Average estate agent fees for renting

Navigating estate agent fees for renting is a bit more complicated than you might think. After all, there is no industry-standard pricing that all agencies must legally comply with. 

Letting agents can offer landlords different services. Do you just want a tenant-finding service? Let-only? Rent collection? Or a comprehensive full-property management service where the letting agent looks after the whole scope of management tasks that would otherwise fall under your responsibility as the landlord?

Letting agents’ fees for landlords

Costs are high at the moment, and like many other landlords, you are probably thinking about ways you can bring down your spending on overheads while also keeping tenants satisfied. 

Many landlords, however, decide to use the skill set that letting agents have, so we have decided to take a good look into the average estate agent fees for renting and how this may impact you if you are looking into renting out your property.

What’s the difference in cost between a ‘let-only’ and a full management service?

These are the two primary service categories that letting agents typically provide. The difference is that you get a much more comprehensive package with a full management service, and the letting agent will take the property management almost entirely off your hands. 

Let-only services, however, will only find your tenants and process the paperwork, and the rest of the management will be up to you to sort out. So, ultimately, you will need to decide which service you want to invest in and which will benefit you the most. 

What does a let-only service entail? 

A ‘let-only’ service means that the letting agent takes responsibility for tasks such as coming up with a rental assessment to give you an accurate idea of how much rent you can realistically charge tenants, conducting viewings of the property on your behalf, and performing tenant referencing.

Typically, a letting agent’s ‘let-only’ service could also take care of the tenancy agreement, credit checks on prospective tenants, and take the tenant’s first payment, as well as set up any direct debits. 

What a full management service entails 

A full management service will do all the above and also take the responsibility for the day-to-day management of the property off your hands as the landlord. This means that in the event of the tenant locking themselves out or the boiler ceasing to work, for example, the letting agent will arrange for one of its approved contractors to sort out any issues. 

Remember, you must first receive tenants’ permission to access the property for property inspections or repairs. 

Estate agent fees for renting

As you can tell, there will be a clear difference in estate agent fees for renting depending on which service you choose to take on, but knowing the letting agents’ fees for landlords can be tricky to figure out.

It’s important to note that many letting agents may be open to negotiation on prices, however, so make sure to do your homework by speaking to different companies to see which one suits your needs best.

So, as a starting point, you could simply request pricing from two or three letting agents in your locality and negotiate prices from there on. 

Usually, if you opt for a full management service (typically a 12-month deal), a letting agent will charge 10-15% of the monthly rent. But, on the upside, you do get a lot for your money, and full management service can include: 

• Property advertising
• Tenant search and reference checks 
• Rent collection 
• Compliance and safety updates on your property
• Regular inspections
• Monthly income statements
• Maintenance management
• Annual gas safety certificates
• Plumbing and electrical cover
• Boiler servicing
• Legal eviction coverage
• Monthly income statements

Understanding different services and fees for landlords

As a landlord, you will have different reasons for wanting to rent out your property, and this may dictate how much time you have to spend on the logistics and administrative tasks involved in letting out a property. So, let’s look at the different services a letting agency might charge you for. 

Sourcing tenants

The basic service level, known as “let only,” involves your chosen letting agent finding tenants, conducting financial checks to ensure they’re reliable, collecting a deposit, and drafting the tenancy agreement. They’ll keep you informed throughout and may arrange the inventory if your property is furnished or unfurnished.

Collection of Rent

“Rent collection” includes all of the above, plus the agent takes care of monthly rent collection and monitors any late payments. This may be a relief for you as the landlord because you wouldn’t have to be the one chasing up late payments or managing rent collection in general. 

Complete property management

For those who want a hands-off approach, “full management” covers everything mentioned earlier, along with maintenance and repairs. The agent becomes the primary point of contact for your tenants, which is particularly beneficial if you’re abroad or simply would prefer to delegate responsibility to the agent.

Tenant letting fees

Now, let’s take a look at a breakdown of typical estate agency letting fees for landlords:

• Sourcing tenants: This usually incurs a one-off fee, which can sometimes equal a full month’s rent.
• Rent collection: If you add rent collection to the service, expect to pay a percentage of the monthly rent, typically ranging between 5 and 10%.
• Full management: Opting for full management entails a higher fee, often up to 20% of the monthly rent, covering comprehensive property oversight and tenant relations.

These services and fees vary, so it’s wise to consider your preferences and budget when choosing the level of management that best suits your needs as a landlord.

Location and estate agent and letting fees for renting

Bear in mind that the cost of rent always varies depending on location, and 10-15% of monthly rent in London, for example, may amount to you giving a large chunk of money to an agent every month. According to Zoopla, the average rent in London is £2,121 pcm as of April 2024. 

With online letting agents, is it still worth using a traditional letting agent?

In today’s digital age, where a lot of information is easily readily available online, you could try conducting traditional letting agents’ duties yourself, as you might be attracted to taking a ‘DIY’ approach to the initial letting or the complete management of your property. 

Admittedly, doing all of your property management can be difficult. Still, it all depends on factors like the level of landlord experience you have, the size of your property, and the nature of your tenants. But doing it yourself isn’t impossible. 

Finding your tenants without needing a letting agent’s support may be a more realistic option for you, although this still requires a heavy time investment. Nonetheless, tasks such as property viewings, tenant referencing, and tenant deposit registration can be done for little or nothing. 

So, from a financial point of view, this route may make good sense. Only you, as a landlord, can ultimately make a decision that fits in with your circumstances, requirements, and experience. 

Essentially, the amount you end up paying will be largely affected by what you sign up for. This is why, before accepting a service, you should read the attached T&Cs carefully to make sure you aren’t landed with an expensive service you never really needed.

Landlord insurance

Another cost you’ll need to consider is landlord insurance to cover yourself against eventualities and risks. Landlord insurance policies can cover you in the event of loss of rent, fire, theft, damage by tenants, and more. 

CIA Landlords can compare landlord insurance and find you the most cost-effective deals in no time. Get a quote here or call us on 01788 818 670 today.