Landlord letting agent fees
Whether you’ve got a portfolio of properties or are looking to let for the first-time, letting agents provide a convenient service. Like most services, that expertise comes at a price – find out more about the benefits and how much letting agent fees could set you back.
What are letting agent fees for landlords?
Letting agent fees (or landlord fees) cover the cost of services provided. That cost will depend on the services you choose.
What are letting agents responsible for?
Services provided will vary from agent to agent but broadly speaking, letting and estate agents offer:
- Tenant-finding services – the letting agent will be responsible for advertising your property and will also show potential tenants around. This package of services also usually includes referencing checks, arranging contracts, collecting a deposit and the first month’s rent.
- Rent collection – as well as finding tenants for you, letting agents can also be responsible for rent collection for the duration of the tenancy.
- Full management services – if you prefer to be a hands-off landlord (or simply don’t have the time) letting agents can manage every aspect of your rental, including chasing up rent arrears.
Letting agents will also offer a range of other services, some may include them as part of existing services or cost you a little more. For example:
- Check-in and check-out reports, including an inventory.
- Managing specific landlord responsibilities such as gas, electrical, and fire safety checks.
- Dealing with emergency repairs like a broken-down boiler.
Are letting agents responsible for their tenants?
This will depend on the service you opt for. If you choose a full management service, yes – letting agents will be responsible for managing tenant queries as well as dealing with any issues that arise.
How much are letting agents’ fees for landlords?
Letting agent fees will vary depending on the services you opt for.
One-off tenant finding services could set you back up to four weeks’ rent while full management could be anything from 10% to 20% of your monthly rent.
Bear in mind that letting agent fees are likely to be higher in major cities and particularly in London. You’ll also need to remember to add on VAT to any charges.
What is the letting agent fees ban?
The letting agent fees ban refers to the Tenant Fees Act 2019 which came into effect in June 2020. The act essentially makes it illegal to charge tenants certain fees.
Before the act, letting agents (and landlords) could charge tenants for various services including referencing and credit checks. The act also makes it illegal to charge extra for services such as gardening or cleaning.
In fact, there’s only a handful of expenses that letting agents and landlords can charge tenants – including the rent itself, a refundable deposit and changes to the tenancy agreement. For a full breakdown of ‘allowable expenses’ and how the legislation might affect your rental contract, take a look at our guide to the Tenant Fees Act 2019.
How do I choose the right letting agent for my circumstances?
Competition for your business will be fierce so it can be well worth your while comparing packages from a few letting agents before making any decisions. Considerations to bear in mind include:
- The number of properties you have – if you’ve got a number of rentals or a mixed portfolio of residential and commercial properties, it might be worth looking for agents with experience managing multiple lets. Similarly, if your properties are dotted around the country, a letting agent with branches nationally can be a convenient choice.
- How experienced you are – if you’re relatively new to lettings, you might prefer a smaller firm that can take the time to discuss the rental process with you. Alternatively, if you don’t want to manage the property at all, an agency with a large team could cover all aspects of your let.
- The type of property you rent – some letting agencies and estate agents focus on particular rental markets which could help you market your let more successfully. This could be a sensible choice if you have a specific type of property like an HMO or student let.
- Value for money – this can be hard to gauge but you should feel that the services you buy are worth the expense. Think about how quickly issues are dealt with, how quick your agent is to respond and weigh this up compared to managing the let yourself.
- Recommendations – if you can’t ask anyone personally, check online reviews and testimonials. Landlord forums can also be a valuable source of information.
Check credentials – letting agents can choose to join various trade bodies which also means they agree to abide by certain standards. In the UK, the main trade organisations for letting agents are:
- ARLA (Association of Residential Letting Agents)
- UKALA (UK Association of Accredited Letting Agents)
- Safeagent (previously NALS, National Approved Lettings Scheme)
Do I need a letting agent, can I manage a let myself?
It’s entirely up to you whether or not to use a letting agent. If you do decide to go it alone and manage the entire lettings process yourself, you’ll need to think about:
- Advertising for tenants – consider how you’ll reach potential tenants. For example, are you targeting students, young professionals, or families? Knowing who your tenant is, can help you find the best marketing platform.
- Background and credit checks – it’s your responsibility to carry out all the appropriate checks and in particular, to ensure your tenant has the right to rent in the UK (e.g. over 18 and able to reside in the UK legally). By law, you must check all prospective tenants. You should also ask for previous landlord references or an employer reference too. It’s vital not to skip checks as it can help weed out potentially troublesome tenants.
- Tenancy agreements – you’ll need to organise a tenancy contract that establishes the specific terms and conditions for renting your property. You can find templates from one of the letting agent trade bodies which you can use word for word or adapt. Whatever you do, you must be sure that none of the conditions contradicts tenants legal rights as set out in the Housing Act
- Deposit protection – you’ll have to secure your tenant deposit in one of three schemes: Deposit Protection Service, mydeposits, Tenancy Deposit Scheme.
- Inventory and maintenance – it’s also a good idea to have an inventory listing anything you provide, particularly if you’re providing a fully furnished let. A check-in and check-out report are also useful for setting out the condition of the let before and after the tenancy ends. Don’t forget – fair wear and tear is to be expected and something you cannot penalise tenants for. You’ll also need to decide a process for dealing with maintenance issues so that problems can be resolved effectively.
Protecting your assets
At Alan Boswell Group, we understand that if you’re letting out property, it’s important to protect your assets. Our five-star insurance products can provide peace of mind and the support you need to deal with the unexpected. For more information, visit our landlords insurance hub or speak to an expert member of the team on 01603 216399.