move-in and move-out inspections: A flat fee may apply, often shared with the tenant in accordance with ALUR regulations.
Unpaid rent insurance (GLI): This optional coverage protects against unpaid rent, property damage, and legal expenses.
Handling major damages or legal disputes: Some cases may require additional billing.
Issuance of a summary document for income tax filing support
What Factors Influence Property Management Fees?
Several factors affect the amount of management fees. The same agency may offer different rates depending on the property’s characteristics and the owner’s expectations.
Key factors influencing the fees:
Number of rental units managed: An owner with several properties may negotiate a reduced management rate.
Lease duration or tenant turnover rate: The more stable the management and the lower the tenant turnover, the fewer leasing fees to bear.
Additional services: A contract that includes rent guarantee insurance, technical monitoring, or detailed reporting may involve additional costs.
Complexity of the case: Co-ownerships, social housing, or specific tax regimes (Pinel, LMNP…) may incur additional fees.
What Does the Law Say About Agency Fees and Management Commissions?
Regulation of Real Estate Agency Fees under the ALUR Law
Property management fees are strictly regulated by French law, especially since the enactment of the ALUR law (Access to Housing and Renovated Urban Planning) in 2014. This law requires full transparency in the pricing practices of real estate agencies.
Current legal obligations include:
Mandatory display of fees in the agency’s window and on its website. Fees must be stated inclusive of tax and broken down by service.
Use of a standardized information sheet: this document must list all proposed services and their individual prices.
Mandatory written management agreement: this contract must clearly specify the services included and the corresponding fees.
Ban on abusive clauses: any unjustified or unlisted fees may be challenged by the owner.
Rights and Duties of the Landlord and the Real Estate Agency (Rent Payment to the Owner)
The relationship between a property owner and the manager is governed by a contract that sets the rights and responsibilities of each party.
For the landlord, this includes:
Providing all necessary documentation about the property (diagnostics, co-ownership rules, etc.)
Fulfilling the financial obligations outlined in the contract (fees, provisions, etc.)
Delegating the powers specified in the agreement without interfering in day-to-day management
For the manager, obligations include:
Acting in the owner’s best interest with full transparency
Informing the owner of events affecting the property or tenant relationship
Managing the property in compliance with current laws (urban planning, lease agreements, taxes, etc.)
Regularly reporting to the owner (account statements, annual reports, etc.)
In case of breach, the owner may terminate the contract at renewal or contact a mediator or court in the event of a rental dispute.
Is Property Management Profitable Despite Agency Rental Fees?
Cost/Benefit Analysis of Real Estate Agency Fees
Hiring a professional for property management involves recurring costs. However, this expense can prove profitable in the long term when considering the associated advantages.
Here’s how profitability is justified:
Saved time: The owner no longer has to handle calls, reminders, repairs, or paperwork.
Reduced rental vacancy: Thanks to the agency's efficiency, the property is rented out faster, limiting periods without rent.
Legal security: Lease agreements are compliant, diagnostics are up to date, and regulations are followed—avoiding potential disputes.
Market expertise: The agency adjusts rent appropriately, spots warning signs early, and offers tailored solutions.
Tax optimization: Management fees are deductible from rental income under the real tax regime, reducing the tax burden.
Ultimately, the best approach is not to see these fees as a loss, but as an investment in your rental property’s performance.
Conclusion – Property Management Fees and Real Estate Agency Costs: A Profitable Investment
At first glance, property management fees may seem like a constraint, but they cover a broad range of services that simplify the landlord’s life and protect their rental investment. When chosen wisely, these fees save time, prevent mistakes, and enhance long-term rental profitability.
They cover essential tasks: rent collection, tenant management, repairs, etc.
The law enforces full transparency and fee regulation via the ALUR law.
Delegating management helps reduce rental vacancy and maximizes the landlord's peace of mind.
Are you planning to rent out a property or optimize the management of your rental assets?
Trust the advisors of the Optimhome network, present throughout France. With their local expertise, human support, and transparency, you benefit from tailor-made services to secure your income and enjoy peace of mind.
FAQ – Real Estate Agency Fees and Property Management
1. How are property management fees calculated?
They generally range from 5% to 10% and may apply to rent only or to all collections (rent, charges, taxes), depending on the agency’s practices and what is defined in the contract.
2. Are property management fees tax-deductible?
Yes, they are deductible from rental income under the real tax regime.
3. Can an agency charge additional fees beyond those in the contract?
Yes, but only for optional services clearly specified, such as move-in/out inspections or rent guarantee insurance.
4. Can a property management contract be terminated?
Yes, at each annual renewal or in case of a valid reason (manager’s failure, mismanagement, etc.).
5. Is it mandatory to use an agency to manage your property?
No, it’s not mandatory. But hiring a professional brings time savings, greater legal security, and peace of mind.
6. Who pays the agency fees?
For property management, the fees are paid by the owner. For rental services, some costs (lease, inspection, etc.) may be shared with the tenant, as governed by the ALUR law.
Author:
Sandrine Hammann – Head of Property Management
As a rental management expert, I provide practical advice and insights to help you maximize the profitability of your real estate investments. My goal is to offer clear, actionable guidance to help you optimize the management of your properties.
