Letting Agent Fees
How much should I pay for a letting agent?
Many landlords employ a letting agent at some time in their property management career. The difficulty for landlords in working out whether they are over paying the letting agent fees, or getting a good deal as there is no industry wide standard service or charges. This means that each letting agent can include different levels of service within their fees to landlords.
There is a trade organisation which governs letting agents called the Association of Letting Agents (ARLA) and it may be worth checking whether a letting agent is a member of this organisation which at least has a code of practice for it’s members.
There are many levels of service that letting agents offer landlords but ostensibly they fall into two:
The first is commonly known as the ‘let only’; the other is a full management service.
If a landlord employs a letting agent on a ‘let only’ their main tasks are:
• Giving a rental assessment (how much rent a landlord could charge)
• Producing letting particulars which more likely now will be submitting advert to Rightmove
• Conducting the viewings for a landlord
• Do the tenant referencing and credit check the prospective tenant
• Make sure that the tenant has contents insurance
• Provide a tenancy agreement
• Take the tenants first payment and set up any direct debits
• Inform the relevant utilities about the readings at check in
Additional services letting agency services
Most letting agents also offer additional services to the landlord that they will charge for. These including sorting out Energy Performance Certificates, making sure that the property has a valid Gas Safety Certificate and preparing a property inventory.
The fees for a let only service?
The fees for a ‘let only’ vary massively across the lettings industry. If a landlord is employing a small independent letting agent they may get away by paying as little as £200. Most letting agents will charge the equivalent of 2-4 weeks rent for a let only service. For example national letting agent Belvoir charges on average £250 + VAT.
The fees for a full management service
Landlord that go for a full management service will as well as the letting service detailed above also will not be involved in the ongoing management of the property. This means that they should avoid much the hassle of the potential day to day contact with the tenants. If the boiler goes or the tenant locks themselves out, the letting agent will use one of their approved contractors to do the work. It is sensible to agree a delegated authority figure with the letting agent so that if the work is needed they can commission this without contacting you first.
Fees for this service will normally start in the regions at 7% of rent and go all the way up to 15% for some agents in London. These fees are deducted straight from the monthly rent. Anything less than that, and a landlord needs to question the quality of the service and longevity of the business.
Alternative charging models
There are a number of companies that offer alternative models of letting and charging. For instance there is Letting Agent.Com which offer a national let only service for landlords for 3% of the rental period payable out of the first months rent. It is a no let not fee arrangement, but where the landlord is responsible for conducting the viewings once a tenant has been sourced. They also offer a bespoke service for landlords that want to reduce their involvement in the day-to-day management.
Another option for landlords is the service offered by Hutcheon Solicitors which for a starting price of £15 per month will collect a landlords rent from the tenant and offer legal support to the landlord should the tenant fail to pay all the rent.
DIY letting – a landlord doing it themself
Landlords looking to cut costs want to seriously consider doing it themselves. With website such as Lettingaproperty, Discount Lettings and Upad offering a service that enables landlords to get their property featured in the national letting websites, including the biggest – Rightmove – (which used to be one of the attractions of using a letting agent as Rightmove has a policy of only allowing ‘letting agents’ to upload properties onto the site)
It is also possible for landlords to advertise rental property for FREE on websites such as Gumtree. Clearly if a landlord is prepared to manage their investment property then they will save a small fortune. We evaluate in more depth whether a landlord is best using a letting agent or not.
How much are you paying? Would you use a letting agent?