How much is a letting agent?

Once on the viewings, if an application is made, a holding deposit is taken, and the referencing process starts. A good agency should be taking paperwork inhouse before the referencing process so that they can see what the applicant looks like on paper for more control over the application.

Once a tenant has passed their references, then it is an agent’s job to organise the legal paperwork and making sure a landlord is compliant and the move in process begins. A deposit will be received along with the rent and the paperwork is signed, contracts are signed, and the tenant has the keys.

So, let’s take a look below at what it costs for a letting agent to rent your property.

Online Agency: £30-£150

For this service, an online agent will charge approximately this price. You are paying for the advertising online and maybe the referencing procedure as an addition, you may have more control and must get involved a lot more, but you do get what you pay for with this service. Some landlords like this as it gives them more control over the rental and vetting process. If you are a landlord that likes the control element of things and just need someone to market the property, then I would suggest this route. Please note that this option is way more labour intensive for the landlord.

Start Up Independent: £250 – £600

This is still (in my opinion) quite a low fee if an agent is doing the work properly, if they are doing the work properly then it may be because they have just started out or their costs are quite low.

If a letting agent is conducting a rental process in the right manner and not taking risks, meaning they are compliant and choosing an adequate tenant with their processes, then it can be quite a laborious job.

The paperwork takes time to collate for more than one tenant, time to go through bank statements making sure they look in order (check out my video in this link of what to look for in a tenants bank statements) and setting up the whole process can take time, especially if certificates needs to be done, an inventory booked in and certain maintenance procedures such as smoke alarms need to be put into the property. There can be a lot to go through and is a stringent process if done correctly before the contracting signing phase. The prep needs to be done right as a tenant has more rights than a landlord once keys are handed over, this is truly what you are paying for.

So, there are a lot of good independents that might have low staff levels, where the owners do things themselves or they work out of a serviced office and may not have the same overheads as a high street agent. There is nothing wrong with this, but just make sure you are checking out reviews and doing your due diligence before committing.

Small Independent: £800 – £1500

A Small Independent is an agency that hires more than 3 people and has at least one shop or serviced office, up to about 5 shops. They may also have a reputation and have been open for a while.

This might seem quite a large chunk of money and the equivalent of one month’s rent for some landlords but if you take experience and expertise into the equation, then this is not a huge amount of money when looking after your asset, especially if you want someone to do all of the donkey work and you obtain a good tenant in the process that pays your rent. This amount costs a lot more if the preparation is not done correctly and a bad tenant is found!

Please note that most agents will usually do you a better deal on the finder’s fee if you are giving the property to them for full management or rent collection and they get your repeat business over the term of a year. This would usually bring the finders fee down substantially, so it is important to know this prior to giving it to an agency to rent. If an agency knows that they are in it for the long haul, then they do not mind taking the hit on the upfront cost because they will make it back over the years term and potentially longer.

Please note that there is a lot that goes into the upfront preparation of a good tenancy, a good tenant is all in the preparation and that is usually the reason why you have a smooth tenancy during the rental, it is because the agency found the right tenant with the right character, has the right paperwork and the setup was smooth.

Large Independent or Corporate Agent: £800 – £2000

This is usually a large global chain or independent with over 5 offices around the UK. These companies have set pricing systems and cannot deviate from their price banding. There may not be much room for negotiation as they have higher fees to pay and higher targets to hit.

A plus point with a large agency is that they will have a history and will always have staff available to handle the process, although may have a higher turnover of staff. Plus, they have brand awareness.

The downsides could be staff turnover and that certain administration and property management can be moved to remote centralised offices where the intimacy can be lost as a drawback.

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