What does a letting agent do?
A letting agent acts on behalf of a landlord, assuming responsibility for various property management tasks in return for a fee (often a percentage of rental income). The degree to which a letting agent is responsible depends on your individual arrangement but can commonly include tenant find, rent collection, inspections and managing tenants.
When using an agent your involvement is reduced but you remain ultimately responsible as the property owner, so it is important to choose wisely.
Types of letting agent
Not all agents are alike, and their skill set, expertise and competence will vary depending on their speciality. The common types of letting agent you will encounter are:
- Local - Typically small businesses that operate in a specific area. They will often have a good knowledge of the local property market and can offer personalised service. Good for single property or localised portfolios but may be less suited for high volume professional landlords.
- National - Larger companies with offices nationwide. They may have a broader range of services but can sometimes lack the personal touch. Usually, national agents have more marketing power. If you have multiple properties in different cities, this may be a good option.
- Digital – Online only businesses that usually have a large selection of properties and charge minimal fees, making them popular. However, much of their business occurs over email live chat which is worth considering if you like traditional face-to-face or phone interaction.
What services are offered by letting agents?
How involved a letting agent is in your property will depend on your individual agreement and needs. There are 3 levels of service typically offered by letting agents:
- Tenant Find – The agent assumes responsibility for finding suitable tenants for the property as a one-off service, including professional photography, floorplans and advertising. They may also conduct viewings, carry out referencing, put tenancy agreements in place and create an inventory as part of the service. Once a tenant is found a move in date is established and ongoing management is carried out by the landlord.
- Rent Collection – An ongoing service for the duration of the tenancy the agent will assume responsibility for collection of rent and handle the legal requirements around protecting the tenants deposit. They will also chase tenants for any rent arrears and may even offer insurance to protect your income in the event of non-payment.
- Fully Managed – The agent assumes complete control of managing the letting including all services in Tenant Find and Rent Collection. Additional services include all correspondence with the tenant(s) during the tenancy, arranging maintenance, onboarding tenants and finalising tenancies (including handling disputes).
How much does a letting agent cost?
Letting agent fees will vary depending on factors such as property type, location and service level but as a guide below are some examples of what you can expect to pay.
Tenant Find is typically a one-off cost equivalent to 1 months rent and Rent Collection services would normally be a monthly fee of around 5% of your rental income (plus VAT). Fully Managed is usually charged as a percentage of the monthly rent which can range from 10-15% (plus VAT). So, if you’re renting out a property for £750 per month, you can expect to pay £112.50-£156.25 in fees to your letting agent each month.
Properties with multiple tenants (HMO’s) often incur higher fees due to the increased work involved for the agent. The exact pricing structure, what’s included and what is an additional cost will depend on the agent, so it is always worth getting written confirmation of costs and terms to review before committing to ensure there are no surprises.
Letting agents – What to consider
The benefits of using an agent are well established, they assume control of all or some of the management tasks to reduce the workload of the landlord. This makes them a good option for landlords who don’t want to be or cannot be hands on (such as landlords who are not local to their property).
This service of course comes at a cost, so you need to ensure that any fees work within your personal budget. A less talked about consideration of using an agent is that they will own the relationship with your tenants so you will not have the same opportunity to directly influence the longevity of your tenancies.
It is important to note that as a landlord you are still ultimately responsible that government regulations are followed for your property even if you employ a letting agent. It is therefore key to make sure that you use a reputable agent as their conduct may have implications for you. It is always a good idea to carry out your own due diligence by getting personal recommendations and reading reviews before committing.
What does managing your own property involve?
In self-management a landlord takes ownership of all aspects of the lettings process. This may involve them personally carrying out activities or they may outsource individual tasks to professionals with more expertise. Managing your own property is a rewarding and cost-effective approach but will require more personal involvement than using an agent.
To effectively self-manage you need to have a good understanding of your obligations and clear plan for handling common landlord tasks.
What do I need to know to let my own property?
Knowledge is power, and a key focus of self-management should be understanding your role and responsibilities as a landlord and how to make you property compliant to let. This will give you a solid foundation and ensure that you operate in accordance your obligations under government legislation.
Equally as important is understanding the management tasks you will be expected to take on (or outsource) as a DIY landlord. This may seem daunting at first, especially to a new landlord but there are many quality resources to help you get up to speed. Our guide to managing your own rental property covers the full landlord journey and is a great place to start.
Common landlord tasks
Every tenancy is unique but the most common tasks a landlord will have when managing their own property will be:
- Advertising your property & finding tenants
- Credit checking, vetting & referencing prospective tenants
- Creating a tenancy agreement
- Protecting the Tenancy Deposit in a approved scheme
- Rent collection
- Property inspections and managing issues
- Tenancy finalisation and returning the Tenancy Deposit
There are some great service providers that can help you self-manage with companies such as OpenRent providing many of these services for a one-off fixed fee.
As a DIY landlord it is also worth considering property cover from a provider such as Hometree or 24/7 Rescue. This can help keep unexpected costs down and can give a dedicated resource to call out for issues with the heating, plumbing or electrics.
Self-management - What to consider
The most obvious benefit of self-letting is the cost saving as there will be no letting agent fees to reduce your margins. There are also secondary benefits such as the ability to personally control the relationships with your tenants and many DIY landlords report that it is a personally rewarding experience.
The cost saving will however come with additional responsibility and involvement so self-management is best suited to those looking to be more hands on. However with modern service providers you can now outsource individual aspects of the process to reduce your personal involvement where needed for much less than a letting agent would charge.
How Sharehouse can help with self-management
We were created to specifically support DIY landlords by making self-management simple. Our free online library of landlord resources contains everything you need to know and our network of service providers brings together industry leading companies in one place top help with all stages of the rental journey.