Property management in Nigeria can seem confusing when it comes to fees. As a potential landlord, you need to understand exactly what you’ll be paying a property management company to handle your rental property.
In this article, we’ll break down the most common types of fees charged by property management companies in Lagos and some other major states in Nigeria. You’ll also get some tips for negotiating the best deal.
Let’s dig deeper.
Key Takeaway
- Lagos property managers charge 10-15% for rent collection, with extra fees for tenant placement and lease renewals.
- Abuja and Port Harcourt have slightly lower fees, with rent collection at 12-13% and 10-12% respectively.
- Maintenance fees typically include actual cost plus a 10% service charge for minor repairs and upkeep.
- Property managers handle everything from rent collection to tenant disputes, for a monthly fee and additional one-time charges.
- Negotiate for better rates by researching market rates, comparing quotes, and highlighting property value.
Lagos
Rent Collection Fee
Most property managers in Lagos charge between 10-15% of the total monthly rent amount as their rent collection fee. This covers activities like issuing receipt letters to tenants, following up on late payments, and depositing funds in the landlord’s account.
Maintenance Fee
Maintenance costs are usually covered additionally. The property manager charges actual maintenance expenses plus a 10% service charge. This covers minor repairs, pest control, gardening, etc. Any major repairs above a certain threshold would require landlord approval.
Other Fees
Landlords may also be charged additional one-time fees for services like tenant acquisition (equal to 1 month’s rent), lease renewal (half month’s rent), and check-out inspection (₦5,000-₦10,000).
Abuja
Rent Collection Fee
Most property managers in Abuja charge 12-13% of the monthly rent as their collection commission.
Maintenance Fee
Similar to Lagos, actual maintenance costs plus 10% service fee is typically charged.
Other Fees
Tenant acquisition fees tend to be slightly lower at 0.75 month’s rent. Lease renewal is 0.4 month’s rent. Check-out inspection fee is ₦3,000-₦10,000.
Port Harcourt
Rent Collection Fee
Property managers here usually charge 10-12% of monthly rent.
Maintenance Fee
Follows the same model as Lagos and Abuja of actual cost + 10% service fee.
Other Fees
Tenant finders fee is 0.8 month’s rent. Lease renewal is 0.35 month’s rent. Check-out inspection is ₦2,000-₦10,000.
Other Functions of Property Management Companies in Nigeria
Here are some additional functions/operations commonly performed by property management companies in Nigeria:
Accounting & Remittance
Property managers handle all rental payments, security deposits, and accounting. They remit rental income to the property owner monthly, usually within the first 5 days, after deducting their fees. Any major repairs or capital expenditures require the owner’s approval.
Tenant Sourcing
When units become vacant, property managers market the listings on real estate platforms and put up “For Rent” signs. They screen applicants, conduct background/credit checks, and select suitable tenants based on the owner’s criteria.
Maintenance Responsibilities
Managers organize regular cleaning and minor repairs. They hire contractors and oversee more significant repairs like plumbing, electrical works, painting etc. Emergency response systems are in place. Larger maintenance projects require owners to deposit funds beforehand.
Insurance & Taxes
Owners are responsible for property insurance and taxes. But managers can facilitate premium payments and file tax documents on the owners’ behalf for an additional fee.
Owner Obligations
Owners must fund a reserve account for maintenance, provide detailed property information, and be available to sign documents or approve expenditures above a pre-set threshold.
Dispute Resolution
Managers typically handle tenant complaints, rent issues, and minor disputes. They liaise with owners and tenants, perform unit inspections, and facilitate negotiations if needed.
8 Tips For Negotiating the Best Deal
Negotiating the best fees with property management companies in Nigeria requires careful consideration and effective communication. Here are some tips for Nigerian landlords to help them negotiate favorable terms:
Research and Compare
Before approaching property management companies, conduct thorough research to understand the prevailing market rates and fee structures. Compare the fees charged by different companies to get an idea of the average fees in your area. This knowledge will provide you with leverage during negotiations.
Clearly Define Services
Clearly define the scope of services you expect from the property management company. Make a list of tasks and responsibilities you want them to handle, such as tenant screening, rent collection, maintenance, and marketing. By clearly defining your requirements, you can negotiate a fee structure that aligns with the extent of services provided.
Request Fee Breakdown
Ask property management companies for a detailed breakdown of their fees. Understand the individual components of the fees, such as the percentage charged for rental income, leasing fees, maintenance fees, and other charges. This breakdown will help you evaluate the reasonableness of each fee and negotiate specific terms.
Leverage Multiple Quotes
Approach multiple property management companies and request quotes from each of them. Use these quotes as leverage during negotiations. If you receive a higher quote from one company, you can mention the lower quotes received from other companies to negotiate a more competitive rate.
Negotiate Percentage-Based Fees
The percentage-based fee is a common practice in property management. While negotiating, try to secure a lower percentage fee based on the rental income. Highlight factors that could justify a lower fee, such as the property’s location, condition, or a long-term contract.
Consider Value-Added Services
Property management companies may offer additional services that can enhance the value they provide. Negotiate for added benefits such as regular property inspections, financial reporting, or access to a network of trusted contractors. This can help justify a higher fee if the services provided are comprehensive and valuable to you as a landlord.
Contract Duration and Performance Clause
Negotiate the duration of the contract to your advantage. A longer-term contract may provide more negotiating power in terms of fee reductions. Additionally, consider including a performance clause in the contract that allows termination or fee adjustments if the property management company fails to meet agreed-upon service levels.
Professionalism and Relationship Building
Approach negotiations with professionalism and a desire to build a positive working relationship. Property management companies are more likely to be flexible and open to negotiation if they see you as a reliable and cooperative landlord. Establishing a good rapport can lead to more favorable terms.
FAQs On How to Do Property Management Companies Charge in Nigeria
How Much Do Property Managers Charge in Nigeria?
In Nigeria, property managers typically charge a commission based on the monthly rent, usually around 10%. This can vary depending on the location and services offered.
What Is the Legal Charge on Property in Nigeria?
The specific legal charges on property in Nigeria can vary depending on the situation. It’s advisable to consult a lawyer for accurate information on buying, selling, or leasing property.
What Is the Service Charge in Estate Management?
Service charges in estates cover maintenance like security, waste disposal, and utilities. The cost depends on the amenities offered and can be a fixed monthly fee or a percentage of rent.
How Much Is the Legal Fee for a Tenancy Agreement in Nigeria?
The legal fee for a tenancy agreement in Nigeria can vary based on lawyer experience and agreement complexity. Expect to pay a few thousand Naira, but consult a lawyer for a specific quote.
Conclusion
In summary, rent collection fees range from 10-15% of monthly rent across major Nigerian cities. Maintenance costs are additionally charged on actual expenditure basis along with a 10% service fee. Various one-time fees also apply for tenant acquisition, lease processing, and unit inspections.
Also, negotiation is a two-way process, and both parties should feel satisfied with the final agreement. Be prepared to compromise, but also advocate for the best terms that align with your needs and the value provided by the property management company.
