What is a letting fee?
You probably already know that letting agents run on commission but how much do letting agents charge to manage a property? Here, we break down the typical fees you'd expect to pay to a letting agent in the UK and how, in the long run, a good letting agent can actually save you money.
What should you expect to pay in letting agent fees?
An agency’s commission is generally a set percentage plus VAT unless otherwise agreed. Agency fees for renting in the UK are paid when your tenant moves in and can vary in price depending on the company and your location.
Bear in mind that most agents have a no let, no fee policy, which is good to know if your property is empty. Also – expect to pay higher fees if you rent out a home in London, because, you know, London.
What's included in letting agent fees?
The letting agent fee depends on how involved you want – or need – them to be. Here’s a breakdown of letting agents’ services, details of what they provide and how much it’ll cost you.
1. Finding tenants and initial setup
This basic service has your letting agent find your new tenants and arrange the initial setup of the let for you. They’ll advertise the property and arrange the show-rounds and once a tenant has been agreed, they’ll then sort out the tenancy agreement, the rent and the first payment for you. After that, you’re responsible for everything else.
Normally, this service requires a one-off flat fee of a month’s rent. Some letting agents might round the fee up to a percentage of the entire contract, in which case you can always try negotiating for a better deal. Any marketing expenses should be included within their commission so double-check in case your agent wants to add any additional advertising fees.
2. New tenants, set-up and rent collection
You might also want your letting agent to collect your tenants’ rent on your behalf, as well as everything mentioned above. Lucky landlords could pay as little as 5% of the monthly rent for this service, though the average fee typically sits between 8% – 12% in most cases. If you don’t want to hassle of dealing with payment disputes or tenant’s potential arrears, your letting agent will deal with this on your behalf.
3. Full Management
Expect the full works the whole time your tenant is living in your home with full management of the property! The letting agent takes care of pretty much everything here – that includes everything mentioned previously, as well as any maintenance queries, disputes, surveys and assessments and a whole lot more.
With this service, you hand over everything to the agent and they act on your behalf. The charge for this service is between 10% – 15% of the monthly rent.
How can letting agents save me money?
Now that we understand how much estate agents charge for renting your property and have an idea of how much it will cost you, you need to decide which option is best for you.
Obviously, doing the whole yourself will save you money, but we’d have to strongly advise against this if you’re a new landlord or don’t live near the home you’re renting out… or if you don’t have the time to sort your tenant’s problems and aren’t confident with the laws and regulations you’ll have to adhere to. If these apply to you then paying a letting agent is a no-brainer. As a final thought, you might want to ask yourself if you’re prepared to go to court if there’s a legal dispute, or if you at least have the knowledge or contacts to guide you otherwise? A letting agent will know how to act best in this situation and advise you what to do.