If you’re a landlord looking to rent out a property, chances are you’ll need to work with a letting agent.
Letting agents can take a lot of the hassle out of finding and vetting tenants, but their services come at a cost. In this article, we’ll cover the average letting agent fees in the UK, what those fees cover, and when it makes sense to hire a professional agent.
What are letting agent fees?
Letting agent fees refer to the charges landlords pay to agents for their services in managing rental properties. Based on recent data from Property industry eye, the average letting agent fee in the UK is around £297. With an average rent in London being £2,121 per month. It is predicted letting agents have an average rental fee of 14%.
For a let-only service where the agent finds a tenant but the landlord manages the property, fees are typically 10% of the first year’s rent.
It’s important for landlords to understand these fees can add up quickly, especially for higher-rent properties. For example, if you rent out a property for £1,200 per month (£14,400 annually), a full management fee at 14% would be £2,016 per year.
The services included in a letting agent’s fee structure can vary, but generally cover things like:
- Marketing the property
- Conducting viewings
- Tenant referencing/vetting
- Drawing up tenancy agreements
- Collecting rent payments
- Managing repairs/maintenance
- Conducting property inspections
Here is the extensive list of services offered by Cozee:
| Service | Service type | Price (exc.VAT) |
|---|---|---|
| Let & Manage | Core | 14% |
| Let only | Core | 10% |
| Property management | Core | 7% |
| Change of Ownership set up | Core | £200 |
| References fee per person | Core | £20 |
| Mail forwarding and scanning | Core | £20 |
| Payments (service charges, utilities) | Core | £15 |
| Deposit registration (per tenancy) | Core | £30 |
| Property visit | Core | £60 |
| Annual license holding (per year) | Core | £100 |
| Onboarding fee | Core | £150 |
| Tenancy agreement fee | Core | £100 |
| Cancelling a let before the tenant moves in | Other | £200 |
| Section 21 Notice (solicitor’s fees might apply) | Other | £50 |
| Section 13 Notice (solicitor’s fees might apply) | Other | £50 |
| Quarterly return to HMRC | Other | £100 |
| Land Registry & Head lease from Land Registry | Other | £10 |
| Mandatory & Additional HMO | Property certificates | £600 |
| Legionella Risk Assessment fee | Property certificates | Quotes |
| Selective Licence | Property certificates | £300 |
| Energy Performance Certificate (EPC) | Property certificates | £125 |
| Electrical Installation Condition Report (EICR) | Property certificates | from £180 |
| Portable Electrical Inspection fee | Property certificates | Quote |
| Gas Safety Record fee | Property certificates | £110 |
| Installation of smoke & CO2 detectors | Property certificates | £50 |
No, it’s not legally mandatory for landlords to use a letting agent when renting out a property in the UK. You can choose to self-manage and find tenants yourself. However, there are several benefits to using a professional letting agent service that are especially true when using Cozee:
Access to Tenant Database: Reputable agents have databases of prospective tenants actively looking to rent. This can help fill vacancies much faster than marketing a property yourself.
Outsourcing the Entire Process: Letting agents handle everything from advertising the property and conducting viewings to referencing tenants and drafting legal contracts. This saves landlords significant time and effort.
Expertise in Landlord-Tenant Law: Experienced agents have in-depth knowledge of landlord-tenant regulations to ensure you stay compliant and avoid legal troubles.
Working out if a letting agent is qualified
To ensure you’re dealing with a legitimate and qualified letting agent, there are several accreditations and memberships to look for:
Property Redress Scheme – All letting agents in England must be a member of a government-approved redress scheme
The Property Ombudsman – one of two independent government-approved redress schemes, comprising two branches: one for sales and the other for lettings. Agents must be members for the public to file a complaint against them.
The Ombudsman services – This scheme can grant awards of up to £25,000 if the agent has caused financial loss or distress. In 2011, the average award was £900. Membership for agents is mandatory.
Additionally, since letting agents handle tenant deposits, they must be part of a government-approved tenancy deposit scheme like:
- Deposit Protection Service (DPS)
- MyDeposits
- Tenancy Deposit Scheme (TDS)
When does a letting agent take their fee?
Letting agent fee structures and payment timelines can vary between companies. Some may charge the full fee upfront once they find a tenant, while others may take a portion upfront and the remainder once the tenant moves in or on an ongoing basis.
It’s crucial to carefully review an agent’s fee terms before agreeing to use their service. Be wary of any upfront fees before they successfully rent out your property.
For example, at Cozee lettings we only charge our fee once a tenant has moved into your rental property and begun paying rent – not before.
This ensures you don’t pay anything until our service is complete.
What are the average letting agent fees?
Letting agent fees in the UK have fluctuated over the years but on average in London are just above 14% for a full let and manage service. Here’s a look at the average fees landlords have paid for full property management service.
The fee charged to let and manage a property in London on average is £397 including a holding deposit that is charged by most agents to show that a tenant is serious about being referenced for a property.
What companies have the lowest letting agent fees?
When comparing letting agents, fees are just one factor to consider. You’ll also want to look at their marketing reach to let your property quickly, their expertise in achieving maximum rental values, and their overall customer service.
The cheapest letting agent isn’t always the best value if they can’t find you a quality long-term tenant who will care for your property.
At Cozee, our premium marketing and highly-trained staff ensure we let properties at the right price while providing excellent service – allowing us to keep quality tenants for longer.
How do letting agent fees vary throughout the UK?
Letting agent fees can fluctuate across different regions of the UK based on average local rental prices and other market factors. You’ll generally find the highest fees in London and the surrounding Southeast, where rents and real estate values are also highest.
However, it’s still important to shop around in any area, as fees can vary significantly even in the same city. Don’t simply assume higher rents mean higher costs – agencies like Cozee provide premium London letting services at very competitive rates.
No matter where your rental property is located, always be sure to compare letting agents’ fees against the full services and track record they provide. At Cozee, we believe in complete fee transparency and offering exceptional value in any market.
To see how our calculator works, we’ll break down example fee calculations below.
Example of a calculation using Cozee’s fee
Here’s the calculation for a 14% let and manage fee…
For a property renting at £1,500 per month (£18,000 annually):
Annual Rent: £18,000
Letting Agent Fee at 14%: £2,520
So on a £18,000 annual rental income, you’d pay £2,520 in management fees over the course of a year at a 14% fee rate.
If you are looking for more information on property management, please refer to our resources section on Cozee Properties.
Frequently asked questions
Full management can save time and ensure compliance with legal regulations.
Letting agents may charge fees upfront once a tenant is found or spread the cost over the course of the tenancy.
A let-only service involves finding a tenant and setting up the tenancy, while the landlord manages the property. Full management includes ongoing services like rent collection, property maintenance, and dealing with renter issues.
No, it’s not mandatory to use a letting agent. However, agents can save you time and effort by handling tenant vetting, legal paperwork, and property management. This is especially useful if you’re new to being a landlord.
Last Updated on September 17, 2024