Management contract with a property management company: the clauses you should check

Signing with a management company is an important decision, and the contract you sign will decide whether that relationship gives you peace of mind or headaches. We explain which clauses to check before you sign. If you are still unsure whether to manage the property yourself or hand it over, you can first look at when it pays to hire a holiday-let manager.

The two payment models

Before you sign, make sure you understand which financial model you will be working under:

• Full management on commission: the management company charges a percentage of gross income, usually between 15% and 30% (the norm is between 18% and 25%), and you carry the occupancy risk.
• Rent-to-rent (guaranteed rent): the management company pays you a fixed rent, typically between 60% and 75% of the market rent, and it is the company that carries the risk of the property sitting empty.

Clauses the contract should include

• The manager's obligations: marketing and listing on platforms, booking management, guest support, cleaning and maintenance.
• How the manager is paid: the exact percentage of income or the fixed fee, and which costs are deducted before it is calculated.
• Duration and exit: the length of the contract and the conditions for ending it without a penalty.
• Reporting: how often the management company reports occupancy, income and costs to you.

Warning signs before you sign

There are several signs worth watching for before you commit:

• Suspiciously low commission (below 15%) on a full management model.
• Occupancy promises without historical data to back them up.
• Mandatory minimum terms of more than 12 months without a reasonable way out.
• No transparent monthly reporting on income and costs.

The parties are free to agree whatever terms they see fit, as long as they are not against the law, but it is wise to have the contract reviewed by a specialist professional before you sign.

Would you rather someone took care of it for you?

At beBalmy we work with clear terms and transparent reporting from the very first month. Tell us about your situation and we will tell you how we can help.