What letting agents charge a landlord, and what you get for it
Letting agency fees are quoted in a way that makes comparison hard, not because anybody is being clever about it, but because agents genuinely package the work differently. Three quotes for “full management” can cover three different sets of jobs.
The three usual shapes
- Tenant find. The agent markets the property, does viewings, references the applicants and sets up the tenancy. Then they hand you the keys and step back. You are the landlord from that point on, for everything.
- Rent collection. Tenant find, plus chasing and collecting the rent each month and paying it over to you. Maintenance and everything else is still yours.
- Full management. All of the above, plus the day to day: repairs, contractors, inspections, the tenant ringing at nine at night about a boiler.
Tenant find is usually charged as a one off, often expressed as a number of weeks of rent. Rent collection and management are usually a percentage of the rent each month. Whether that percentage is quoted with or without VAT matters as much here as it does in sales, and for the same reason.
The charges that are not in the headline
The monthly percentage is rarely the whole picture. Ask specifically about each of these, because they are the ones that appear later:
- Setting up the tenancy, and referencing each applicant
- Renewing a tenancy, or a periodic renewal fee
- Registering and protecting the deposit
- The inventory at the start and the check out at the end
- Arranging safety certificates and their renewals
- A commission or mark up on contractors’ invoices
- Serving notice, and anything to do with possession
- Handling a deposit dispute
That last group is where full management earns its money or does not. A landlord who has never had to serve notice or defend a deposit deduction may reasonably wonder what the monthly percentage is buying. A landlord who has done both usually stops wondering.
What tenants can and cannot be charged
Fees charged to tenants in England are tightly restricted by the Tenant Fees Act 2019, and there are equivalent rules in Wales and Scotland. Broadly, most of the old administration and referencing charges to tenants are banned, and deposits are capped. The detail is precise, it differs between nations, and it is exactly the sort of thing that should be read at source rather than paraphrased on a website.
If you are a tenant being asked for a payment you were not expecting, the government guidance on the Tenant Fees Act is the place to check, and your local council has a trading standards team that enforces it.
Judging an agent, not just a price
For a landlord, the questions that separate agents are about what happens when something goes wrong.
- Who holds the rent, and how quickly does it reach you?
- What is the limit above which they must ask you before spending on a repair?
- Do they use their own contractors, and is there a mark up?
- How often do they inspect, and do you get the report?
- What do they do in the first week the rent does not arrive?
An agent who answers those clearly is describing a process they actually run. An agent who answers them vaguely is describing an intention.
What we would say
Ask for the total annual cost on your actual rent, including VAT and including every fee on the list above, rather than a percentage. Then the three quotes are comparable for the first time.