Letting agents charge a fixed fee or the first month's rent plus VAT for finding a tenant for your house or flat. If you want a fully managed service covering the tenancy agreement expect to pay between 5% to 10% of the rental value per month.
You might feel you can advertise the property locally yourself and deal with the tenants directly. You can sort out legally binding contracts, make sure your property is compliant and deal with maintenance and day to day running of the property. Or you might require the services of a Letting Agency.
Getting good tenants, high returns and being able to deal with tenant complaints effectively are usually the first three requirements when searching for a letting agent. Hiring any professional comes at a cost (and risk) and we will break down the fees that agents charge and some hidden fees that you need to be aware of.
Landlords are looking for a letting agent they can trust. This is especially true of the letting market which doesn’t have the best reputation. Reviewing platforms like google maps and trustpilot are making it more difficult for letting agents to perform badly without getting punished in a review.
For this reason it is good business for letting agents to be more diligent at screening tenants and keeping tenants and landlords happy. There might be some fake reviews out there but established businesses with lots of reviews cannot hide how well they are performing.
There are plenty of letting agencies out there offering different levels of service. Some will only offer a Tenant Finder service, which is especially true of online letting agents. Others will offer a comprehensive service package including full management.
Choosing the right agency for you depends on how much you can afford and if you have time on your hands to deal with the tenants. Nothing is fixed in stone with letting agents. You can negotiate the fee, especially if you have multiple properties or you are in an area of fierce competition. So make sure you get multiple quotes, shop around and let the agents know that you have checked out other agents.
Expect to pay around £700 +VAT as a fixed fee or a month's rent for finding a new tenant in the UK. There are regional variations that depend on the agency and rent yields in your area. London for example has more expensive letting fees than a town in the north or England.
The good letting agent will point out all the services included with a Tenant Finder fee. It usually includes finding a tenant, doing checks on them and creating the contracts to sign.
Don’t be afraid to negotiate the fee or a discount on additional services, you are a landlord and the property market is short of rentable homes.
If the estate agent requests an upfront fee that is non returnable even if they cannot find a tenant then you should shop around or change their mind. If it takes so long to find a tenant maybe you are with the wrong agent anyway.
Collecting rent is something all landlords like as long as the tenants are paying on time. If the tenant knows they are paying the landlord directly they might think they can get away with paying late.
Letting agents are used to dealing with late payment and chasing it up. Something Landlords might find less attractive.
Expect to pay from around 5% of the monthly rent on rent collection fees.
A full managed service means that the letting agents will look after the property and the tenants. Making sure the rent is paid, repairing and maintaining the property and creating the initial inventory when the tenant moves in.
Expect to pay 10% to 20% of the monthly rent on this service. This usually does not include the finders fee. The finders fee will be the first month's rent or a negotiated fee. The letting agent may call this cost an initial fee, included as a complete “fully managed” package from start to finish.
Also not included is the cost to repair or replace fittings and appliances which you will be expected to cover. The agents will have tradespeople on hand to do the work and might be able to negotiate favourable rates with plumbers and electricians.
Landlords with a large portfolio or those living far away will probably be interested in this service but it does reduce your rental yield. Tenants also expect a quick response to problems so it might be worth the cost and keeps your time free from other household drama.
Guaranteed rent is another way to make money from your rental property. You rent your property to the letting agents (third party) who “guarantee”, by contract, a fixed monthly rent even when nobody is living at the property.
You negotiate your rent and the letting agent makes a profit on the rent it charges the tenants that they choose to move in. This will be higher than your rent but the letting agents will be responsible for fully maintaining the property.
There are different types of guaranteed rent contracts available, so shop around to see which one suits your needs. Today, where rents are high, letting agents are keen to turn a profit on a property using guaranteed rent.
Local authorities also work with guaranteed rent schemes but landlords don’t have control of who lives at the property. So there might be higher risk tenants moving in.
Guaranteed rent works well for HMO (Household in Multiple Occupation) properties because the agent or third party can convert the property and earn more by renting out individual rooms.
Guaranteed rent insurance is also available through letting agents and online. You pay a monthly fee and you get a guaranteed rent if the tenant goes into arrears. Each scheme can be different so make sure you read the small print. This option might suit those who want guaranteed rent but also want to choose who is living in their property.
The fees for an online letting agent will probably be cheaper than the high street branch but that doesn’t mean the whole package will be cheaper.
Unless you pay for an additional service you will be expected to do the viewings yourself which might be a good idea if you want to personally vet the new tenants. For others this is a time consuming and awkward process they can do without.
The fees differ for online letting agents but it is usually an initial fixed fee and then a monthly charge but not a percentage of the rent unless its a fully managed service. Then it will be around 5% of rental income per month unless stated otherwise. This is attractive to landlords who want higher rental yields.
Both online and high street letting agents advertise using the same platforms like Zoopla and Rightmove so visibility wise they are pretty much equal. Online services usually offer an app which might be your initial contact with an online agency. Some landlords and tenants prefer this way of communicating.
Remember that initially things can seem a lot cheaper with online services but make sure you get the same level of service without having to pay for extra for things that are not included in one of the advertised packages.
Online letting agents sometimes take an upfront fee that isn't returned if they cannot find someone to rent your property. Ask for a "no rent no fee" package is you are worried about that happening.
Whichever option you choose we can help landlords connect with a local or online letting agent to get the process started so you can start earning money from your property portfolio and cut costs.