Landlords who live abroad, hold several units or simply have no time often hire an agent to find tenants, collect rent and handle repairs. A good agent saves hours and protects income. A poor one creates arrears, unexplained deductions and tax problems. This guide explains what to agree before you hand over the keys.

What agents do

Services vary, but a full-management agent typically:

  • Advertises the unit and screens applicants
  • Prepares the tenancy agreement and inventory
  • Collects rent and deposits and pays the landlord
  • Arranges repairs and inspections
  • Handles notices and, if needed, eviction steps
  • Sends statements of income and expenses

Some agents offer only letting (finding a tenant) or only rent collection. Pay for what you need.

Typical fees

Agents commonly charge a percentage of rent collected, often in the range of 5 to 10 percent, depending on the number of units and the services, plus a letting fee equal to part or all of one month's rent when a new tenant is found. Extra charges for repairs, legal steps or advertising should be listed. VAT at the standard rate of 16% applies to the agent's fees if the agent is VAT-registered, so ask whether quotes include it. Compare quotes by working out the annual cost on your rent, not just the headline percentage.

What the management contract should say

  1. Scope of services and the agent's duties.
  2. Fees and when they are charged.
  3. Rent remittance: the date by which collected rent is paid to you, and the bank account the agent uses to hold it (a client account, separate from the agent's own money).
  4. Spending limit for repairs without your approval, and the rule for emergencies.
  5. Reporting: a monthly statement showing rent received, expenses and fees, with receipts attached.
  6. Tenant deposits: where they are held and who is responsible for refunds.
  7. Termination: notice period and handover of keys, records and deposits.

Who pays the tax?

The landlord remains responsible for the tax on the rent, even when an agent collects it.

  • Monthly Rental Income tax. The landlord files and pays by the 20th of the next month, on gross rent. Some agents offer to do it for a fee; make sure they file on your PIN and give you the payment confirmation. Read how to file a monthly rental income return.
  • Withholding tax. If the agent is appointed by KRA to collect rent, they may withhold tax from the rent at the resident rate of 7.5 percent and pay it over, and the landlord then treats it as paid. Ask for a withholding certificate each month. See withholding tax on rent and use the withholding tax on rent calculator.
  • Agent fees are an expense for landlords taxed on profit, but cannot be deducted by landlords paying MRI. Compare in MRI or annual rental tax.

Managing the agent

Do not leave everything unchecked. Each month compare the statement with the bank deposits. Visit the property at least once a year, call a tenant occasionally and ask for copies of key documents. Keep your own register in the rental property and tenant register and update the monthly rental income tracker from the statements.

Work out the tax on the rent you collect with the rental income tax calculator, and see how the agent's fee changes your profit in deductible expenses for landlords.

Red flags

  • Rent paid late or in parts without explanation
  • Deductions with no receipts
  • Vague answers about deposits
  • Refusal to share the tenancy agreement
  • An agent who wants rent paid into a personal account

Changing or ending the agency

Give notice as the contract requires, ask for the final accounts and the deposit balance, and make sure the tenant is told in writing where to pay rent. Update your records, and tell KRA if the withholding arrangement changes. The checklist in records every landlord should keep will help you collect everything from the agent.

Frequently asked questions

Can an agent evict a tenant for me? An agent can start the process and serve notices, but legal steps are taken in the landlord's name, often through an advocate.

Who keeps the tenant's deposit? The contract should state it. Many landlords prefer the deposit to be held in a separate client account.

Is the agent's commission taxable to the agent? Yes. It is the agent's income, and withholding tax on management fees may apply when the payer is a company.

Should I use several agents for one unit? That can cause double bookings and disputes. Appoint one agent or use a clear sole-agency agreement.