The Case for Bundling

Contributed by HOLMANS ACCOUNTING & TAXATION 23 April 2018

The Case for Bundling

Bundling is not new and has been around since the beginnings of Management Rights. What has changed however is the removal of the requirement to be bound by a commission structure which now effectively opens the doors to new and innovative ways of charging for the services you provide to your Unit Owners.

Traditionally services provided have been charged on a per service basis leading to a long list of individual charges, particularly in short term letting. A bit like the “meal deal” offered by many fast food Restaurants, a number of services can now be bundled into one charge making it far simpler and less confronting to a unit owner. Typically, the bundled charge is expressed as a percentage of gross tariff revenue and would appear as one line item on the Unit Owners monthly statement.

In theory, by bundling you may experience higher returns in the high season and lower returns in the low season but the same return over a 12 months period, all other things being equal. As such, cash flow management will become all the more important.

Importantly you will get a “pay rise” every time you increase occupancy and/or tariff and share equally with your Unit Owners in the spoils of your success. If you have not started updating your letting agreements to the new Form 6 Agreement, now might be the ideal time to introduce bundling with the change to the new Agreement format. Alternatively, you may look to introduce bundling to new Unit Owners entering the letting pool as Units are sold to investors.

The information, recommendations, opinions or conclusions provided above are generic in nature and do not express individual advice. You should always consult your professional representatives before taking any action. Holmans welcome any queries you may have in relation to the above matters.

Need help and want to know more?

Call Holmans for assistance on (07) 5430 7600 or send us an email.

Tony Rossiter
Director
trossiter@holmans.com.au