What a managing agent costs, and what you should get for it

Managing agent fees in South Africa are quoted in a handful of standard shapes, and the headline number is rarely the whole cost. Two quotes that look a few thousand rand apart over a year can be far further apart once the items charged separately are added in. This is how to read a fee properly.

How community scheme fees are structured

For a body corporate or an HOA, the management fee is usually quoted in one of two ways:

• Per unit, per month. A fixed rand amount for each unit or erf in the scheme. Simple, predictable, and the most common structure.
• A percentage of the levy roll. Less common, and it has an awkward incentive built in: the agent's fee rises when levies rise.

Either way, the fee should be set against a defined scope. The number on its own means nothing until you know what it buys.

The items usually charged on top

This is where quotes diverge. Ask specifically whether each of the following is included in the management fee or billed separately:

• Attendance at trustee or board meetings, and whether a limit applies per year
• Attendance at and preparation of the AGM
• Attendance at special general meetings
• Arrears collection, letters of demand, and handover to attorneys
• Preparation of levy clearance certificates on sale of a unit
• CSOS registration, annual returns and dispute submissions
• Insurance claim administration
• Printing, postage, SMS and statement distribution
• FICA and onboarding costs
• Site inspections, and how many are included
• Preparation of the ten-year maintenance, repair and replacement plan
• After-hours or emergency call-outs

A low management fee with every one of these billed as a disbursement can cost a scheme considerably more than a higher all-inclusive fee. Ask for last year's total billing to a scheme of similar size — not the fee, the total.

Rental management fees

For a residential rental property, the structure is usually:

• A monthly management fee, typically a percentage of the monthly rent collected
• A once-off procurement or placement fee when a new tenant is placed, often expressed as a portion of one month's rent

Worth confirming: whether the monthly fee is charged on rent collected or rent due. Charged on rent due, you pay the agent in a month the tenant did not pay you — which removes a useful part of their incentive to chase.

Also confirm who pays for the credit checks, the lease, the inspections and the inspection reports, and what the spending limit is for maintenance without your prior approval.

The cheapest managing agent is rarely the cheapest outcome. An agent who lets arrears reach 90 days costs a scheme far more than the fee difference that looked attractive at the quoting stage.

What you should get, at any price

Regardless of what you pay, certain things are not optional extras:

• A separate trust account. Scheme or landlord funds must never sit in the agent's own operating account.
• Monthly financial reporting you can actually read: income and expenditure against budget, an arrears age analysis and a bank reconciliation.
• A named person who knows your scheme, rather than a general inbox.
• Statutory compliance handled: CSOS registration and returns, the AGM held in the period the STSMA requires, insurance valuations kept current.
• A written management agreement setting out scope, fees, notice period and what happens to the records if you leave.

Check the agent's own compliance

Managing agents of community schemes fall under the Property Practitioners Act 22 of 2019, which requires registration with the Property Practitioners Regulatory Authority and a valid Fidelity Fund Certificate. Ask for both, in writing, before you appoint anyone. An agent who is reluctant to produce them has answered the question.

The clause most people miss

Read the termination clause before you sign. What is the notice period? What happens to the scheme's records, and how quickly are they handed over? Is there a fee for the handover itself?

A management agreement with a long notice period and an expensive exit is a agreement designed around the agent's retention rather than the scheme's interests. The best time to notice that is before signing, not three years later when the trustees want to move.

We are happy to quote against a defined scope and to say plainly what is not included. Tell us what you are managing and we will put it in writing.