Flat Rate or Percentage Model – Which Is Better for Property Owners?

What Is the Percentage Model?

The classic model in property management: the management company calculates its fee as a percentage of the annual rent. Depending on the provider, the rate is applied to the gross rent or the net rent – for property owners, a net-rent basis is more favorable, since ancillary costs are simply pass-through items. Market rates typically run around 2.5 to 5 percent excluding re-letting; once the effort for re-letting is added, the rate can climb to as much as 10 to 12 percent (gryps.ch, fairwalter, cash.ch).

There is no binding association guideline table for this: the industry association SVIT withdrew its earlier fee guidelines after the Swiss Competition Commission (WEKO) classified them as problematic under antitrust law in the late 1990s. The ranges circulating in the market are therefore informal benchmarks, not an official standard.

Not to be confused: the 3 to 4.5 percent sometimes cited elsewhere refers to the administrative cost flat rate within the ancillary cost statement (Art. 4/5 VMWG, which can be charged to tenants) – not the property management fee borne by the owner. This article deals with the property management fee.

What this means in concrete terms is illustrated by an eight-unit apartment building with a net rent of CHF 1'800 per month per unit – around CHF 172'800 in annual rent:

The Structural Weakness: Fees Disconnected From Effort

Under the percentage model, the fee grows with the rent level – regardless of whether the actual workload has increased. If the rent rises, the fee rises too, even though the work stays the same.

In professional terms, this is described less as "management against the owner" and more as a missing incentive for quality and effort: because compensation is tied to rent rather than to performance or workload, there is no built-in incentive for better service quality (CUREM, University of Zurich, 2013).

In fairness, the other side of the argument belongs here too: from the perspective of many investors – especially large, institutional ones – the percentage model actually aligns interests, because the management company is motivated to achieve high rents and avoid vacancy quickly (CUREM/UZH 2013). This view, however, comes from the world of large investors with broadly diversified portfolios; for private owners with a single property, the starting position is different. The point, then, is not a criticism of individual management companies, but a characteristic of the model itself: the fee and the actual effort drift apart.

What Does a Flat Rate Mean in Practice?

Under the flat-rate model, the management fee is independent of the rent level. You know exactly what you're paying from the outset – and that amount doesn't change when the rent goes up or down.

What's new here is not the principle but its application: in condominium ownership, a flat rate per unit has long been the market standard – a base fee plus a fixed amount per unit is common practice (gryps.ch). RESONUS applies this proven, effort-based logic to rental properties, where the percentage model has so far dominated.

For us, this is also a matter of fairness: whether an apartment costs CHF 1'300 or CHF 2'800, whether it's in a rural municipality or in the city of Bern – we deal with the same tenants, the same concerns, and the same statements. The effort is tied to the unit, not to the rent level. A fixed price per unit reflects that honestly.

What's Included in RESONUS's Flat Rate?

At the flat rate of CHF 69 per unit per month, all standard services are included – no surprises:

• Rent collection, reminders & debt collection
• Ancillary cost and annual statements
• Applicant management & lease signing
• Move-in and move-out inspections
• Coordination of tradespeople and building caretakers
• Owner portal, available 24/7
• Personal point of contact

Third-party costs – such as invoices from tradespeople or government fees – are passed on transparently and separately, only after prior agreement.

At What Point Does Each Model Pay Off?

The average rent is the deciding factor. Mathematically, the flat rate of CHF 69 per unit becomes cheaper than a percentage model as soon as the monthly rent exceeds a certain threshold (own calculation: CHF 69 divided by the percentage rate):

Percentage model	Flat rate cheaper from (monthly rent)
3%	CHF 2'300
4%	CHF 1'725
5%	CHF 1'380
6%	CHF 1'150

Since most units rented at market rates are well above these thresholds, the flat rate is, as a rule, the cheaper option. In the interest of honesty: at very low rents, the percentage model can be mathematically cheaper. And the flat rate shifts the effort risk – the management company then bears the cost of particularly demanding units, not the owner. For property owners, this means one thing above all: predictable costs, independent of rent trends and workload.

The flat-rate model is therefore suited to anyone who:

• Prefers predictable, transparent costs
• Wants no conflict of interest between the management company and their own interests
• Values full service regardless of the rent charged

The Return Effect: Why This Matters Beyond the Fee Itself

Under Swiss tenancy law, management costs are a recognized deduction when calculating a property's net yield (Art. 269/269a CO; case law of the Zurich cantonal courts). Every franc of management fee reduces net yield one to one. A lower, predictable fee therefore has a direct effect on net return – in the eight-unit example, that's around CHF 2'000 per year that flows into your own return rather than into the management fee.

Conclusion

The percentage model has grown historically and still makes sense in parts of the market. Its structural weakness, however, remains that fee and effort drift apart. For owners with properties rented at market rates, the flat rate is, as a rule, the more transparent, more predictable, and often cheaper alternative.

At RESONUS, you pay CHF 69 per unit per month – no matter how high the rent is, no matter how strong the market gets. Re-letting included.

Frequently Asked Questions

All figures and legal references in this article are disclosed and linked → Sources.