Letting Agents are extremely useful allies for busy landlords. Their services free up time & reduce stress when it comes to managing a property.
Letting agent fees are however a major factor when it comes to picking a letting agent, as fees can quickly eat away at rental income profits. Adversely, if the fees are too low then this may indicate a diluted service.
With a number of online agents entering the market & different fee types on offer, the market can be a difficult place to navigate.
A good first step is for landlords to compare letting agent fees
Knowing what each local letting agent is charging, their services on offer & their past performance, puts landlords in a far better position during negotiation.
Letting agents structure their fees in many ways. There are fixed one off fees, % of the first month’s rent and % of ongoing rent. In addition, there are different fees for different types of services.
10 types of letting agent fees:
1. Letting Agent early cancellation fees
Your agreement with a letting agent will include terms and conditions that will include some details on the length of the agreement. Usually this refers to the tenancy term of a potential tenant.
Usually, when a tenant is found the term for an agreement is a year. Therefore if a landlord wants to exit an agreement with a letting agent early, there is a fee to be paid.
This makes sense to protect the letting agent. If the letting agent has found a tenant, it’d be unfair to them if a landlord switches provider after 2 months, especially if the letting agents fees are based on an ongoing % of the monthly rent.
There are options for the landlord if the exit decision is based on a poor service or legitimate dispute.
Letting agents need to be signed up to a regulatory body, which handles disputes between agents & landlords.
2. Fees for rent collection
Collecting rent is another popular service offer by letting agents.
This weekly or monthly tasks can be cumbersome to landlords (especially if there are notoriously difficult to get hold of tenants!)
Included in this services is usually the tracking of late payments and issuing late fee penalties to tenants.
Landlords need to be aware of rent due vs rent collected small print. ‘Rent collected’ means letting agent fees are based on rent actually handed over from the tenant (i.e. the letting agent will get 10% of this amount)
But ‘rent due’ can leave landlords out of pocket. If rent due is £1,000 but rent actually handed over to a letting agent is only £800, the letting agents fee will be based on the £1,000 (i.e. the amount that was due)
3. Fees for finding a tenant
Letting agent fees for finding tenants can very. On the lower end of the scale there are low one off prices, however viewings may have to be conducted by the landlord themselves.
Whereas more comprehensive tenant find services, which include conducting viewings, may be charged at 10% of the monthly rent for the duration of the tenancy agreement.
A large proportion of the cost to find tenants are Right Move & Zoopla fees. These portals are by far the best proven method to find tenants.
Landlords can see how much their rental fees can be reduced, by comparing letting agent fees on Rent Round
4. Letting agent viewing fees
Letting agents offering low tenant find charges, often have add on charges to include viewings.
This gives landlords flexibility when wanting to get a low fixed fee cost to find a tenant but don’t have the time to conduct viewings.
Landlords should be mindful that some fixed fee charges need to be paid upfront and are possibly not depending on a tenant being found.
Landlords could see themselves out of pocket and without a tenant. It is prudent to get this clarified before choosing a letting agent
5. Letting agent charges for premium listings
Near enough all portals give the opportunity to be ‘premium listed’.
For landlords this means their property is shown at the top of search results on portals such as Zoopla.
For the portal owner it means more money generated.
For the landlord & letting agent, it increases viewings for the property post therefore increases the chance of finding a tenant quicker.
6. Fees for renewing a tenancy
A tenancy agreements start when a tenant moves in and usually last 12 months.
Landlords can be charged if the same tenant stays and renews their tenancy for another period of time.
Even if there is little change in the agreement aside from new dates, landlords can still be charged.
Furthermore if the landlord requests a change mid-way into an agreement (e.g. for a rent increase), letting agents can issue a fee for this.
7. Maintenance fees
If a landlord has taken up ‘fully managed’ services from a letting agent, then how maintenance is charged is a big factor.
Will the agent tell the landlord how much a particular fix is going to be charged beforehand?
Will the letting agent choose the contractor to fix the issue themselves?
Does the landlord get the opportunity to shop around for a better price before any fixes?
Depending on how the construct of the agreement is drawn up, the landlord may get little visibility of charges to fix their property.
8. Letting agent eviction fees
Sadly evictions need to happen from time to time.
Continuous late paid rent, damage, noise and criminal activity are all problems landlords may face with their tenants.
To process an eviction, solicitors, courts and bailiffs all may be needed – and they all have their costs.
Landlords should check letting agent fees for evicting a tenant. Furthermore landlords need to check how much of what’s needed to evict the letting agent will do.
When it comes to evicting a tenant, it will usually mean another tenant is needed to fill the vacant room/property. This again may trigger the letting agents’ fee of finding a tenant.
9. Guaranteed rent fees
Guaranteed rent is a policy that ensures a landlord gets rent paid if a tenant refuses to pay or vacates early without notice
Landlords who may have financial difficulty in keeping up with mortgage payments etc. may opt for this policy to protect themselves.
It’s worth landlords checking the pay-out stipulated in these agreements. Some policies can take up to 6 months to pay out.
10. Letting agent inventory services
Getting a letting agent to conduct an inventory can help in potential tenant (and agent) disputes.
Furnishings & items, as well as their condition can be drawn up into a catalogue. This can then be referenced if there are any queries on what was in the property before the property was handed over.
Comparing letting agent fees
Letting agents must display their fees in offices & their website. This increased transparency helps landlords save on letting fees & see exact charges that can be issued.
Rent Round makes landlord life even easier. By simply entering the property postcode, fees, ratings, distances and regulatory affiliations of letting agents are displayed.
It’s completely free for landlords to use.