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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?
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 want to manage most aspects of the tenancy yourself, you may only need to pay a letting agent to find tenants for you. This is likely to be a one-off payment of a few hundred pounds.
On the other hand if you’re looking to take a more hands-off approach, you’ll need to pay the agent a full management fee. This is likely to cost you between £1,000 and £2,000 a year.
Read on for a more detailed summary of the types of letting agent services available, plus an idea of average costs.
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 pay the letting agent for things like tenant-finding, reference checks, and property management.
Fees vary depending on the level of service you need, the location of the property, and the agency you choose.
For example, letting agent fees in London and other big UK cities are often higher.
It’s important to note that you may also 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.
For a let-only service, letting agents tend to charge a one-off fee.
But how much do letting agents charge to manage a property? Fees for property management are likely to be in the region of between 12 and 20 per cent of the monthly rent.
For example, if you charge a monthly rent of £950 and your letting agent charges a property management commission fee of 14 per cent, you’ll pay them £133 a month (£1,596 a year).
Clearly, the amount you pay will depend on the level of service you're getting, but this is a rough guide to letting agency 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 letting agents would pass the costs on to landlords in the form of higher management fees. It was suggested that this could encourage landlords to increase rents, or force landlords to sell their properties due to rising costs.
Since 2019, average rents have continued to rise as the shortage of rental property has worsened.
However, despite challenging conditions, landlords can still generate solid rental yields thanks to high average rents and fierce competition for available properties.
There’s no requirement for you to have a letting agent at all. In fact, 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’d 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.
Read our guide to holiday let agents for more information.
What are your tips for getting the best lettings agency fees? Let us know in the comments.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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