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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While you may be aware of the fees involved in buying a property, what about letting agent fees, and how can you factor them into your plans?
Letting agent fees are payments that landlords make to letting agents for the services they provide.
The letting agent fees 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 a one-off fee (equivalent to around four week's rent), while full property management fees may be equivalent to 12 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.
You can choose different levels of service from your letting agent depending on how much you’re willing to spend and whether you have the time to manage some of the details yourself.
Finding tenants (let only): the 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.
Rent collection: this 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.
Full management: as well as the services listed above, with full management 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 estate agent letting fees for landlords:
As an example, we’ve looked at the prices of a large letting agent in the UK, Andrews:
You’ll also pay an initial setup fee and can add additional services for a monthly fee. But remember, specific fees will vary depending on the level of service you're looking for.
The Tenant Fees Act 2019 came into force on 1 June 2019. This means that most fees for tenants are now banned, including those applied to assured shorthold tenancies, student housing and lodger agreements.
At the time it was widely reported that this could mean a rise in rents, or that we’d see more landlords selling up due to an increase in passed-on costs.
Since then however, the pandemic has disrupted the landscape and we’ve seen eviction bans and a seven-year low on landlords selling their rental properties.
Of course, there’s 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 work with an agent to keep up with general maintenance. However, if you just need someone to help you find tenants, you might well be able to do this yourself.
Finally, what about letting agent fees for holiday lets? Usually agents will charge commission on each holiday booking made through them, which can be anything from 15 to 25 per cent.
Make sure you know what’s included in the fee, for example services can stretch to cleaning and maintenance as well as dealing with admin, enquiries, and key collection.
Do you think letting agents are necessary for landlords? Let us know in the comments.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
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