Letting Agent Fees Explained For Landlords

How much do lettings agents’ fees for landlords cost, and what will you get for your money?

Naturally, you don’t want to eat into your profit margins. But some services are hard to replicate alone, not to mention that getting an experienced letting agency to handle things can save you time and hassle.

Perhaps you own several rental properties across Merton Park, Wimbledon Village, Kingston or Battersea, and you need to streamline the associated workload. It could be that you’re juggling your rental property portfolio with other work, or just want to benefit from a local agent’s expertise.

Here’s what you need to know about letting agents fees for landlords in south west London.

What are letting agent fees for landlords?

Letting agent fees cover everything from marketing the property to collecting rent, property management and cleaning after check-out. The total you’ll pay depends on the level of service you choose, but it’s important to note that they’re the landlord’s responsibility.

Under the Tenant Fees Act 2019, landlords are banned from charging tenants certain fees. The aim is to make renting more affordable and transparent, so you must factor them into your costs.

Typical letting agent services & fees

Think about the level of service you want from your letting agency to work out what you need. These are the average letting agent fees for landlords in London.

1 Tenant Finding

London landlords pay an average 6% and 13% of the monthly rent for the letting agents to find tenants. This typically includes marketing the rental property, carrying out tenant checks and preparing the tenancy agreement. In summary, it can involve:

• Advertising the property online and in local listings.
• Arranging and conducting viewings with prospective tenants.
• Tenant referencing, credit checks, and background checks.
• Drafting the tenancy agreement and securing signatures.
• Collecting the initial deposit and first month’s rent.

2 Rent collection

In addition to a ‘tenant find only’ agreement, you may want to upgrade to a rent collection service. This allows your letting agency to chase up rental payments on your behalf. You should budget for letting agent rent collection fees to cost somewhere between 5% to 10% of the rent amount.

This letting agency fee covers finding tenants, collecting rental payments and chasing arrears throughout the tenancy. In summary, it can involve:

• Collecting rent from tenants: The letting agent will collect rent on behalf of the landlord, ensuring it’s paid on time each month.
• Chasing late payments: If the tenant misses a payment, the agent will handle reminders, communication, and may take initial steps to resolve late payments.
• Providing rent statements: Many agents provide regular statements to landlords showing rent payments, fees, and any deductions. This ensures that a clear paper trail is kept.
• Handling rent arrears: If tenants fall into arrears, agents may pursue the tenant for the overdue amount. They could initiate legal action on behalf of the landlord if necessary (though this may incur additional legal fees).
• Transferring rent to the landlord: Once rent is collected, the agent will transfer it to the landlord’s account, minus any agreed-upon fees.

3 Full management

Agents will charge around 14% to 20% of your monthly rental payments for full property management services. For this fee, they can also field calls from the tenants about repairs, and to take care of everyday maintenance issues in your rental property – as well as the features of the previous two services mentioned. This is one of the main reasons to use a letting agent, rather than going solo. In summary, it will likely include:

• Collecting rent on behalf of the landlord.
• Conducting regular property inspections.
• Handling tenant queries, repairs, and maintenance issues.
• Managing renewals and any rent increases.
• Dealing with legal issues such as eviction processes (if required).

4 Rent guarantee

Rent guarantee insurance can cost between £160 and £300 on average, and cover rent arrears as long as you meet the necessary conditions.

Online letting agent fees for landlords

When you compare letting agent fees for landlords at high street estate agents versus online agents, bear in mind that many just provide a let only service. Average fees charged by online letting agents are lower, but you have to take on much more of the work yourself.

Other letting agent fees to consider

Some agents charge a universal fee, while others break down each service separately, so it’s important to know what’s included. Make sure you ask questions about the level of service offered, as you may need to pay fees like:

• Administration fees – Letting agents fees for landlords to sign up or for administration start at £100, sometimes rising to £500 or more. This covers the costs of processing and managing essential paperwork.
• Renewal fee – The average letting agents renewal fee is between 8% and 15% of the value of the monthly rent in London, which landlords pay when the tenancy is renewed after the initial term has ended.
• Check-in and out fee – Landlords may also have to pay ‘check-in’ fees of £100-£200, and check-out fees of about £100. This covers several tasks, for example, meeting with the tenant as they move into the property to discuss any housekeeping, or conducting inventory checks.
• End of tenancy cleaning fee – Depending upon your contract, you may pay a cleaning fee of around £150 or more at the end of a tenancy. This varies according to the size of the property and the specific agreement in place.

Before you sign the contract with a lettings agency, make sure you know what’s included in the fees – whether the above costs apply to you or not.

Do I need to use a letting agent?

It’s possible to rent out a property without a letting agent, but it can be more challenging. Explore all of the pros and cons of using a letting agent, and ensure you understand what you’re taking on if you go it alone.

Local property agents know the type of tenants looking to rent in your area, and can market your property accordingly. Not to mention, many major property portals like Rightmove and Zoopla only accept listings through letting agents. As a result, landlords typically engage a letting agent on a let only basis, at the very minimum.

Taking care of documentation yourself can save money, but you must be thorough to protect your buy-to-let investment (e.g. through careful tenant screening). As a landlord, you’re also legally bound to protect the tenant’s deposit in an approved scheme, carry out right to rent checks and safety checks.

While you may pay a fee for the privilege, an experienced agent’s support can help to ensure nothing’s missed along the way.

And finally

At Robert Holmes, we offer a choice of our full management service, or a letting and rent collection service. This means you can select the landlord services that are right for you and your property portfolio. If you’re a landlord in Wimbledon Chase, Roehampton, Putney or Wandsworth, contact us to discuss the best options for you.

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