Letting agents can be useful, but they can be expensive too. Many landlords rely on them to manage their property, collect rent, or just find tenants.
But what do letting agents do? And crucially, what are the average letting agent fees (or letting agency fees) for landlords?
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We recently reported a 32 per cent surge in landlord laws since 2010. But what about letting agent fees and how to factor them in to your plans?
Letting agent fees are payments that landlords make to letting agents for the services they provide.
The letting agent fees charged and the services included differ from one letting agent to another, but typically landlords are paying the letting agent for things like tenant-finding, reference checks and property management.
The fees you pay will depend on the services you choose, and you may pay them as a flat fee or as a percentage of your rent. If you're thinking of using a letting agent, our how to choose a letting agent guide is a great place to start.
So, how much are estate agent fees for landlords? For a let-only service, letting agents tend to charge landlords around three or four weeks’ rent, while full property management fees may be around 10 to 20 per cent of monthly rent. Letting agent fees in London are often higher. On top of this, you may have to pay a setup or administration fee.
To begin with, you should remember that there are different levels of service that you might require from a letting agent. The first (most basic) level simply involves finding tenants and completing the referencing process, along with collecting a deposit and drawing up the tenancy agreement. The agent may also arrange the inventory in these cases.
The second level involves the agent collecting rent every month, and following up with any arrears. Some landlords choose to outsource this to avoid the hassle of chasing late payment.
Finally, you might opt for a full management option. Here, as well as the services listed above, the agent will take care of maintenance and repairs, and will act as the point of contact for your tenants.
Clearly, the amount you pay will depend on the level of service you're getting, but this is a rough guide to the letting agent fees paid by landlords:
The Tenant Fees Act 2019 came into force on 1 June 2019. It means that most fees for tenants are now banned, including those applied to assured shorthold tenanancies, student housing and lodger agreements.
Property giant Rightmove reported that almost a quarter of landlords are planning to sell at least one property from their portfolio. One of the most common reasons given was this new ban on tenant fees, with landlords feeling the pinch in passed-on costs.
Check out our June 2019 report on rent increases as a result of the estate agent fees ban.
Of course, there is no requirement for you to have a letting agent at all. Many landlords choose to complete the entire lettings process themselves. Your choice here will depend on a range of factors, including your proximity to the property, and the level of service that you would otherwise need from an agent.
For example, if you simply don’t have the time to take on the management side, you might need to contract with an agent to ensure that maintenance tasks are completed. However, if you just need someone to look for tenants, you might well be able to do this yourself.
For more information, read about whether landlords really need letting agents.
Do you think letting agents are necessary for landlords? Let us know in the comments.
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