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What Are The Letting Agent Fees For Landlords?

letting agent fees for landlords

If you’re letting out a property that you own to tenants, you may choose to use the services of a letting agent to help advertise the property, find tenants and provide a point of contact for any issues they have during their tenancy.

Letting agent fees for these services usually cover:

  • Set up/tenant referencing fees – £100 – £400. These one off costs cover credit checks, application processing and drafting tenancy agreements.
  • Rental income/management fees – 10-15% of rental. These on-going charges will usually be charged as a percentage of the monthly rent collected. Services in return will be handling money. Maintenance requests and inspections.
  • Tenancy renewal fees – £50-£300 Should tenancy’s get extended and renewed, a charge will be incurred.
  • Check-in/Check-out fees – One off costs cover the inventory management, and supporting the tenant with key handover and metre readings for the move in/out
  • Additional services – Letting agents will also offer deep cleaning services, utilities set up, inventories and more. Pick and choose what you need based on your requirements/budget.

Whilst all convenient and helpful services, they can quickly add up. Understanding and budgeting for these costs upfront is key to a profitable property investment.

Find out more about each fee type, what service they provide, and how much you should expect to pay below.

What Are The Different Types Of Letting Agent Fees?

Agents charge tenants for a multitude of services like setting up a tenancy agreement, finding tenants, inspections and rent collection.

  • Set-up Fee: To handle the costs of setting up the tenancy agreement and referencing tenants, some letting agents will charge you a fee. That could be anywhere between £100 – £400
  • Tenant Referencing Fees: This process is to ensure that potential tenants have the right to live in the UK and can afford the rent advertised. It involves ID and credit checks, employment status and current address.
  • Tenancy Agreement Fees: Agents will typically charge you for this service as well when they draw up your tenancy agreement. The cost can vary depending on how complex it is so remember to ask for an estimate before signing it.
  • Rental Income Fees: Almost every letting agent charges this common fee. This cost is a percentage based on any income gotten from tenants. The charge will differ depending on how much of the service you want, but usually falls in a range between 10-15%. You can pay it all at once or as time passes.
  • Management Fees: if you want to take your hands off of the process of renting a property, even more money has to be spent. This fee includes tenant background checks, collecting rent, and fixing stuff that breaks. This price will range from £100 to over £300 per month.
  • Other fees: Depending on how much is being done, there may be extra costs. These small things include arranging property inspections and handling the check-in/check-out process. Some agents also offer training courses for landlords that you have to pay more for.

How Much Do Letting Agents Charge?

Agents will usually charge a one-off fee to cover certain things like referencing tenants or drawing up tenancy agreements plus a percentage of the rental income received from the tenant or ongoing management fees, but the exact charges will vary between agents.

The fees are also going to be different depending on where you are location wise, property type and what services you want. It is impossible to give an exact figure on what these fees will be because of this variation, but landlords should expect it to range from hundreds of pounds all the way up to thousands.

After which, you can then start comparing prices between these options and find yourself the best deal for your money.

How To Reduce Letting Agent Fees

Getting value for your money and cutting out waste has never been more important than it is in today’s economic climate.

By following the steps below, you may be able to lower the cost of letting agent fees:

  • Landlords must compare options before settling on one. It’s a simple task that can cut costs to suit the budget available.
  • Homeowners need to ask themselves if they’re able to pitch in when it comes to managing tenants. This could mean tasks such as finding and referencing tenants or collecting rent. Although be careful as there could be legal obligations that come with these tasks
  • Looking for a good letting agent? Well, it’s important to know that not all of them charge the same fees. So don’t hesitate to ask for a better deal or negotiate on price. Essentially, you’re the customer in this situation.
  • It’s also important to remember that there are other options besides your typical letting agent. Some online letting agents offer a more cost-effective solution for landlords.

Most of the time they have lower fees than high-street agencies, making them ideal if you’re working on a budget.

How To Find Reputable Letting Agents In Your Area

It’s important that you trust your chosen letting agent to do a good job and with your best interests at heart. Your property is a huge financial investment, so they need to be able to look after it on your behalf. By doing some simple online research and the right comparisons, you’ll find a great deal on an agent that will give you peace of mind.

  • You can start by looking up local agents online. Also don’t forget to ask friends and family for suggestions as well. Once you have a few companies in mind, go ahead and check out their website. You’ll want to see what exactly they’re offering and how much it costs. Another thing you should look at are the reviews! If a company has bad reviews – look elsewhere!
  • If everything checks out from there, reach out to each agent you’ve come up with so far. You’ll want to meet them in person so that you can properly gauge how they operate. Find out more about their fees, services and experience. You must always be clear on what is offered.
  • Make sure to ask who will be watching over your property. Is it just one person, or will your account be handed off between multiple people depending on who’s available? This way, you will have an idea of who to talk to in the event of anything.
  • Verify with the appropriate governing bodies to make sure that any letting agents you are considering have the right qualifications and are registered. This will give you peace of mind and reassurance.

It doesn’t matter which agent you decide to go with, when renting out your property it’s a good idea to have landlord insurance. This is so you’re covered in case something goes wrong while the agent was doing their job.

Letting Agent Accreditation and Affiliations Check

Make sure your letting agent is regulated by a governing body. They are supposed to follow the rules of whatever group they belong to. If you’re in the UK, agents should be registered with The Property Ombudsman or a similar redress scheme. You also want to make sure that they have Client Money Protection insurance.

There are three main governing bodies:

If a letting agent displays any of these logos or trademark names, you can be sure that the professional body to which it belongs has instilled certain rules and regulations that its members must follow while working.

The property ombudsman and other redress schemes provide an additional layer of protection for landlords and tenants.

  • You should check if the letting agent you’ve chosen is registered with one of these organisations before you make any sort of agreement. If they’re not, take that as a red flag and maybe find another agent. The local council trading standards departments can look into your complaints about a letting agent.
  • Just like in our last point, if an agent isn’t registered with a letting agent redress scheme or you believe they’re being unfair, you can report them to trading standards. They’ll be able to investigate any illegal charges or unfair practices.

If you do check and everything’s above board, then there shouldn’t be anything to worry about. It just helps to know who’s in charge of your property when it’s out of your hands and under someone else’s management.

Why Do Landlords Use Letting Agents?

Most landlords use letting agents because it saves time. Letting agents are professionals who have a lot of experience with the rental market in your local area. They handle all the tedious work for you, while you’re busy doing other things like working another job or going on vacation.

They know how to find suitable tenants, conduct viewings, and collect rent payments so you don’t have to. You can trust them to provide advice and support about any tenancy-related matters as well, making sure both parties are happy.

You can think of letting agents as an intermediary between you and your tenants. Some landlords decide they want more control over their property and choose to communicate directly with their tenants. On the other hand though, some landlords just want to handle the business side and nothing else. So they outsource the day-to-day management of their property investment to reliable letting agents who can act on their behalf.

What Services Do Letting Agents Provide For Landlords?

Ask your local agent to find out the precise services rendered by letting agents, as it depends on agency size. In general, many letting agents will provide the following services:

  • Tenant referencing and credit checks
  • Creating tenancy agreements and contracts
  • Property viewing or showing
  • Rent collecting from tenants
  • Settling any differences or disagreements arising from a lease
  • Taking responsibility for maintenance, repairs and safety inspections, and keeping all relevant licences
  • Managing check-in/check-out processes,
  • Custodianship of deposit protection schemes
  • Offering personal advice and assistance with property investments.

Help Available If You Have An Issue With A Letting Agent

An informal conversation with the offending agent is recommended before taking any formal action. If you are not satisfied with how a registered agent has handled your complaint, you can approach the redress scheme they belong to.

If these approaches don’t work then it may be necessary to elevate the matter. You could make a formal complaint to your letting agent demanding a response within 8 weeks or alternatively, you can go to court.

Alternatively, if you think your letting agent has overcharged you in fees or costs and they then demand payment for services which they have not offered, you can report this to Trading Standards.

Summary

From the advertising fees, set up costs to on-going management fees and service charges, letting agent fees for landlords can quickly add up. Underestimating the amount can severely dent your profits and make what seemed like a good rental opportunity an inefficient investment so it’s important to budget carefully before diving into the property rentals investment game.

To ensure you get the best value, always shop around and explore the service offered by several reputable letting agents. You can often negotiate more favourable terms to the prices quoted, so don’t be afraid to ask for what you need based on your budget.

DIY property management is an option to save the most money but you will need to weigh up if you have the time and expertise needed to make the trade off a savvy financial move.

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