Most High Street Letting Agents would offer 3 standard services namely:

1.Tenant Find Only
2.Rent Collection
3.Full Management

In this article we look at the differences of these services and ways in which you can save money on your letting agent fees.

Tenant Find Service
A tenant find service would typically include:

Advertising the property – The first part of the process would be to market the property to find prospective tenants. This could be done in a number of ways which are typically online, in the local newspaper, with a To-Let board and in the High Street Agent’s window.

The online method is hands down the most effective tool of finding tenants. It is estimate that around 95% of all lets are as a result of an online advertisement on either Rightmove, Zoopla, Findaproperty, Prime location and Gumtree. These sites probably account for the majority of tenant enquiries.

Once a tenant has been secured, the Agent would then go about referencing the tenant (including a previous landlord reference, 6 year credit check and an employment reference. Typically, the Agent would charge the tenant around £250 per application to carry out these references.

Next would be the creation of the tenancy agreement. The majority of lets would fall under the Assured Shorthold Tenancy Agreement. Examples of where they would not would be either letting to a Company, Holiday lets or where the Landlord is living in the property i.e. taking on a lodger.

The deposit would then be secured with one of the 3 deposit schemes. This would protect the tenant from unlawful deductions of the deposit and is a legal requirement. Failure to lodge the deposit and notify the tenant as to the whereabouts of their deposit could result in a fine imposed to the landlord for up to 3 times the deposit amount.

Once these elements of the Tenant Find service have been completed, the landlord would then pay the Agent a % fee of the rent or a pre agreed fixed fee. Typically, a charge of around 75% of the first months rent, plus the dreaded VAT on top. Say the first month’s rent was £1000, the Agent would therefore deduct £750 + vat, totaling £900. The landlord would be left with £100 from the rent.

The Agent should then collect the rent from the tenant and transfer the balance to the Landlord within an agreed timescale. This is an important aspect of the agreement between the Landlord and the Agent. Unfortunately, not all Agents transfer the rent to the landlord on the same day they receive it from the Tenant. We have heard some horror stories where it takes the Agent up to 2 weeks to transfer the balance. By this time, the landlord’s mortgage payment is overdue and they may have incurred charges from the bank.

The Agent would typically charge a fee of around £250 – £300 + vat to set up the advertising and rent collection service and then deduct a further % from the rent. This is normally in the region of 8 – 12% + vat per month. So if you rent is £1000, the Agent would deduct £80 – £120 + vat per month. Over a 12 month let, this would set the landlord back £960 – £1440 + vat. This is equivalent to around 10% – 14% of the annual income!

Full Management
As in the Tenant Find and Rent Collection services, the marketing and legal aspects will be covered. So too will the rent be collected monthly. The main point of difference would be the management of any maintenance issues that may arise during the course of the year.

The Agent would hopefully have a network of trade’s people on hand to deal with maintenance issues such as electricians, plumbers, carpenters etc. They will of course need to contact you before any work is carried out unless the issue is of a serious nature and the tenant has the right to the service namely the boiler breaks down in winter and the tenant has no heating or hot water.

In extreme cases, we would expect on average between 2 – 3 calls per 12 months from the tenant to the Agent. Generally speaking, most of these issues are resolved within 24 – 48 hours by sending out the relevant trades person to the property. In our experience, the most common causes for these calls are down to boiler services or plumbing leaks. The more serious of calls would be due to damp or fire.

As an enhanced service, the Agent would typically look to charge a fee of around 15 – 20% + vat of the monthly rent. The further South you are in the Country seems to be more expensive.

A fully managed property at £1000 per month would therefore cost in the region of £2100 + vat per annum – equivalent to 20% of the total rental income.

How can I save on my Letting Agent Fees and still have the same level of service?
There is an alternative agent that can deliver on all these services at almost a 10th of the price – the online letting agent.

In comparison, the online letting agent would charge the following for these services for a property let at £1000 per month:(All pricing includes VAT)

 

As you can see from the above, the online letting agent route is a far more cost effective method in finding tenants, collection of rent or indeed managing the property.

More and more private landlord are opting for the online agent and taking over the maintenance issues themselves. With the internet being a valuable source of tenants, it makes sense to try the online route first and if you are not amazed, you could then fall back on the High Street Agent with very little risk associated.

If you are a landlord and would like to know more about this service or any of the other services available please visit lettingaproperty.com or call us on 0844 567 0578.