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Should landlords use letting agents? Benefits, fees and responsibilities
Letting agents are a popular choice for landlords when it comes to managing a property. They can help take some of the stress away from dealing with tenants and organising rents. In this guide, you will find information on letting agents for landlords, including their services, types of letting agents, their fees as well as pros and cons.
In this guide:
- What is a letting agent?
- What does a letting agent do?
- Letting agent fees
- Online vs high street letting agents
- Pros and cons of using a letting agent
- FAQs
What is a letting agent?
The role of the letting agent varies depending on the level of service the landlord requires. Essentially, a letting agent is someone who acts on behalf of the landlord. They will carry out specific duties based on the type of service the landlord has purchased. These services can include sourcing a prospective tenant, rent collection and full management. Letting agents offer professional help which can benefit new landlords or landlords with multiple properties.What does a letting agent do?
When choosing a letting agent, landlords will be able to decide what type of letting service they need. There are three main types of letting services:- Tenant-find
- Tenant-find and rent collection
- Full management
Tenant-find
As the name suggests, a tenant-find service offers to find a tenant for your rental property. Tenant-find is the most hands-off approach from the letting agent. The service will end once a suitable tenant has moved into the property. With the tenant-find service, the letting agents will:- Advertising and marketing (website, local newspapers etc.)
- Photography of property
- Show prospective tenants around the property
- Check references
- Draw up an agreement
- Collecting the first month’s rent/deposit
- Property inventory (a list of all the items in the property)
- Check-in on moving day to ensure the tenant is happy
Tenant-find and rent collection
A tenant-find and rent collection service is halfway between a hands-off, letting agent service and full management. The service includes the above tasks and bi-weekly or monthly rent collection (depending on the agreement with the tenant).Full management
A full management service means the letting agent is responsible for the day-to-day operations of the property. This service means that the landlord is only contacted during an emergency, at contract renewal phase or the end of a tenancy. Full management services include:- Sourcing prospective tenants
- Tenant viewings
- Credit checks and references
- Property inventory
- Rent collection
- Rent chasing (if required)
- Repairs and maintenance
- Regular property inspections
- Notice processing
- Final inspection
- Deposit dispute handling
General services
All letting agents should:- Give guidance on tenancy agreements
- Explain landlord responsibilities
- Provide answers to any tenancy-based queries
- Know and provide best practice to both landlord and tenant
What a letting agent isn’t responsible for
There can be confusion on the responsibilities that letting agents have. The section above outlines the key letting agent responsibilities, depending on the type of service. It’s equally important to state the areas letting agents aren’t responsible for:- Landlord legal responsibilities
- Rent arrears
Landlord legal responsibilities
It is the landlord’s responsibility to remain on the right side of the law during a tenancy. These legal responsibilities include:- Unpaid bills
- Health and safety regulations
- Data protection
- Tenancy deposit agreements
- Smoke alarm regulations
Rent arrears
All tenants are expected to pay fully and on-time. If you have a full-management service from the letting agent, they will dutifully attempt to have the debt paid. However, the final responsibility still falls to the landlord.Letting agent fees
The cost of letting agents depends on the type of service landlords require and the location of the property. Prices can massively vary depending on location; for example, London will have some of the highest agent fees in the country. Below is the list of main services letting agents offer and the prices you can expect to pay.Tenant-find fee
The tenant-find fee is usually priced at a flat rate. It is usually the equivalent of one month’s rent or a percentage of the overall tenancy contract. It’s important to understand these fees clearly as you may be charged again further down the line. For example, if your new tenant decides to stay beyond their initial contract, you may need to pay a renewal fee to the letting agents.Tenant-find and rent collection fee
Landlords can expect to pay a percentage fee from the monthly rent. This can vary from 5 – 12% in most of England. This price can be higher in London.Full management fee
Like the tenant-find and rent collection fee, full management will cost a percentage of the monthly rent. This percentage can vary widely, but landlords can expect to pay 15 – 20% of the monthly fee. If the tenant renews their contract, you may be able to ask for a lower fee due to the guaranteed rent.Extra fees
A letting agency may charge for extra services that can make a landlord’s life a bit easier. Landlords should know these extra services before agreeing to use the agency. Some services that make have extra fees attached include:- Inventories
- Rent reviews
- Gas/electric safety checks and certificates
- Tenancy references
- Admin fees
- Agreement contracts
Pros and Cons of using a letting agent
| Pros | Cons |
|---|---|
| Can screen prospective tenants to ensure the right one rents your property | Can cost up to 20% of monthly rent depending on the service |
| Can provide minor maintenance | Some can have complicated terms & conditions |
| Can deal with tenant emergencies | Issues between landlord and tenant can take longer due to communication through a third-party |
| Can deal with tenant emergencies | Issues between landlord and tenant can take longer due to communication through a third-party |
| Can inspect the property | |
| Save time and effort | |
| Ensure the property maintains a certain standard |
Online vs high street letting agents
In recent years, there has been a rise in online letting agent services. These services operate exclusively online without a physical brick and mortar location. The online experience comes with its benefits and drawbacks compared to high street letting agents. In this section, you will find a comparison between the two based on essential factors.Cost
The baseline for many decisions comes down to cost, and letting a property is no different. High street letting agents likely have higher overheads, including owning a high-street property. This means their costs are likely to be higher. However, they can also offer a more personal service. Because online services are run exclusively via the internet, their overheads are much lower and can offer a lower price. If you are simply looking for the cheapest way to rent a property, online services are likely to win. However, there are many other considerations to be made when letting a property (see below).Local knowledge
Online letting agents likely operate on a national (or even international) scale. The agents may not live around the local area and lack the knowledge that may help prospective tenants choose your rental property. A high-street agent will be based in your location and will likely have some expert knowledge at hand. Many people refer to search engines when researching an area, so specialist knowledge isn’t as essential as it once was. However, there is benefit in having locally based letting agents is important for other aspects (see below).Inspections and viewings
Many online letting agents do not perform rental checks before or during a rental period. This is likely because it is not feasible for them to inspect all the properties across the country. They are also unlikely to offer viewings for the same reason. An online letting agency may be able to send prospective tenants to a rental property for the landlord to give a viewing. However, this option will vary between letting agents. Inspections and viewings are the bulk of a high street letting agent’s job. They will source tenants, give viewings and provide inspections during the rental period (depending on service).Conclusion
Choosing the right type of letting agents depends on how “hands-on” landlords wish to be with their property. If you are willing to provide your own maintenance and inspections/showings, an online service will suit you. If you are looking to leave most of the property responsibility up to the letting agent, you should look at choosing a high-street agent.What to look for in a letting agent
There are many different letting agents to choose. The quality of service can vary widely, meaning you can have some bad experiences. You should always research the letting agent before using their services. There are key attributes to look out for when choosing a letting agent:- Regulated –– since October 2014, all letting agents have been required to be a member of one of three government-approved letting agency redress schemes.
- Part of the Client Money Protection Scheme –– since April 2019, all letting agents have been required to belong to an approved ‘Client Money Protection’ scheme (to ensure tenants and landlord’s money are protected)
- Quick vacancy fill rates –– an excellent letting agent will have, on average, a rapid vacancy fill rate.
- Fast response –– letting agents should be hungry for new clients, ensure they give you a rapid response to show you are a priority
- Competitive rates –– letting agents should constantly be monitoring the market to ensure their prices are reasonable