Tenant Procurement versus a Managed Lease Mandates and the benefits

The rental property landscape is legislatively complex with many compliance issues which are often a challenge for landlords and property owners who are increasingly turning to the services of professional rental property agents.

Generally, when contracting the services of a rental property agent, the landlord will need to sign a written mandate which will set out the type of service chosen and the applicable fees. There are generally two types of Mandates:

Tenant Procurement Mandate

This service would include the sourcing and vetting of a suitable tenant for the property and the preparation of a compliant lease agreement.

Activities include listing of the property with the relevant information and photographs, screening and vetting of tenants including credit and reference checks and arranging and attending to viewings.

The agent will draw up the lease agreement and negotiate the terms including use of the property, deposit required, monthly rental and any other conditions. The agent will arrange for payment of the deposit and first month's rental as well an incoming inspection and occupation of the property.

If there is no management option included in the mandate, then the management of the tenant and the property will fall to the responsibility of the landlord or property owner.

The deposit is usually kept by the landlord who must invest it in an interest bearing account until the end of the lease whereafter it must be refunded (with interest) to the tenant, net of any deduction for damage repairs. The agent could also provide this as part of the service.

A once-off fee is usually charged for this service.

Managed Lease Mandate

The inclusion of a management option provides peace of mind and assurance to the landlord or property owner that the tenant and property will be responsibly managed.

While the specific services will depend on what is negotiated as part of the mandate, it usually involves the invoicing and collection of monthly rentals and reconciliations, payment of services and/or levies, managing the tenant and property on an ongoing basis including maintenance requirements and attending to incoming and outgoing inspections.

It will also usually include managing the deposit and investing and refunding it (with interest) after expiry of the lease, net of any deductions for damage repairs.

The fee is usually based on a percentage of the lease charged monthly.

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