How much do letting agents charge landlords?

How much do letting agents charge landlords?

The amount you’ll have to pay your letting agent if you’re a landlord depends upon the type of service you need, but roughly, it’ll be a percentage of total rental income. However, a good letting agent will be more than worth the expense as you’re paying for a wealth of knowledge and expertise as well as peace of mind. It may even be possible to recoup the costs as a taxable deduction.

Let us look at the services you might pay for...

Let only service

A let only service sounds straightforward but in fact there is quite a lot involved in the process. Your letting agent will carry out a rental valuation of your property to ensure that you rent at the best market price. They will also give you all the advice regarding essential building and contents insurance - an absolute must if the property is furnished and in case of damage or theft, and they will deal with all the marketing and advertising entailed in finding you the perfect tenant. This will be everything from including the property on the lettings notice board to online listings.

Your letting agent will accompany any prospective tenants when they come to view the property and will, once the right tenant is found, obtain the relevant references, dealing with credit searches and also collecting the first month's rent and the deposit. They’ll ensure the tenancy agreement is signed by you, the landlord and all tenants, they organise gas and electrical checks and EPC and finally hand the keys over to the tenant.

Rent Guarantee

Your letting agent can also ensure you’re covered by Landlord's Rent Guarantee Insurance, often referred to as rent protection insurance. This is a form of cover that means that you will still receive your rental income even if your tenants are unable to pay their rent and have run up arrears.

Let and rent collection

This is different from the let only service as you’ll also pay your letting agent to cover all aspects of the let only service but they will also have the additional task of collecting rent monthly on your behalf. They’ll also, should the tenants not live up to their glowing references and fall behind with rent, be able to step in and sort everything out. Appointing a lettings agent to do this is a great way of keeping things on a more objective, businesslike footing.

Managed service

If you are a landlord who gets a buzz from looking after your tenants then you may not feel you need any help with everything that happens day in day out with your properties. On the other hand, you may have one or several properties that you are prepared to hand over totally to the letting experts. Finding tenants and making sure they pay rent, making the various checks before they move in and ensuring their references are up to scratch are all just the tip of the iceberg when you rent out a property. Here are some of the other services you’ll receive should you decide to pay for a managed service.

1. Utility companies will be notified of the latest meter readings when a new tenant takes over.
2. A check-out inspection will make sure that when a tenant leaves the property, everything is checked thoroughly.
3. Periodic property inspections - three per year will be made by the letting agent. These inspections are a way to assess the condition of your property both inside and out and also to ensure that the tenants aren’t breaching any terms of the agreement. Your letting agent will be equipped with the knowledge (including an understanding of the legal implications) of what may be termed a breach of the agreement and also with the necessary skills to deal with such situations.
4. A point of contact - instead of you getting up in the middle of the night following a call from tenants about a leak, or a broken window, the letting agent will do that for you. And more…
5. Chase rent arrears - because even with the best will in the world, the inevitable can happen and a tenant may get into arrears but you don’t have to deal with this problem because that is your letting agent’s job when you pay for a managed service. It simply means you don’t have to handle any confrontations and unpleasantness.
6. Organising repairs. Everyday responsibilities for a property can be time consuming and let’s face it, if you don’t live anywhere near to your rental property, it is massively inconvenient but your letting agent will organise these for you. They’ll get quotes for the work of course and use their knowledge of local contacts to ensure the best people are hired to do the work at the earliest convenience.
7. They’ll sort out the return of the deposit, which isn’t always straightforward if a tenant has caused damage to the property for example.

Optional extras may include:

• Lodging the tenants deposit with DPS

If you’re a landlord who’s taken a security deposit for a new tenancy, you must protect it with a government-approved deposit protection scheme but your letting agent will do that for you as part of the managed service.

• Inventory/Schedule of Condition

The letting agent will prepare an inventory/schedule of condition - this is essentially a list of everything in the property and its condition ensuring that an objective assessment can be made when the tenancy comes to an end.

• Tenancy agreement renewal

Most landlords would love to keep good tenants - conversely many tenants may decide to stay put in their rented home as many are doing as a result of the Covid pandemic, whatever the reason there comes a time when the tenancy agreement needs to be renewed. The best time to approach renters is 12-16 weeks before the end of the fixed term so there’s plenty of time on both sides to negotiate terms and enough time if you need your letting agent to remarket your property.

 If you are a landlord who is interested in any of our letting services and want a quote free of any obligation then please get in touch and we would be more than happy to help.