Let’s face it: renting is expensive, and buying a home can be even more so. If you’re a letting agent, you are similar to a property manager, facilitating the rent of residential and commercial properties.
A letting agent is usually compensated by the landlord and can be paid either on a commission basis or through a flat fee. It can be extremely helpful to get advice from an experienced letting agent. Especially if you are new to the field or are new to being a landlord.
A good letting agent usually knows the area surrounding your property well, has contacts in the real estate market and can even negotiate monthly rents with tenants on your behalf.
We’ve put together a handy guide to help you make sure you’re on the same page as a landlord and avoid any unpleasant surprises down the road.
What is a Letting Agent?
A letting agent is a professional (or a company) that is paid to manage the renting of properties on behalf of landlords.
A letting agent is like a property manager who will normally manage all aspects of a rental property, including finding prospective tenants and advertising the property, as well as arranging viewings and negotiating the terms of tenancy.
They also take care of all aspects of managing the tenancy once it’s been agreed upon, including checking that monthly payment is made on time and dealing with any disputes and complaints a tenant might have.
If you want to rent out your property but don’t have time to find tenants yourself, or if you live too far away from where your property is located to deal with any issues that might arise during a tenancy – then letting agents can be an ideal solution for you.
What Do Letting Agents Do?
Letting agents will often charge landlords a fee for their services, this is usually based on a percentage of the monthly rent collected.
In most property management courses, letting agents are described as having the following responsibilities:
- Managing enquiries from prospective tenants and contacting them when a property is available
- Screening applicants to ensure they meet the criteria set by landlords
- Conducting tenant referencing & credit checks on potential tenants
- Collecting references from previous landlords and employers
- Negotiating tenancy agreements with tenants and ensuring that they are signed by all parties before moving into their new homes
- Prime property management tasks:
- Administration of rent payments, keeping a track of maintenance costs and repairs, dealing with tenants’ complaints, being sure all property documents are in place
What is the difference between a landlord and a letting agent?
Landlords are people who own a property and rent it out to tenants.
Letting agents, however, charge landlords for their services, which can include advertising a property for rent, collecting rent money from tenants, and arranging repairs to issues in the property. Some property management companies also offer insurance coverage for landlords against damage caused by their tenants (or their pets).
Some landlords manage their own rental properties without using an agent’s services or a proper property management system. These landlords are called self-managing landlords. These landlords are responsible for finding new tenants and maintaining the property themselves.
Click here for more details.
What is the difference between an estate agent and a letting agent?
Estate agents and letting agents are both professionals that work in the property industry.
An estate agent is a person or company that sells houses, flats, and other properties on behalf of a seller (the owner). They’re also known as residential property professionals. You might now think do estate agents do credit checks?
Well, it depends.
Residential Estate agents can be independent freelancers or can work at one of the big national chains. They’ll usually be found working in their offices where they advertise properties for sale and arrange viewings for prospective buyers. They’re also responsible for finding tenants for landlords who need someone to live on their property.
Choosing the best estate agent or letting agent can be challenging. A letting agent is similar to an estate agent but instead of selling properties, they find and manage tenants for landlords.
The letting agent will advertise a property online and arrange viewings with prospective tenants. They’ll also help landlords with paperwork such as signing tenancy agreements and completing references with potential tenants and often use property management software such as Lofti.
What Are The Typical Letting Agent Fees?
The most common fees for landlords and letting agents include:
Letting agent fee
This is the cost of using a letting agent to manage your property. The fee varies depending on the size of the property and whether it’s furnished or unfurnished. Typical costs are between £300 and £1,000 per property or between 10-15% of the monthly rent.
Referencing fee
This is an upfront cost charged by most letting agents to check that tenants meet certain criteria, such as their credit history and references from previous landlords or employers. The referral fee is typically around £60. Click here to find out more about referral fees.
When do you pay for the Letting Agent Fees?
Curious to know when the payment is due? Read more on our article on “When do you pay estate agent fees?“
Is It Worth Having a Letting Agent?
The answer to this question depends on your circumstances. If you are looking for renting out your property on short-term tenancies, then it is worth paying a letting agent to do all the work for you and keep up with tenants’ turnovers.
A good letting agent will find tenants quickly and efficiently, save you time and money, and make sure that the deals run smoothly. Some letting agents are tech-savvy and utilize a property management app or software to streamline their workflow.
However, if you live in an area where you own several properties, then a letting agent may not be worth the cost. In this case, you should manage and advertise your properties on websites and deal directly with potential tenants.
This way, you can avoid paying a commission to a letting agent. Use property management software to help you manage your property portfolio and become a wealthy self-managing landlord.
Is Using a Letting Agent The Better Option?
The short answer is yes, it is better to use a letting agent.
The reason is simple: good letting agent fees are comparatively affordable for you. It’s their job to negotiate the best deals with suppliers and service providers such as utility companies. They can also give you advice on legal issues such as notice periods, tenancy agreements, rent reviews, and repairing damage caused by tenants or their guests.
If you’re new to renting out your property, it can be time-consuming and stressful sorting out all these things yourself.
A Letting agent is usually an experienced professional in tenant management who knows exactly what information is needed from tenants before they move in, how much money to ask for rent, and when it’s time for repairs to be carried out.
Letting agents also know about building regulations, property maintenance services, health and safety laws, and when it’s time for an inspection by the local council.
How do I choose a letting agent?
Before choosing a letting agent, there are several things you need to consider.
Do I want an agency with a reputation for quality?
If you’re looking for a professional and reliable service, it’s important to choose a letting agent who has built up a good reputation in the local area. Tenants will often be able to tell whether an agent is reputable or not by word of mouth, so it’s worth asking friends, family, or colleagues for recommendations.
Letting agents who are members of the Association of Residential Letting Agents (ARLA) or the National Approved Letting Scheme (NALS) should be able to provide references from previous clients.
How long should an agency have been in business?
The longer an agency has been trading, the more established it will be and the more likely it is to have built up a good network of contacts within the industry.
In addition to providing references from previous clients, a letting agent who has been in business for several years will also have experience dealing with any problems that might arise during the tenancy.
Is there anything else I need to know about my local agent?
While most agencies operate nationally and don’t restrict their services to specific areas, some agents work only with private landlords without using estate agents and may specialise in certain regions or postcodes due to their knowledge of local property prices and rental demand.
Why do tenants prefer private landlords?
There are many reasons why tenants prefer private landlords over letting agents, including:
Choice of properties
Private landlords can offer a wider choice of properties than local authorities, who tend to own more affordable housing. Private landlords also have more flexibility with the type and size of property they can offer along with other block management services.
Flexibility
Private landlords can offer tenancy referencing, and tenancy agreements for shorter periods than what agencies do. This is particularly useful for students or those who may be moving in and out of the area on a regular basis. They may also be willing to consider letting only part of their property if an individual or family needs only a room.
Choice of payment methods
Some private landlords accept payment by direct debit, while others prefer to rent in advance or by cheque, and some even take cash payments. This means that tenants have greater choice as to how they pay their rent each month.
Rent deposit
Some private landlords ask for a deposit or fee to secure a place before moving in. This allows them to cover any damage done by the tenant during their stay without having to seek compensation from their insurance company after the event.
Are private landlords cheaper than letting agents?
Although the landlords and letting agents both charge rent for the use of the property – renting a home through a letting agent is quite different cost-wise.
A letting agent is paid by landlords to manage their properties while they are rented out. This means they take care of all aspects of letting, from advertising your property to finding suitable tenants and collecting rent from them.
As a tenant, you might be able to find cheaper rents when bypassing the letting agent and renting out directly from landlords (i.e avoiding him/her paying the fees).
But, if you don’t have much time or trust in what a landlord can offer, it may be worth using an agent to help you find your next apartment.
Is good to remember that in most cases, letting agents also charge fees on top of rent payments. These can include:
Application fees
It covers the cost of processing applications from prospective tenants and includes things like credit checks and reference checks (which can cost up to £20 each).
Checkout fees
If you want to end your tenancy early, and if your contract allows it, this will typically cost you between £50 and £150 depending on how much the letting agent charges, how long you have been living there and the reason why you want to terminate your stay
How Do Letting Agents Work?
A letting agent charges a fee for their services, which is usually included in the rent paid by tenants. The amount charged depends on the type of property, its location and the duration of the contract.
The letting agent is responsible for finding tenants, marketing the property to prospective buyers, and helping with paperwork relating to tenancy agreements and other tenancy-related documents.
They also act as intermediaries between landlords and tenants by negotiating rental prices, carrying out background checks on prospective tenants, and managing deposits.
The role of a letting agent has changed dramatically over recent years with some letting agents now offering many different services such as financial advice on mortgages or investments, legal advice on buying or selling a house or flat, moving house, flat cleaning services, repairs and maintenance services and more.
Why a Landlord should Use a Letting Agent?
A letting agent is the best person to help you find a tenant, manage the whole process and protect your investments.
1. They know the area
Letting agents are local experts that know their market area inside out. They have a wealth of experience which means they can offer expert advice on what type of tenants would be suitable for your property.
Your Letting agent will also be able to find tenants quickly and efficiently while saving you a lot of time and hassle.
2. They have access to tools that you don’t
Letting agents have access to tools that make it easier for them to find tenants for your property.
These include subscriptions to listing platforms such as Right Move and Zoopla which gives them the ability to market your properties with hundreds of thousands of other properties for rent in any given area – opening up more opportunities to find potential tenants than if you did it yourself.
They also may have a private network of tenants who are looking for properties to rent.
This means a room may be able to get filled a lot quicker and at much better rates when using a letting agent rather than relying only on yourself.
3. You can trust them with your money
What do you pay the estate agent? To find a suitable buyer for your property.
Similarly, when choosing a letting agent, it is important to choose one who has been vetted by a reputable organisation such as ARLA (Association OF Residential Letting Agents) or NALS (National Association of Letting Agents).
This means they have passed an audit and have been approved by the governing body as trustworthy and professional enough to manage your money safely within market standards.
What is ARLA?
ARLA is the Association of Residential Letting Agents. It was founded to protect the interests of individuals and companies who let residential properties through ARLA members.
It aims to raise standards in the industry and establish a level playing field for letting agents by providing a range of services that include training courses and qualifications, professional indemnity insurance, marketing support, legal advice, and a lot more.
Conclusion
By working with a letting agent you have the assurance that he or she is fully aware of the property market and, thus will strive to obtain the best price possible on your behalf also because his/her fees are usually directly linked to the monthly rent amount.
Moreover, the letting agent will also complete all the necessary administrative and legal obligations leaving you free to do what you are good at – selling your property.
0 Comments