How ancillary fees influence the value of a rent roll
It’s easy to focus on management fees when trying to calculate the value of your rent roll. While these form the foundation of recurring income, you also need to consider ancillary fees like letting fees, lease renewal fees, statement fees, end-of-financial-year (EOFY) fees and other admin charges. These ancillary fees influence the overall value of the rent roll and are part of a valuation.
When it comes to ancillary fees, there is definitely a ‘sweet spot’. If they are structured correctly, these fees can significantly improve the appeal and overall worth of your rent roll. If they’re not well-balanced, they can trigger client dissatisfaction, regulatory scrutiny or lost income.
The role of ancillary fees in rent roll valuations
From your rent roll valuer’s perspective, ancillary fees play an important role because they provide a snapshot of additional income and reflect how professionally and consistently the portfolio is managed.
A well-structured schedule of ancillary fees:
Maximises total revenue per property
Signals a mature and operationally sound rent roll
Reduces reliance on management fees alone
Demonstrates opportunities for ongoing growth
When a rent roll is up for sale, underpriced, inconsistent or poorly documented fees raise red flags. If there is no clear logic behind your fee structure or if fees vary from property to property, this can suggest a lack of process and discipline. The asset will be harder to value and less attractive to potential buyers.
Here’s a breakdown of ancillary fees and some suggestions to maximise the benefits they bring to your rent roll.
Letting fees and lease renewal fees
These are often the most scrutinised ancillary charges, and for good reason. Letting fees compensate for the work involved in advertising, vetting renters and signing new leases, while lease renewal fees account for negotiation and document preparation when existing renters re-sign.
It works well to charge a transparent, flat fee or a set percentage of the weekly rent. Both should reflect the true cost of service delivery while remaining competitive within your local market.
If these fees are too high, you risk pushback from property owners. Too low, and you’re losing income and potentially undervaluing the rent roll. A benchmarking exercise may be required to check that the amount you’re charging is fair and in line with your competitors.
Statement and EOFY fees
Rental property owners expect access to regular financial statements and EOFY summaries, particularly when tax time approaches. Charging a nominal fee to prepare and share this information is entirely reasonable, but it needs to be justified by clarity, accuracy and timeliness.
Again, consistency is key. If you only charge some clients this fee, or if the amount changes year to year without explanation, it creates confusion and undermines trust. A simple, fixed fee (charged annually or monthly) is the most straightforward approach.
Contracts should always outline these fees so clients avoid bill shock and don’t start questioning your agency.
When you prepare your rent roll for sale or valuation, you will need evidence of these charges in your records and documentation.
Admin fees: low effort, high impact
Admin fees can cover everything from processing insurance claims to chasing arrears or coordinating repairs. These might seem small in isolation, but they can collectively represent a meaningful income stream, especially across a large portfolio.
Rather than charging ad hoc amounts, consider creating a clear menu of services with set fees. This helps with client transparency and allows prospective rent roll buyers to confidently factor admin income into their due diligence process.
Profit margin matters
One of the most common mistakes that decreases the value of a rent roll is ancillary fees set too close to cost. If it takes two hours of staff time to prepare a lease renewal, charging a nominal $20 doesn’t reflect the real value being delivered, and it doesn’t make financial sense.
Each task your team undertakes should generate a reasonable margin while remaining within industry norms. This strengthens the rent roll’s overall profitability and ensures you're being rewarded for the services your team is providing.
A more valuable rent roll starts with smarter fees
Ancillary fees might sit in the background, but their influence on rent roll value can be significant. When they’re set fairly, charged consistently and linked to actual service delivery, they improve revenue and give you a more attractive asset.
If you're planning to expand, refine or sell your rent roll, now’s the time to review and update your ancillary fee structure, charges and the way they are communicated to clients. Ensure clarity and transparency, and this will become a helpful selling point.