Compare Property Management Prices
Save up to 40% by comparing quotes from trusted agencies
Last Updated on December 9, 2020
Letting Agent Fees – Costs For Landlords and Tenants
When it comes to renting and letting, there’s a lot of different information flying around out there, so it’s easy to get confused as to what you can and should expect. However, we’re here to not only dispel a few myths that are yet to be fully distinguished, but to talk you through the basics of letting agents/property management: what they do, how you can use them and what to look out for.
First things first, let’s settle a common misconception that often goes unresolved regarding letting agent costs – things are different these days.
Letting agent charges are illegal
Yes, believe it or not, whilst there is still a lot of inaccurate information still out there, letting agent fees are illegal! This hasn’t always been the case – which is one reason why most people are still unaware – but as of June 2019, when The Tenant Fees Act was signed, the majority of letting fees are now banned. In addition to this, the legislation also brought in a cap on all holding and security deposits, with holding deposits capped at no more than one week’s rent and security deposits at no more than five.
Of course, like all government legislation, it goes into much greater detail on what the specifics are – namely, what fees are and are not permitted. So while The Tenant Fees Act is applicable to all cases, it’s worth doing your research before taking out any tenancy agreement. For more information, make sure you check out the resources (1), (2), (3) and (4).
Table of Contents
What about landlords?
If you are a landlord, on the other hand (whether currently or considering letting out your property), you can expect to be charged some kind of property management fees. Since The Tenant Fees Act chiefly protects the rights of renters, legislation for landlords can be adjusted each year and, therefore, so too do property management and letting agent costs.
What kind of letting fees can I expect as a landlord?
This depends on the kind of arrangement you set up with your chosen letting agent, however, it can be broken down into two main schools:
- Let-only – this is pretty much what it says on the tin: involves handling the processes and documentation needed to take on a tenant and will cost you roughly 3-4 weeks rent worth. This can often include advertising and any potential viewings
- Property management (full service) – this entails not only the handling of all documentation, but everything from rent collection and maintenance, to essentially having all interactions with the tenant go through the letting agent/property manager. As this is a complete service, allowing landlords to be fairly hands-off, it can cost anywhere between 10 and 20% of the total rent for the year
Beyond these two primary letting packages, other charges can include:
- a one-off fee for sourcing a tenant, arranging references and preparing the tenancy agreement (often costing as much as a full month’s rent).
- rent collection, which usually sits at approximately 5% of the total rent.
- minor administration fees, such as posting the property advert etc.
No matter whether you’re a renter or landlord, you should always take the time to read the fine print and fact-check online to make sure everything’s above board. With that in mind, we
What is a letting agent responsible for?
Depending on the type of arrangement you are looking for, a letting agent’s responsibilities can vary. However, at the bare minimum, a letting agent advertises and enables the renting of properties to prospective tenants – so, whether you’re the one looking to rent or you own a property and are looking to let it out, to say they come in handy would be an understatement.
As touched upon already, depending on the package you sign up for as a tenant/landlord (not always a matter of choice, at least in the case of a tenant), a letting agent can be responsible for anything from simply arranging the paperwork, all the way up to full-scale property management. To summarise briefly, a letting agent can be responsible for the following:
- Advertising/marketing for a property
- Finding potential tenants and viewing arrangements
- Tenancy agreements, referencing and other important records/paperwork
- Property maintenance, cleaning (when vacant – end of tenancy cleaning prices) and any other major issues
- Rent collection, service charges and other payments required from tenants
Of course, the extent to which your letting agent is accountable will vary from company to company and this is by no means an exhaustive list. Regardless, as always, it is worth doing your research around the agencies in your area and the services they provide.
Is it worth using a letting agent?
Definitely. Despite having to forego a few additional costs, letting a property through a professional agency allows you to take a step back and manage your property relatively stress-free, whether that be as a tenant or a landlord.
Not only do letting agents provide you with added security and assurances re: protection of your premises, background and conduct of tenants, secure payment structures and legally protected contracts etc., but they are especially helpful if you are a landlord and looking to let/manage a number of properties in your portfolio.
Overall, regardless of whether you are looking to rent or let a property, finding a good, reliable letting agent should be at the top of your list.
What is the average letting agent fee?
Once again, any attempted letting agent fees imposed upon a prospective tenant are illegal, so it shouldn’t cost you anything beyond the standard deposits to go through a letting agent.
However, if you are a landlord, it depends entirely on what you have set as the rent for your property. Nevertheless, the rough figures we provided earlier – 3-4 weeks rent for let-only and 10-20% of the annual rent for full property management – are a good baseline to start with when it comes to comparing different rates from different agencies.
How do I choose a letting agent?
As always, the first thing to do is your due diligence and carry out proper, extensive research. As well as finding reputable agencies in your area, you also need to take the time to do some comparative analysis; decide on what level of service you need (i.e. let-only or full property management); if you are a landlord, the letting fees they quote you, and so on.
The list goes on – you really can’t do too much digging when it comes to selecting the right letting agency – however, we thought we’d give you our top four tips, just to get you started.
- Check their credentials/membership – No matter how convincing things might look, there are still plenty of fraudulent organisations out there, so the first thing to do is confirm that the letting agency is registered with either the Property Ombudsman Service or the Property Redress Scheme. This is a legal requirement so if it can’t be proved, steer clear.
- Check their money protection scheme – Another legal requirement is that all deposits are tenancy protection scheme. Whether you’re the tenant or the landlord, it is crucial that money is kept securely. You can double-check all the approved deposit protection schemes here.
- Look at reviews – There’s nothing more telling than hearing it straight from the horse’s mouth. There are plenty of sites out there, such as Trustpilot and Rentround, where you can find reviews from people who have first-hand experience with a letting agent. Whether it’s good or bad, it pays to know who you’ll be interacting with before you the wheels are in motion or any money has changed hands.
- Compare fees – Obviously, this only applies to landlords and those looking to let their property, but it’s worth taking time to compare and contrast the costs from agency to agency. It is really enough to simply take the estimates we have earlier and base everything off those. Obviously, it’s common sense to try and look for the best price available, but you might also find agencies that quote you even smaller fees than we have predicted (unlikely). However, this could suggest other concerns surrounding legitimacy or quality of service, so don’t rush into anything.
Can I let my property without an agent?
Yes, you can. With the advent of free to use online services like Gumtree and, more recently, SpareRoom, many people have avoided having to go through a recognised letting agency.
However, we would always recommend going through a letting agent wherever possible. To reiterate an earlier point, not only does this allow you to find suitable tenants and entrust the letting and management of your property to qualified professionals, but it also saves you the headache.
Letting a property independently isn’t just a case of finding a tenant and having them sign along the dotted line: there are a lot of legal processes and documents to deal with, as well as detailed legislation and guidelines for landlords that you need to understand inside and out. If you don’t, you could be culpable for any malpractice or misconduct.
We hope that this quick guide into letting agents, fees and what you need to know before renting, or renting out your next property is helpful. We’d like to reiterate that this is more of a quick breakdown and there is still plenty more information that you’d be wise to look into yourself.
We wish you all the best in your search!
Compare Property Management Prices
Save up to 40% by comparing quotes from trusted agencies