Letting out your property allows you to collect a monthly fee whilst your house’s value rises.
However, the time, energy, and costs can be stressful for landlords.
That’s where letting agents come in.
Read on to learn more about what they do, how much they cost, and how to find one.
What is a letting agent?
A letting agent facilitates renting out properties on behalf of landlords.
You can hire them to represent your house and find suitable tenants. They then have a set of keys and act on your behalf to:
- Screen potential tenants
- Collect rent
- Organise maintenance (such as painting, gardening, etc.)
- Orangise inspections (for Gas Safety Certificates, electrical issues, etc)
- Negotiate monthly rent prices
- Renew contracts
- Handle disputes over deposits.
The more of these roles you ask your letting agent to perform, the higher the price you’ll pay.
Where to find lettings agents
Most major estate agency companies tend to have a lettings department. And some independent lettings agents work only in this field.
Most cities and towns have multiple companies offering this service. So, it’s worth doing basic research and talking directly to different agents to find the best provider.
How much do letting agents charge?
Both types of letting agent usually charge monthly fees.
Some offer a discount if you pay for a full year up-front. And give a discount if you hire them for several properties simultaneously.
They usually charge a percentage of monthly rent. This is around 10% for simple rent collection.
But if they arrange inspections, maintenance, and negotiating prices each year, it’ll go up to roughly 15%.
This price varies based on the money you’re bringing in from your property. For example, for a fully managed service, it would be:
- £1,000 per month rental property = £150 cost
- £1,500 per month rental property = £225 cost
- £2,000 per month rental property = £300 cost
- £2,500 per month rental property = £375 cost
- £3,000 per month rental property = £450 cost
As mentioned above, your monthly fee will usually be less than this if you only pay for rent collection and nothing else.
Your location also has a significant impact on the costs. Fees are typically higher in London and lower in rural Wales and Scotland, for example.
Do letting agents charge more for bigger properties?
Letting agents don’t typically charge based on the size of your house. They charge according to the monthly rental fee.
However, there tends to be a correlation between the size of a property and how much it costs tenants to live there.
Ways to keep down cost of a letting agent
Manage your own property
The simplest way is to manage the property yourself.
This will involve a time commitment but shouldn’t involve extra costs. You’ll need to decide whether you can handle:
- Collecting rent
- Negotiations
- Arranging damage inspections and repairs.
And more.
Negotiate with letting agent
Consider negotiating on price with your letting agent. Most larger companies are not open to this idea, as their rate is ‘set in stone’ beforehand.
But some of the smaller, independent organisations could consider it. This is especially common in major urban areas where competition is fierce.
Select tenants carefully
You should take extra care with your renter selection at the start. This is one of the biggest influences on your costs.
A problematic tenant will result in regular repairs and inspections, which you must pay for.
They’ll often pay late, too. Be ‘slow and steady’ when vetting people at the beginning. It’ll pay off in the long run.
Shop around
Ensure you get a price quotation from several letting agents before you decide.
You shouldn’t rush into the first one you speak to. Clarifying that you’re looking around could make some firms more willing to negotiate.
Circumstances when using a letting agent is useful
You’re busy
A letting agent can be beneficial if you’re short on time.
Perhaps you’ve got a full-time job, meaning managing your rental daily isn’t practical.
Or you could take regular holidays or have to travel to work regularly.
You’re a first-time landlord
It’s also helpful to be supported by a letting agent if this is your first time being a landlord.
You’ll probably need advice and support at various steps along the way.
And your letting agent could know the best handymen in the area, who you can use if something gets broken.
Circumstances when a letting agent is not needed
You’re an experienced landlord
On the other hand, a letting agent is less valuable when you’ve got experience as a landlord.
In this case, you are comfortable and competent at arranging inspections and repairs yourself. And you likely know trusted professionals in the area who can help with the latter.
You want to maximise profit
There are also financial advantages to sidestepping a letting agent. You keep all the income yourself. This means that your home ownership is more profitable.
You also won’t have to get someone’s opinions on your choices.
You’ll be in the driver’s seat – and while it needs more time and effort, the reward is more significant.
