What does a letting agent do and how much do they cost?

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Keys in the door of a rental property managed by a letting agent.

With the demand for rental properties sky high and the cost of renting continuing to rise, there has never been a better time to rent out your property.

According to English Private Landlord Survey 2021, 39% of private UK landlords own between two and four rental properties, representing 31% of tenancies across the country.

Managing a rental property can be hard work; each property takes up time and energy you might wish to spend elsewhere (for example, growing your property portfolio further). And that’s where a letting agency can lend a helping hand.

This guide explores the services letting agents can offer landlords and how much you can expect to pay.

What are letting agents and what do they do?

A letting agent is a company or individual that, for a fee, will assist the landlord through the process of renting their property out. From providing a matchmaking service, identifying prospective tenants, to the complete management of your property, there are different levels of engagement that letting agents can deliver throughout the process.

Letting agent services for landlords

What letting agent services are popular with landlords? We’re exploring three below.

Tenant search

As a landlord, you need to find suitable tenants. But this process can be time-consuming — poring over applications, interviewing and screening tenants etc. And you don’t want to cut this process short just because you haven’t the time to dedicate to it. You need to find reliable tenants with a good track record who pay on time and will look after your property.

A letting agent can manage the entire search process from taking photos of your property, drawing up floorplans and marketing it on property apps like Rightmove and Zoopla, right through to arranging and managing viewings. Letting agents can also screen potential tenants and conduct reference checks.

If you’re not keen on parting with money to manage your tenancy search, many options are available to help you manage this yourself, such as self-managed services, including Purple Bricks and Strike.

Rent collection

As you’d imagine, this service is all about collecting rent from your tenants. The letting agent can ensure the tenant’s deposit is securely in a deposit protection scheme and can continue collecting the rent monthly from your tenants on your behalf. This service frees you up to do more productive things with your time and removes any worry about chasing rent arrears or serving any notices to problem tenants.

Letting agents are well-versed in chasing rent arrears and can competently deal with problem tenants, so even if you sign up for this service for their expertise and guidance alone, it could be a worthwhile investment.

Full management

If you’re looking for a letting agent to remove all the admin and faff that comes with tenant management, a fully-managed letting agent service could be for you. On top of managing the tenant search and rent collection, the agent can also oversee property inspections, organising work or required maintenance to the property and general tenant communication.

Full management service is the perfect solution for landlords who live further away from their rental properties, or if they have more than one property to manage.

How much does it all cost?

Letting agents usually charge 10-15% of your monthly rental fee for a fully-managed service. This might seem like a hefty percentage, but as long as it covers your expenses, it’s a good option for busy landlords.

These would be priced differently if you were just interested in specific services. For example, for a tenant search service, you can expect to pay a one-off fee (fees vary). And if you were looking for rent collection services only, this would usually be a smaller percentage of your monthly rent, for example, 5%.

How much or how little help you’re looking for might depend on budget and your availability as a landlord.

How do I find a good letting agent?

Firstly, ask around for referrals. If you know other landlords in the area, or can start a conversation in a local landlord forum, you can get some reliable information on local letting agencies.

After you’ve shortlisted your options, it’s time to look a little deeper. Read their reviews (Google or Facebook) to check that customers are largely satisfied with the service they receive.

Next, meet them in person. Invite them to the property and learn more about their process. Remember, you’re in the driving seat. You need a letting agent who can confidently manage aspects of your tenancy — ask them how they have handled problem tenants in the past. The letting agent is someone you’ll work closely with, perhaps for many years to come, so you want to build a personal and trusting relationship with them.

Check their ‘terms of business’. This contract between landlord and agent outlines all the terms of the service they’ll be providing. Before signing, you’ll want to go through this document in fine detail to ensure you’re happy with everything.

Do I need a letting agent, or can I do it myself?

Should you manage the tenancy process yourself? Or take on a letting agent? Your answer will depend on your circumstances. But we’ve put together a pros and cons checklist below to help you decide.

Pros of using a letting agent

  • Save time and hassle by not managing it yourself
  • Get access to their expertise when it comes to late or no rent payment
  • Have someone on hand to inspect the property if you don’t live in the area
  • Tenant vetting processes mean you’re more likely to attract good tenants

 

Cons of using a letting agent

  • It’s money into their pocket, not yours
  • You have less control over who moves into your property
  • You could be charged extra fees, i.e. an arrangement fee if any maintenance is required

As a landlord, there are many moving parts to think about — from buying the property, refurbishing it and finding tenants, to maintaining the property and managing the tenancy.

Deciding to take on a letting agent shouldn’t be made flippantly, but if you can afford the fees and it makes sense for you to offload some of the headaches that come with being a landlord, it could be an option worth exploring.

We have plenty of useful resources for landlords just like you in our guide section; here are a few that might interest you:

What are your health & safety responsibilities as a landlord?

Landlords: Do you need an HMO mortgage?

7 ways to increase your income as a UK landlord