Every landlord must eventually decide whether or not to work with a letting agent. This decision could involve considerable money, so you should take your time to find the right agency for your needs.
But what should you expect to pay here?
The cost of hiring a letting agent will vary from case to case.
However, one point still stands: letting agent costs can end up becoming astronomical over time, especially when you’ve got 3 or more properties to take care of.
Carefully consider what profits you may be able to make with a letting agent’s help.
Of course, you can find an experienced property manager to oversee your portfolio, but could you be wasting your money here?
That’s something we’ll explore below.
If you’re new to being a landlord, here’s what you can expect when it comes to paying letting agent fees.
Why should a Landlord work with a letting agent?
If they have an extensive portfolio of properties to manage, most landlords work with a letting agent at one point or another.
It’s impossible to be in multiple places at once to cater to different tenants.
A letting agent can help to bridge that gap.
More hands on deck mean your rental profits are much easier to maintain.
If you’re a new landlord and you’ve not quite got to grips with rental laws, a letting agent can take care of the legal side for you.
They’re well versed in real estate law and ensure you’re always compliant with regulations, many of which cover legal protection for you regarding tenant disputes.
Check also to see if your agent is part of a regulated body such as the Association of Residential Letting Agents, Safeagent (Previously The National Approved Letting Scheme) or the National Association of Estate Agents.
What services do letting agents offer?
If you’re a private landlord, letting agents can offer a variety of beneficial services. These come on a level-by-level basis, with most agencies offering a package of services according to the amount paid.
Many landlords use ‘let only’ services, which is the most basic cover a letting agent can provide.
This means they’ll find and secure a tenant for you, draw up the tenancy contract and conduct all background checks, but you’re on your own once the tenant has moved in.
Some landlords opt for the middle ground service, which involves rent collection.
In this case, the agent will collect rent, follow up on any late fees, and find a tenant for you in the first place.
There’s also a full-service package you may be able to benefit from.
In this case, you’ll have little contact with the tenant before and after they’ve moved in.
Aside from finding the tenant, the letting agent will also be the point of contact for rental payments and maintenance needs.
However, the overall legal responsibility will still be on your shoulders.
What are the traditional letting agent costs?
If you’re wondering how much agents charge to rent your property, you’ll be pleased to find it’s usually only a one-time fee.
This may be calculated at a small percentage based on the rent you charge, or it may be a figure agreed upon during the initial consultation.
How much do agents charge to rent your property?
If you choose the rent collection service on top of the rental service, this fee will be calculated at a steady rate according to the rent collected. You can expect to pay around 8%-10% each month.
The rate will be naturally higher for the whole service, but once again, paid monthly based on the rent you collect. Expect to pay around 15% at the very least.
What does a letting agent contract look like?
Any letting agency contract should be set out clearly, with both parties identified and specific legal clauses stated in full.
The service you’re paying for should be named, as should the fees and percentages you’ve agreed to pay.
You can find many templates online if you want to get a quick overview of a typical contract.
No matter what terms you’re presented with, go through them carefully and make sure you’re aware of what you agree to.
Feel free to negotiate here if you come across any clause you don’t quite agree with. Ask yourself some questions as you go – for example:
Are you getting the services you want?
On the other side, are you expected to pay for a service you don’t want? How long will the contract last, and is the term length something you want to be locked into?
Are there any legal promises included, such as anti-money laundering within the property market clause? Are there any additional tenant onboarding costs?
Can a Landlord let themselves?
Yes. This set-up is known as being a ‘private landlord,’ and you can easily make arrangements between yourself and a tenant regarding a property you own.
However, this can be a dangerous game if you’re new to letting out properties. Letting agents are there to make it easier to navigate.
Similarly, technology is also making it much easier to manage a portfolio without needing extra manpower.
With a bit of handy software on your side like our Alphaletz platform, letting agent fees for landlords can be a thing of the past.
You can keep up with your properties with a touch of a button, with your one-stop dashboard acting as the letting agent itself.
How Alphaletz can help Landlords
Putting a property portfolio together is hard to do alone; it’s why letting agents services are so popular!
But the cost of hiring a letting agent can feel like an unnecessary expense, especially now with all the extra costs of compliance and not being able to charge fees to tenants.
Even if you use an agent or property manager, it’s still vital to keep good records.
And don’t forget, you’ll still need to do an annual tax return.
Having information at your fingertips will save you enormous amounts of time and become ever more important as your portfolio grows,
By getting help from a platform like ours, you can cut back on a lot of unnecessary expenses and turn your investments into a professional business that will scale into the future.
You can even allow other people to log in and run the business for you from anywhere in the world, and from any device.
Also, if you need to know where to go to get valuable resources like insurance and compliance work done, try the Alphaletz Marketplace! You’ll find lots of products and services designed specifically for landlords.
You can book a demo by clicking here so you can get a taste of what our system can do for you, and we’re always happy to answer any questions you might have!
Award Winning Property
Management Software
The #1 property management software for Landlords & Property Managers, as featured by the NRLA.
Related articles:
