It would be nice if everything was free. But that is not how the world works. When it comes to renting your property, you could do it yourself and save money. Or you can hire a letting agent to handle the hard work for you.
Paying a letting agent to handle the stress of finding a tenant, collecting your rent, and so on, lets you focus on other important matters in your life. It is money well spent as you have fewer headaches when it comes to your rental properties.
There are 3 levels of letting agents and each level has its own fee structure. The amount you pay will be determined by the number of duties your letting agent has to perform. Here is the approx. letting agent fee structure for those 3 levels and their duties:
Their duties include: finding the tenants, depositing the rent cheques, doing reference checks, inventorying the contents of your home, and writing the tenancy agreement.
For doing all of this for you, this level of letting agent charges 3 to 4 weeks of rent or 6 to 8 % of the monthly rent for the entire term of the agreement.
All of what #1 does plus collecting the rent and going after missed rental payments. For this service, you are charged 8 to 12% of the monthly rent
All of the above plus handling maintenance & repairs as well as being the point of contact for your tenants. For this full service expect to pay between 10 & 15% of the monthly rent.
This is an important aspect of being a landlord. Different estate agencies charge different fees for different activities involving your home. For example, they may charge a flat fee of £500 to find a tenant while other companies may only charge a percentage. One firm charges 10% for that service.
On the other hand, the tenant finder agency that charges a flat fee to find the tenant may also charge a lower management fee while the latter option above will charge a much higher one. For example, 9% to 16% just to manage your property.
There is something you have to be aware of. There are letting agents who will overcharge on maintenance and other repairs. For example, they may charge you £45 just to get new keys cut for the tenants. Or £450 for a new gas certificate.
To help you find the right letting agent, you need to see their list of additional fees. That way you can pick the best one for your property or decide to not have a full-service agent working for you.
Everything is higher in London than it should be. There is a high demand for rentals in the city and that demand pushes prices higher including letting agent fees.
The amount that you will pay will depend on the individual agency. As an example, local letting agencies may charge you a one-time fee of £2350 on a rental of £1750 per month. A high street agency may charge you a one-time fee of £3675 for the same rental price.
For a home renting at £2500, the local agency may only charge you a one-time fee of £3160, while the High Street agency may charge you £5250. You may be able to negotiate with different agencies to bring those costs down.
However, there is some good news here. There are letting agencies that try to undercut the competition. They want your business and have figured out a better management and operation style that cuts their costs.
For the same two properties mentioned immediately above, these agencies can charge as little as £1138 for both rental figures. Before you go with them, make sure to check their references out and see what the reviews say.
The key is to watch out for any hidden fees that they may not disclose in their initial meetings with you. When you do some comparison shopping, you may find that some agencies will go as low as £600 for their services.
Others will charge you 4 weeks of rent in exchange for their services. For example, if you rent at £300 per week, then their fee will be £1200. You just have to shop around to get the best deal.
The government enacted The Tenant Fees Act which restricts what type of fees can be charged to the tenant. According to the act, “most letting fees and caps tenancy deposits paid by tenants in the private rented sector in England.
The ban on tenant fees applies to new or renewed tenancy agreements signed on or after 1 June 2019.”
Also, most letting agents charge the landlord for their fee, not the tenant. According to the ACT, “The party that contracts the service – the landlord – will be responsible for paying for that service…”
It pays to talk to experienced people in the rental business to make sure you know your rights as a tenant and what fees you are expected to pay.
Those fees are outlined in that Act so there is no confusion on this issue.
Hiring a letting agent certainly takes the stress out of finding good tenants. They do all the work for you but their fees may not be as attractive as you would like.
To help you navigate this estate minefield, give our company a call. We have over 10 years of letting agency experience. We handle your property like it was our own. Our fees are reasonable in and out of London.
Check us out and see why we have a great reputation.
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