Managing agent fee structure cheat-sheet

TPI Consumer Charter and Standards Edition 4 clause 2.1(f) states that the Management Fee should be quoted as a fixed fee unless the lease specifies otherwise. A fixed annual figure lets a director read the cost the same way from one year to the next, and it lets the agent set a clear expectation at the outset. This is a point the professional code itself makes about how the core fee is structured.

An on-cost is an administrative percentage added to contractor and supplier invoices to recover the work of procuring, instructing, and paying the contractor. It is a legitimate way to charge for that work. TPI clause 2.3 requires any such income to be declared to the client and leaseholders in the Annual Declaration. The question to settle in writing is that the on-cost is named, at a stated percentage, in the management agreement and the declaration, so both parties read the same figure.

Proportionate Charge is the term TPI clause 2.2.2(i) uses for a charge covering a service that is not included in the Management Fee. Section 20 consultation administration and optional add-ons are common examples: where they sit outside the management fee, the code treats each as a Proportionate Charge. Naming each one and its calculation basis in the management agreement lets a director see what the management fee includes and what is charged separately.

TPI clause 4.2.4 states that year-end service-charge accounts should follow the ICAEW Tech 03/11 standard for residential service-charge accounts, prepared and distributed within six months of the year-end. The accounting line on a fee schedule can be the agent's own charge, a pass-through of the independent accountant's invoice, or both. Settling in writing which the figure represents keeps the year-end accounting cost legible.

TPI clause 7.2 and Guidance Note F07 set out the handover obligations: a professional and efficient transfer of records, accounts, and documents to the incoming agent or the RTM company within agreed timescales. A handover charge may be a fixed fee, time-charged, or nil. Agreeing the handover terms in writing before the appointment starts lets both the outgoing and incoming sides plan an orderly transfer.