Every letting agent offers different fees and services. Some agents charge for very specific services with little else. For example, they may charge tenant finding fees for doing just that — finding a tenant. That means no referencing, no drafting a tenancy agreement, and no scheduling viewings.
Before choosing a letting agent you should know what services are included in their fee and which ones are add-ons. Below you’ll find a description of services that letting agents offer and what they entail.
Rentround’s letting agent and property manager fee comparison feature gives you a breakdown of fees and ratings for your specific property location.
Tenant Find Services
This cost depends on how much work you’re willing to do. An online letting agent will charge between £80-200 to find a tenant, perform references, and establish the tenancy agreement. A traditional agent charges between 8%-12% of the monthly rent. The more you pay, the more services you get in return.
The lower fixed fee costs for finding a tenant usually apply per tenant. So if a tenant leaves, you need to fork out the same costs again.
Whereas under a % agreement, if a tenant leaves, there isn’t usually an additional cost for finding another tenant
In some cases, a landlord needs to change the tenancy agreement midway through the term. This can cost between £30-60.
After one year, landlords usually pay a tenancy renewal fee. This fee can be substantial, especially when agents charge as much as they did to find the tenant in the first place.
Fully Managed Service Fees
Letting agents charge between 12%-18% of the monthly rent for fully managed services.
This service includes rent collection, property maintenance, inspections and dealing with disputes.
If you live a far distance from your property or you’re too busy, then fully managed services may be right for you.
You may want to keep an eye on what contractors are used when your property needs maintenance. A letting agent might have ‘preferred’ contractors which may not be the cheapest.
Tell you agent in advance if you want to have an input on which contractor is used when needed.
How Much Does Guaranteed Rent Cost?
Prices generally range from £80-200 annually. The more expensive the policy, the less restrictive and the lower the payout periods.
Under such a policy, if the tenant doesn’t pay up, you still get your money.
Depending on your policy, you may get paid out as soon as the tenant falls into arrears, or you may need to wait 6 months!
Miscellaneous Letting Agent and Property Manager Fees
There are countless add-on fees for letting agents and property managers that landlords should know about. These fees are usually included in the service agreement but some agents charge for them separately.
Here are a few add-on fees to look out for depending on what services you need.
Tenant Renewal Fee
When a letting agent or property manager finds you a tenant, they’ll charge for this and outline the duration of the rental agreement. Once this term ends, if you want to keep the same tenant, many agents charge a renewal fee. This is one of the most frustrating add-one for landlords.
The hard part is already done, which is finding a reliable tenant. Now it’s about writing up a new agreement, updating dates, and other technicalities. To avoid this fee, make sure it’s not included in the agreement. Legislation passed in 2019 states that this renewal fee can’t be passed onto the tenant.
These fees range from £54-120. Once the first term ends, landlords can change the tenancy to “periodic”. This means the agreement becomes a rolling contract with no specific end date under the original terms and conditions.
Reserve Fund Fee
When accidents happen, letting agents and property managers want the money for repairs readily available. They don’t want to chase landlords or worry about transferring funds. Instead, they charge a reserve fund fee.
Agents may collect a certain amount of money from landlords to cover any damages. If this money is used, it’s returned after the agreement ends. When it comes to price, the larger and more valuable your property, the more likely it is that something will go wrong. Expect to pay between £200-1,000.
These are some of the most frustrating fees for landlords. These fees cover minor tasks that should probably be included in the original agreement.
Services like adding your bank account details to the agent’s platform, adding your profile to a system, and recording contact information are all reasons to charge an additional fee. Check the agreement for these fees and don’t be afraid to push back. It’s rare that an agent will turn away your business over refusal to pay admin fees.
Expect to pay between £50-200 in admin fees.
Just like accidents happen, sometimes the relationship between tenant and landlord deteriorates. Things like providing false information, damaging the property, or failure to pay rent are all grounds for eviction.
Landlords must notify the tenant of the eviction and in some cases, it may go to trial. Afterward, reluctant tenants must be removed from the property.
Each step in the eviction process requires time and plenty of expertise, which is why many agents and property managers charge a fee for these services. You need to weigh the cost against the convenience of paying for these services. If an agent can successfully evict your current tenant quickly so you can find a new one, it may be worth the price.
Serving an eviction notice costs £120. The court order can cost as much as £850 and the county court bailiff will run you £250.
Late Payment Fees
In the event that your property requires maintenance or repairs, the letting agent or property manager might cover the initial cost and pay you later. You’re required to pay the invoice within 14 days. Failure to do so could result in a late payment fee. Unless you have a reserve fund set up.
Late payment fees are either fixed at between £30-100 or a percentage of the due payment (between 3% and 10%).
Tenant Late Payment Fees
In addition to you paying on time, you expect your tenants to do the same. Most tenancy agreements state how much extra tenants must pay if they’re late on rent. This extra fee should deter tenants from falling in the rears.
In some cases, agents keep a portion of late payment fees as commission to compensate them for tracking down the tenants and collecting past due rent. Talk with your agent about how much these fees would be and what percentage they would keep.
You don’t want to incentivize agents making money off of late-paying tenants. On average 5-10% of the fee charged to tenants for non-payment goes to the agent or property manager. The tenant usually pays 5% of the monthly rate as a penalty for not paying on time.
These fees only apply if you’re not paying for fully managed services. If you require your agent to perform maintenance, they’ll add an up-charge to the contractor’s fees. This is reasonable, considering the agent made all the arrangements including finding the contractor, scheduling the repairs, and paying them on your behalf.
Maintenance fees range from 10-15% of the contractor’s invoice. But remember, if you’re paying for fully managed services, there should be no additional fee for maintenance and repairs.
If you’re letting out a fully-furnished property or one that contains valuable items and expensive decor, you’ll want an inventory list. This is a detailed record of any items inside the property, which comes in handy in the event something’s lost, stolen, or damaged.
Some letting agents and property managers will compile this list for you and include detailed photographs. For small properties, expect to pay around £100 for this service. Larger properties that include 3 bedrooms or more might cost around £200.
Note that we included this cost in our letting agent fee calculator above.
Additional Letting Agent Fees
Other fees you might encounter include bill fees, estate agent fees, and early exit fees.
The most important thing to remember is to read through your agreement carefully and ask any questions you might have. Clear the air before signing a contract or agreeing to any terms.