A Complete Guide to Letting Agents Fees For Landlords
Letting agents offer an essential service for those needing to rent a home. Still, most landlords also find letting agent’s services a convenient and time-saving way to manage their property, find tenants and collect monthly rent money. It is also a good idea to get loss of rent insurance to protect your rental income should your tenants be unable to pay rent for whatever reason.
If you are a landlord with multiple properties, it can take up all your available time if you try to manage them yourself. Letting agents can be a valuable way of taking the weight off your shoulders, but their services come at a cost.
But what do letting agents do, and are their services worth the money? In this guide, we look at letting agency fees and how they can work to assist you in effectively managing your rental properties.
What Are Letting Fees For Landlords?
Letting agents’ fees to landlords are payments charged by the letting agent to the landlord for the services they provide. Each letting agent will set its own rental agent fees, so if you look around, you may notice some agencies are cheaper than others.
However, it is worth checking the fine print to learn precisely what services are included in estate agent fees for letting properties because they can differ significantly between providers. Some letting agents will consist of tasks like finding tenants and reference checking in their letting agent fee, but others will add this as an extra service.
If you are a landlord with sitting tenants and you only want them to manage the property for you and collect the monthly rent on your behalf, you may be able to get cheaper monthly letting agent fees.
How Much Are Letting Agents’ Fees?
What you will pay for your letting agents fees will depend on the services you choose to use. In many cases, letting agents will charge a flat fee for their services or a small percentage on your monthly rent collection to cover their ongoing property management services.
Letting agents will often break down their services, and landlords can choose which ones to utilise that best suit their needs. Typical Estate Agent’s Fees can include:
- Domestic Vs Commercial Letting Agent’s Fees: If you are a landlord that owns a domestic property or properties, your letting services will be very different from that offered by a commercial letting agent, and therefore the fee structure will be different. Commercial letting agents only deal with retail and industrial property such as shops, warehouses and factory units.
- Finding Tenants Fees: If you don’t have the time to find tenants for your property yourself, a letting agent can do this for you and charge a fee for the service. This involves a lot of work, including finding and vetting suitable tenants, completing the referencing process, collecting a deposit, and drawing up the tenancy agreement.
- Rent Collection Fees: Once you have a tenant in place, you will need to collect monthly rent from them. A letting agent can do this on your behalf, and it will then be their responsibility to chase up any rent arrears with your tenants. If you are a landlord with multiple properties, this service can allow you to avoid the hassle of chasing up late payments by yourself.
- Full Management Services Fees: This is a comprehensive charge included in your estate agent’s letting fees when you place the entire responsibility of managing your property into the hands of the agent. Full management services include all of the above-listed services. They will arrange your annual gas safety inspections and organise any repair and maintenance work needed to keep your property in good order.
- Letting Agent’s Fees For Tenants: Since 2019, there has been a ban on letting agent’s fees for tenants. The Tenant Fees Act 2019 came into force on 1 June 2019 and means that letting agents can no longer charge fees to tenants taking on a rental property. This act includes assured shorthold tenancies, student housing and lodger agreements.
Do I Have to Pay A Letting Agent, Or Can I Do It Myself?
As a landlord wanting to rent out your property, you are under no legal obligation to use a letting agent. If you own a single property and think you can manage it yourself, you can avoid paying estate agent fees for renting out your property by doing everything yourself.
Suppose you decide to go it alone but eventually find that managing the property is too much for you. In that case, you can allow a letting agency to take over some or all of your responsibilities.
For example, if you are happy to collect the monthly rent and schedule all of the maintenance jobs and annual safety checks yourself, but you don’t have the time to find an ideal tenant, you can hire a letting agent to do this for you. You would only need to pay a one-off tenant finding fee, but it can be reassuring to know that your letting agent will thoroughly check references to find you a perfect tenant and efficiently source their rent deposit for you.
Once you have your tenant in place, you need not have any more dealings with the letting agent until your existing tenant decides to leave, and then you can hire them again to find you a new tenant.
Do I Still Need Landlord Loss of Rent Insurance If I’m Using A Letting Agent?
Suppose you rent out single or multiple properties. In that case, it’s a good idea to have landlord insurance that covers the loss of rent insurance to help protect your monthly rental income, especially if you rely on this income to pay your mortgage or household bills.
If you are renting out a property using a buy-to-let mortgage, the mortgage provider will insist you have landlord insurance in place. It makes sense to include loss of rent insurance on your policy so you can keep up with your mortgage repayments.
Your loss of rent insurance will also cover your loss of rental income for any time your tenants cannot live in the property due to a serious fire or flood that makes the building unsafe or unliveable. This insurance would enable you to continue bringing in a monthly income until your property is made safe and your tenants can return and start paying rent again.
While becoming a landlord and letting out your property is a satisfying thing, this business comes with many risks that you need to mitigate with the right insurance cover.
Whether you choose to use the services of a letting agency in part or to manage your rental property entirely is a personal choice, but regardless of your choice, you should ensure you protect yourself with the proper insurance to protect your business. Looking for affordable business insurance options? Look no further than Brisco Business.
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