Things you should know about letting agents and their fees
Posted on 13th November 2020
You might already know that the rules about tenant fees changed in June 2019. This has affected the way many letting agents work. Some are now reducing their levels of service and passing on fees and additional charges to landlords.
We don’t do this at Letting Genie and are transparent about the fees we charge. However, we have noticed some widespread practices that we thought you should know about. Here we suggest some questions you might like to consider.
Why should I work with a letting agent?
Many landlords manage their own properties very successfully, so why should you engage a letting agent? It can be time-consuming to manage all of the day-to-day requirements of managing one or more properties and answering your tenants’ questions. You will also need to know reliable and professional plumbers, electricians and other tradespeople for example, who can respond quickly if there’s a problem.
It’s also important to keep up to date with current regulations and requirements that affect landlords and tenants.
Working with a letting agent can be a good idea if you have a full-time job already, if your rental property is some distance away, or if you would prefer someone else to deal with your tenants’ issues and property maintenance.
What services should a letting agent provide?
It’s quite common for there to be two or three levels of service.
Tenant Find – a letting agent can simply find a suitable tenant for you, check their references and credit worthiness, draw up the tenancy agreement, and collect the initial deposit. This is normally known as a tenant find service and is normally a percentage of the first months rent or a fixed fee. You should check whether there is an additional fee for an inventory and schedule of condition, the tenancy agreement, deposit protection or any other parts of the service.
Rent collection – rent collection is a service offered by many agents and chasing any late payments should be included. Ask about insurance, guarantees of payment, issuing of notices and legal costs.
Full management – a letting agent can also manage all aspects of renting and maintaining your property for you.
This should include dealing with tenant queries and managing regular maintenance and repairs. You should receive copies of all invoices for work they arrange on your behalf. Some agents charge an additional fee for handling repairs and maintenance, so it’s important to check if this is the case. Some agents also charge commission to contractors which can then be added onto the invoice to landlords.
What should I expect to pay in letting agent fees?
There will be one-off fees for services such as Tenant Find and initial set up or renewing tenancy agreements. For ongoing rent collection and management services the fee is often a percentage of the monthly rental but can also be a fixed fee.
Letting agent fees can be very different and they will also vary between national chains and small independent businesses. You should check whether the quoted rates are VAT inclusive.
It’s a good idea to obtain and compare costs from several agents to see the level of service provided and relative costs. Before you start, create a checklist of all the things you would expect from your agent and questions you want to ask them specifically to confirm what’s included.
For example, some agents will include services such as right to rent checks, referencing, tenancy agreement, inventory and schedule of condition reports and deposit registration as part of their package, while others will add extra charges.
If you are planning to invest in property or are thinking about changing your letting agent, we would be happy to chat to you and give you some advice or quote for a bespoke service that meets your specific needs.
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