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Everything You Should Include in a Property Management Contract
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Introduction
A property management contract is essential for landlords looking to hire a professional property management service. It outlines the responsibilities of both the landlord and the management company, ensuring clarity and legal protection. Without a well-structured agreement, disputes can arise over fees, maintenance responsibilities, or tenant-related issues.
In this guide, we cover everything you should include in a property management contract, helping you understand key terms, obligations, and what to watch out for when signing an agreement.
Why a Property Management Contract is Important
A clear contract sets expectations for both parties and defines the scope of services. This is particularly important for landlords who want a hassle-free rental experience, whether managing long lets or short lets.
A strong contract provides protection by defining the roles and responsibilities of the property manager, outlining the financial terms, and ensuring both parties understand what is expected. It also ensures that maintenance and repairs are handled efficiently, avoiding potential disputes. Furthermore, it details legal compliance responsibilities, which is particularly crucial for landlords operating in regulated rental markets.
Key Elements of a Property Management Contract
Scope of Services
A property management company should clearly define the services it provides. This includes marketing the property, handling tenant applications, screening tenants, collecting rent, and ensuring the property remains in good condition. Some contracts also include services such as periodic property inspections, arranging maintenance, and representing the landlord in legal matters related to tenancy disputes.
For landlords using short-term rental management, the contract should specify additional services such as guest check-ins, property cleaning, and managing guest reviews.
Fee Structure and Payment Terms
Understanding how property managers charge is crucial to avoiding unexpected costs. Contracts typically specify whether management fees are a fixed monthly rate or a percentage of the rent collected. Some property managers charge letting fees when sourcing new tenants, while others have additional charges for services like property marketing, eviction handling, or routine inspections.
Clear payment terms ensure landlords know when and how they will be billed. The contract should outline how rent is collected and transferred when payments are due, and how expenses such as maintenance costs are handled. Transparency in financial matters is key to maintaining a strong working relationship between landlords and property managers.
Tenant Placement and Evictions
One of the key responsibilities of a property management company is tenant placement. The contract should specify how tenants are screened, what criteria are used to approve applicants, and how tenancy agreements are managed. It should also detail how tenant disputes, rental arrears, and eviction procedures will be handled.
Evictions must be carried out in accordance with UK tenancy laws, and property managers should be well-versed in legal processes. Some contracts include an eviction guarantee, while others may charge additional fees for handling the legal aspects of tenant removal.
Maintenance and Repairs Responsibilities
A well-maintained property is crucial for tenant satisfaction and long-term investment returns. The contract should clearly define who is responsible for arranging maintenance, what constitutes emergency repairs, and how maintenance costs are managed. Some property management contracts include spending limits, ensuring that landlords must approve repairs exceeding a certain cost.
For long-term rentals, regular maintenance and inspections help prevent issues before they become costly repairs. Short-term lets may require additional services such as deep cleaning between guest stays and managing property wear and tear.
Legal and Compliance Responsibilities
Landlords in the UK must comply with various legal obligations. A property management contract should state who is responsible for ensuring compliance with safety regulations, handling deposit protection schemes, and managing licensing requirements such as HMO (House in Multiple Occupation) licenses. It should also specify responsibility for obtaining Gas Safety Certificates, Electrical Safety Reports, and Energy Performance Certificates (EPCs).
Failure to comply with these regulations can result in fines or legal consequences, so clarity on legal responsibilities is crucial.
Contract Duration and Termination Clause
The length of the contract and termination conditions should be clearly outlined. Some contracts automatically renew unless notice is given, while others operate on a fixed-term basis. Termination clauses should specify the required notice period, any associated penalties, and the process for transferring management if the landlord decides to switch providers.
Understanding the exit terms helps landlords make informed decisions when choosing a property management company. If a company is underperforming, landlords should have the flexibility to transition smoothly to another provider without excessive penalties.
Red Flags to Watch for in a Property Management Contract
Before signing a property management contract, landlords should carefully review all terms and conditions to ensure fairness and transparency. Some common red flags include hidden fees, unclear service descriptions, and restrictive clauses that limit the landlord’s flexibility.
Exclusive listing clauses may prevent landlords from working with other property agents, which can be problematic if a property remains vacant for extended periods. Additionally, unclear maintenance policies may result in disputes over repair responsibilities, leading to unexpected expenses.
Contracts should also specify what happens in the event of disputes between the landlord and the property manager. A well-drafted contract will include dispute resolution processes to prevent conflicts from escalating into costly legal battles.
Why Choose Upgrade Authority for Property Management?
At Upgrade Authority, we offer transparent and reliable property management solutions tailored to landlords’ needs. Our comprehensive services cover everything from tenant sourcing and rent collection to property maintenance and legal compliance.
Unlike some management companies that have complex and hidden fee structures, we believe in full transparency. Our contracts clearly outline all costs, ensuring landlords know exactly what they are paying for. Whether you’re managing long-term lets, short-term stays, or Airbnb properties, our tailored solutions help landlords maximise their rental income while minimising stress.
We provide expert advice on regulatory compliance, ensuring that landlords stay updated on the latest legal requirements. Our property marketing strategies, professional tenant screening, and proactive maintenance approach keep properties occupied and well-maintained.
Final Thoughts
A property management contract is a crucial document that safeguards both landlords and management companies. It defines the services provided, outlines financial expectations, and ensures legal compliance, making property investment more efficient and stress-free.
Landlords should take the time to carefully review contract terms, ensuring they cover essential areas such as tenant management, maintenance responsibilities, and termination conditions. Understanding these details helps landlords avoid unexpected costs and ensures a smooth working relationship with their property manager.
If you’re looking for a professional property management company with a clear and transparent contract, Upgrade Authority is here to help. Our expertise in long-term and short-term lets ensures that landlords get the best possible service.
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