← All guides

Guide · Recoveries

Can my landlord charge a management fee on recoveries?

By Chris Rencken · Last reviewed 17 October 2026

A landlord may recover a management or administration fee where the lease provides a contractual basis for it. A fee is not an overcharge simply because it exists. Equally, a fee does not become recoverable just because it has always appeared on your statement. What matters is what the lease says: which costs the fee applies to, whether those costs already include management expenses, and whether the percentage and calculation method are supported.

How the fee works

Many commercial leases let the landlord recover certain costs from tenants on top of rent. These are usually called recoveries. They can include municipal rates, electricity, water, refuse, and a share of the costs of running the building, such as security, cleaning and maintenance.

Some landlords add a percentage to those recoveries to cover the work of managing them. The lease may call it a management fee, an administration fee, a handling charge or something similar. It usually appears as a separate line on your statement, or it is built into a recovered amount.

The lease can support a fee in two ways:

• Directly, through a clause that names the fee and sets the percentage.
• Indirectly, through a broad definition of recoverable operating costs that includes management or administration costs, without naming a separate percentage.

Both can be valid. Read the recoveries clause, the operating cost definition and any schedule of charges together, not one clause on its own.

Worked example (illustrative)

The figures below are fictional and for illustration only.

A tenant's recoveries total R5,000 a month, excluding VAT. The landlord adds a management fee of 6%:

• 6% x R5,000 = R300 a month
• Over 24 months: R300 x 24 = R7,200

If the lease contains no basis for the fee, or expressly excludes management fees from recoveries, the full R7,200 is contractually unsupported. This is the finding shown in the TenSure sample report, where the lease excludes the landlord's management fees.

Even where the lease does allow a fee, the calculation matters:

• Fee on the wrong base. Whether the fee should be calculated on the amount before or after VAT depends on the lease. This example assumes the lease requires the VAT-exclusive amount. If the 6% is instead calculated on the VAT-inclusive amount of R5,750, the fee becomes R345 a month: R45 a month, or R1,080 over 24 months, more than the lease supports.
• Different percentage. If the lease allows 4% and the statement charges 6%, the fee should be R200, not R300: R100 a month, or R2,400 over 24 months.

What to check

1. Is there a contractual basis?

Look for the fee in the recoveries clause, the operating cost definition and any schedule. If you cannot find it, ask the landlord which clause they rely on.

2. What does the fee apply to?

A fee that the lease allows on operating costs does not automatically extend to rates, electricity or water. Check the scope of the clause against what the fee is actually charged on.

3. Is management already included?

If the recovered operating costs already include a property management fee paid to a managing agent, a further percentage on top may count the same cost twice. Two different charges can both be legitimate if the lease authorises each of them and they relate to different services, so ask for the breakdown of the operating costs and what each charge covers.

4. What is the fee calculated on?

Check whether it is calculated on actual costs or on the budget, and before or after VAT, and whether that matches the lease.

5. Has the percentage changed?

Compare the percentage on early statements with recent ones. A change needs a basis in the lease or another legally effective variation.

Electricity is a separate question

An administration charge on electricity raises different issues from one on operating costs. On operating costs, the question is mainly contractual. On electricity, the charge must also be tested against the rules that apply to electricity resale, which can limit what a landlord may charge for electricity it resells. The same percentage can therefore be acceptable on one line and questionable on another. Our guide to sub-metered electricity explains how to check electricity charges.

Documents to request

• The lease clauses on recoveries and operating costs, including any schedule of charges and any amendments.
• A breakdown showing how the fee was calculated on at least one recent statement: the base amount, the percentage and whether VAT was included.
• If operating costs include management costs, the breakdown of those costs for the same period.

Not sure whether your fee is supported?

A TenSure Check reviews what you pay against what your lease allows, including any management or administration fee, and sets out each finding with the clause it relies on. Start with a TenSure Check or see a sample report.