Should landlords use letting agents? Benefits, fees and responsibilities

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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.

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

Additional services may include:

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

Within a full management service, there are still different responsibility levels, which is decided by the landlord. Landlords should discuss with the letting agent, what they expect from the service. For example, some landlords like to know when emergency repairs are being made in the property. Some landlords like to organise the repairs themselves. Discuss any thoughts with the letting agent before signing any agreement.

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

You can find out more about landlord responsibilities by visiting our guide – landlord responsibilities: utility bills, council tax, maintenance and more

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

Letting agents can offer advice and knowledge in these areas. They can even help assist in some of these situations. However, the liability of these issues falls directly to the landlord. It is important to find professional letting agents to ensure they monitor any changes in the rental situation and report it immediately to you.

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

FAQs

How much are letting agent fees for landlords?

As mentioned above , the price of agent fees varies depending on the type of service and the location of your rental property. It is worth hunting around for the best price available based on your area. You could also research online letting agents to see if their specific style of service suits your need.

Can a letting agent charge to accompany landlord for inspection?

Yes, but they should make this clear. Some letting agents may charge extra if they accompany the landlord for inspections. They should make this as clear as possible to the landlord. You can ask a letting agent for a list of their extra services to ensure you do not get charged with any hidden costs.

Do letting agents charge the landlord for every repair?

This can depend on the specific letting agent, but the likely answer is yes. Most repairs will have a cost such as replacement parts and the hiring of a professional. These costs will likely fall to the landlord to cover.