What is ‘let agreed’ ? – A guide for landlords

Home » Welcome to Cozee » Resources » The process of renting a property explained for landlords » What is ‘let agreed’ ? – A guide for landlords

A house that is let agreed

The term ‘let agreed’ can be confusing but it is not at all complicated. In fact, a let agreed deal is common and many landlords do them without calling them a let agreed agreement.

Nonetheless, it is important to be aware of what the benefits and drawbacks are about doing a let agreed agreement as a landlord.

What does let agreed mean?

“Let agreed” indicates that a rental property has been provisionally reserved by a tenant after agreeing with the landlord on the terms of the lease. It means both parties have reached an understanding, but the formal paperwork and legalities haven’t been completed yet. It is therefore an informal agreement.

For example, a landlord and tenant may verbally agree on a 6 month tenancy at £500 pcm. This would be considered ‘let agreed’. However, if the tenant’s references then come back unsatisfactory, the landlord can decide not to proceed with the tenancy. However, if the contract is signed and the tenant moves in, it is considered ‘let’.

a let agreed sign

When would a ‘let agreed’ agreement occur?

A let agreed agreement typically occurs when a landlord has found a suitable tenant for their property but wants to secure the tenancy before the referencing process is fully completed. Taking the property off the rental market as a result.

This allows the landlord to take the property off the market while still protecting themselves if the tenant’s references don’t check out. This saves them time referencing additional tenants and also benefits the landlord by ensuring they don’t miss out on what could be a good tenant.

Want to get a let agreed deal with Cozee?

Begin with a free rental valuation to start the process of finding a new tenant

However, the let agreed agreement is not legally binding and is more of an informal agreement so the landlord can pull out if the tenant’s references are unsatisfactory.

What’s the difference between ‘let’, ‘let agreed’ and ‘to let’?

To clarify the different terms that signify the rental status of a property, read the below subheadings to clear things up.

‘Let’ property

A property is considered ‘let’ when the tenancy agreement has been fully signed and the tenant has moved into the property. This is a legally binding agreement.

‘To let’ property

When a property is listed as ‘to let,’ it indicates that the landlord or property owner is seeking tenants to occupy the premises in exchange for payment of rent. Essentially, it signifies that the property is available for rental, and anyone can still inquire about renting it.

a property to let sign

‘Let agreed’ property

‘Let agreed’ means a landlord and potential tenant have verbally agreed to enter into a tenancy agreement, but have not yet signed the contract or completed the referencing process.

At this stage, the agreement is not legally binding on either party. The property will usually be advertised as ‘let agreed’ or ‘under offer’ while references are being checked.

Confused about let agreed deals?

At Cozee, we can take the hard work off of your hands and deal with referencing using our expertise

How do we deal with ‘let agreed’ agreements at Cozee?

Our process of agreeing on the terms of a rental contract before a tenant’s referencing has been completed is detailed below. We ensure that once we find a tenant, we keep them and our landlords benefit from this streamlined process as a result.

Conduct a viewing with the tenant and look for red flags

When a tenant applies to rent a property, it’s important for a Cozee letting agent to be on the lookout for any red flags that could indicate the tenant may not be suitable so they can stop proceeding with a tenant if necessary.

Some examples of red flags from a tenant that would make it obvious they won’t pass referencing include things like:

  • The tenant lying about their income or employment
  • The tenant having pets when pets are not allowed
  • The tenant appearing hesitant or evasive in providing information

If any red flags come up, it’s best for the letting agent to address them directly with the prospective tenant rather than wasting time asking for a holding de putting the property back on the market.

This is something that is unique for each tenancy and a landlord will be updated every step of the way throughout the process.

a-tenant-moving-in-to-a-property

Ask the tenant for a holding deposit

Once a tenant has passed initial vetting and wants to proceed, the next step is to ask for a holding deposit. This is worth one week’s rent and paid by the tenant to take the property off the market while referencing is completed.

At this point the property is now ‘let agreed’ and the holding deposit shows the tenant is serious about renting the property.

Next, we undergo tenant referencing

Thorough tenant referencing is crucial to minimising risk for landlords. This typically involves checks such as:

  • Credit checks: Confirming the tenant has a sound credit history

  • Employment verification: Making sure the tenant’s job and income are as stated

  • Previous landlord references: Checking if the tenant paid rent on time and met lease obligations

  • Right to rent checks: Verifying the tenant can legally rent in the UK

Pass or fail the tenant

Now that the tenant has completed referencing, we will work with you as a landlord to see if the tenant is a good for the property based on the feedback we have found from our background checks.

If the tenant fails referencing, their deposit will be returned and the property will be put back on the market and will have ‘to let’ status.

If the tenant passes referencing, we will ask for another 5 week deposit to begin their tenancy and will subtract the 1 week deposit that has already been paid in the process.

So, the passed tenant now only has to pay four weeks worth to one months worth of rent as a deposit that will be protected in a tenancy deposit scheme.

Tenancy-Deposit-Scheme-1

What are the benefits of using let agreed deals?

Let agreed deals come with a series of benefits. For instance, it allows you to secure rental income and reduces the risk of default amongst tenants during the referencing process.

Secure rental income

Agreeing to let a property to a tenant, subject to contract and referencing, secures rental income from the date the tenancy starts. As long as referencing is passed, this provides certainty over future income from the property.

This is great because if a tenant offers rent that is what you were expecting or perhaps even higher than the expected rent that was advertised, you will be able to secure them as a tenant straight away and give the reassurance that the property will be theirs to rent if they pass the required referencing checks.

This, amongst many other reasons is why Cozee are able to rent 40% of our properties above market value and many of our tenants pay rent up front – reducing the risk for landlords.

Like the idea of securing rental income?

Use Cozee, agents with a large network of student tenants who pay up to a year of rent up front

Reduced risk of default

If a tenant is able to pay a deposit and shows they are confident that they will be referenced correctly, there is a higher chance they have the right income and are the correct tenant.

It also means referencing doesn’t have to be rushed and thorough referencing via a let agreed process reduces the risk that the tenant will default on rent payments as a referencing check can go into more detail.

Stops unnecessary negotiation early

Once terms are agreed in principle and a holding deposit is paid, there is no need for further negotiation or viewings. The let agreed deal provides a commitment from both parties and clarity on the way forward.

Peace of mind

Having an agent manage the let agreed process gives peace of mind that referencing will be conducted professionally and once completed, a tenant will be ready to move in to your property.

You can relax knowing checks have been done thoroughly by experts and a tenancy is likely to start from the minute a let agreed deal is in place.

a-tenant-with-a-strong-peace-of-mind

Could attract higher quality tenants

Responsible, high-quality tenants are more likely to understand and comply with a formal let agreed process. It tells us as letting agents that the tenant is professional and diligent and eager to move in to a property.

After higher quality tenants?

Call cozee today – 40% of properties are rented for above asking price!

What are the drawbacks of using let agreed deals?

Let agreed deals can provide an easy and fast way to let out your property. However, there are some potential drawbacks to be aware of when using these deals.

Potential income loss

One risk with let agreed deals is that you may not achieve the maximum rental income for your property and could agree on rent that is below average.

By agreeing to a set rent upfront, you lose the ability to adjust pricing according to market conditions. This could lead to lost income over the course of a tenancy.

However, Cozee letting agents have extensive knowledge of current market rents and can typically negotiate higher rents than landlords may be able to on their own.

Limited flexibility

Another downside is that let agreed deals do not provide much flexibility. Once you’ve agreed to a set rent and terms, you are locked in.

a-woman-in-a-restrictive-let-agreed-deal

As a landlord, you lose the ability to adjust details like the length of the tenancy as circumstances change. You also can’t terminate an underperforming tenancy early if the tenants prove unreliable.

However, using a Cozee letting agent to manage the lettings process means you will only experience the benefits of let agreed deals as our process is extremely efficient.

Looking to buy or sell your property? Go with Cozee

  • Trusted estate agent
  • More than 25 years of experience combined
  • We help you focus on your objective (investment, 1st time buy)
Skyscrapers of London