Letting agent fees explained

Letting agent fees explained
22nd February 2021

Rental properties are some of the most secure and lucrative investments anyone can make. Are you in the market for letting out your property? Whether you’ve recently become an accidental landlord or are simply not ready to sell your home, a letting agent can help secure you a reliable tenant. In addition, letting agents offer a wide range of services with certain fees attached.

Keep reading to a complete breakdown of letting agent fees and services so you can make an informed financial decision.

Letting agent fees and services

Letting agent fees and services vary greatly depending on how involved the agent is in the process. Some landlords want to oversee the entire rental process, whereas others simply want to sit back and collect a cheque.

Letting agent fees are based on the types of services, as well as the size and location of your property. Before you decide to hire a letting agent or go all-in as a full-time landlord, check out the services letting agents offer and how much it’ll cost you.

Tenant find services

Without a tenant there’s no rent! Letting agents have a pipeline of tenants looking for properties to rent out. In addition, agents have access to the major property portals to advertise vacant rental properties.

If you need a tenant quickly, hiring a letting agent is a great idea.

Fully managed services

Being a landlord is no easy task. From finding and referencing tenants to collecting rent, performing maintenance and repairs, and keeping up with legislation, it can feel like a full-time job. In fact, it is a full-time job for some people.

If this doesn’t sound appealing to you, you’d probably benefit from using a letting agent’s fully managed services. As the name suggests, fully managed services include everything from start to finish. The agent will find tenants, show your property, collect rent, and answer those middle-of-the-night emergency repair calls. While this may sound too good to be true, it’s not.

Landlords wanting these services should be prepared to pay anywhere from 12% to 20% of the monthly rental payment. Sites like Rentround can help you determine exactly how much you’ll pay based on the location of your rental property, your needs, and the type of home you’re letting out.

Individual letting agent fees

Not everyone wants a letting agent to do all the work. Plenty of landlords are fully involved in the rental process from finding and vetting tenants to performing household repairs themselves. Even so, you may find yourself in need of some assistance, which is where individual letting agent services and fees come into play.

Tenant Referencing

Let’s start with the most highly sought-after and tedious of the letting responsibilities -- finding and referencing quality tenants. Most landlords have at least one tenant horror story that ended in damaged property, late fees, or even an eviction. Don’t let this be you.

Instead of combing through countless applications and performing endless background checks only to find the tenants don’t qualify, hire a letting agent to perform all necessary checks for you. In addition to this, tenant referencing usually includes showing the property, collecting the deposit, and even drawing up the tenancy agreement.

Ask the letting agent if they also perform inventory checks. This is especially important if you’re letting out a furnished property. A detailed inventory report lists all of the property’s contents plus what condition they’re in and even photographs. All of these factors come in handy if there’s any dispute over damage to the property or its contents later on.

Tenant referencing and all the associated services could cost you as much as one month’s rent.

Rent Collection

The only thing more frustrating than finding out your tenant is unreliable is when they move in and then refuse to pay. It’s difficult for some people to interact directly with their tenants.

Avoid the drama and uncomfortable confrontations by paying letting agent fees that include rent collection. Not only will the agent collect your monthly rent but handle any arrears, which may involve going to court or filing for an eviction.

By allowing a letting agent to handle these interactions, you can keep your relationship with your tenants a positive one. But this service could cost you between 5 and 10% of the monthly rent.

Guaranteed rent

Speaking of rent, if your tenants don’t pay, how can the letting agent deposit the money into your account? They can’t. This is why guaranteed rent is such an appealing option for most landlords.

Instead of waiting for the tenants to pay up, the letting agent will pay you directly and then worry about collecting their money directly from the tenants. That means you get paid consistently, regardless of how late your tenants pay. These letting agent fees are often broken down annually and may cost anywhere from 3% to 8% of the total annual rent. For many landlords, this fee is well worth the peace of mind of getting a steady income each month.

Eviction fees

Even with all the pieces in place, sometimes, a tenant/landlord relationship just doesn’t pan out. Whether it’s a difference of opinion, damage to the property, or late payments, sometimes, landlords are forced to evict their tenants. If you thought collecting rent was uncomfortable, filing for eviction is an even more complicated and stressful endeavor. This is why many landlords hire a letting agent to do this for them.

Not only is eviction costly (anywhere between £1,300 and £2,200), but it’s also time-consuming. Court fees plus the cost of your own mental sanity can add up quickly. Check with the letting agent you hire to determine how much they charge for evictions and exactly what services they provide. Most agents will charge a flat fee to file the paperwork and ensure the tenant leaves the property without causing any damage.

Other letting agent services include maintenance and repairs and performing all health and safety inspections. While all of the above-mentioned services are usually included in fully managed services, it’s best to ask beforehand so that there’s no confusion over what services you’re getting and how much it’ll cost you.

Letting agents simplify the rental process

Are you ready to rent out your property but feel overwhelmed over how much is involved? You’re not alone! Becoming a landlord, while lucrative, can be extremely stressful. Letting agents are experienced in not only finding reliable tenants but helping you manage your property from start to finish.

Of course, these services come at a cost. Letting agent fees vary based on the number of services you need, the size and cost of your property, as well as their experience and workload. Sit down and formulate a budget before signing a contract. Make sure that the letting agent fees you agree to still leave you with a profit once you find a tenant.

Looking to let a property? Get a no-obligations valuation to find out what income you could get.


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