A landlord's guide to letting agents & their fees handshake close up with property keys

A Landlord’s Guide to Letting Agents and their Fees

Paul Shamplina, the landlord’s friends and founder of Landlord Action, has devised this helpful guide for landlords exploring what they need to know about letting agents.

Watch this video to find out what landlords need to know about letting agents, or click here to read about it.

Should I consider using a letting agent as a landlord?

Letting agents provide a range of services which can be tailored to most landlords’ requirements. These include:

  • preparing the property for rent 
  • marketing and advertising
  • carrying out safety and other property inspections
  • vetting tenants
  • drawing up the tenancy agreement and inventory
  • managing the deposit
  • collecting rent and chasing rental arrears
  • organising maintenance

Before any landlord discards the idea of using a letting agent, they should think twice. As a tenant eviction company, at Landlord Action we’re contacted far more frequently by landlords who did not use a letting agent than those who did.

If living nearby the rental property, landlords may just want to use an agent to help find a tenant and draw up the agreement, but then manage the tenancy day-to-day themselves. I recommend landlords who do not live near their rental property should seriously consider a fully managed service.

Really good agents may also save landlords hassle and money by offering specialist services. These can include deals for specialist mortgages and tax advisors, as well as ensuring any works the agents organise are undertaken by trained professionals who offer a warranty for their work.

Some Pros and Cons of using letting agent include:


  • Secure deposit protection is taken care of and agents will be up to date with current legislation which affects landlords
  • Stringent vetting and reference procedures
  • Paperwork will be accurate and handled on landlord’s behalf
  • Day-to-day property management and maintenance issues can be taken care of 
  • Letting agents are experienced in dispute resolution 
  • If landlords need to evict a tenant, a letting agent will know the correct legal process 


  • There will naturally be more costs involved with using an agent (but that must be weighed up against the increased risk of having a void period, rogue tenant or having to evict)
  • Typically, agents charge a set-up fee and between 5% and 15% of the rental income for a managed service
  • If problems arise, such as evicting a tenant, this will involve extra administration, paperwork and most possibly increased cost
  • If agents arrange repair work on a landlord’s behalf, an arrangement fee on top of the actual repair costs may apply

What does landlord property management include?

It varies. For instance, as a landlord you could:

  • choose to manage the letting of the property yourself
  • hand over certain tasks to a lettings and management agency and opt to handle other aspects yourself
  • or pass full responsibility to the agent.

Lots of landlords make the mistake of not putting a value on their own time as they think they’re saving money by managing their portfolio themselves. But all the time they spend doing that is time they’re not getting paid for.

Landlords should calculate how much time they’d spend every month managing their properties, and work out their hourly rate. In my experience, in many cases it’s a false economy.

Here are some of the responsibilities a managing agent will take responsibility for on behalf of a landlord:

  • Advertising the property to potential tenants
  • Accompanying potential tenants to view the property
  • Full tenant referencing, including credit and ‘right to rent’ checks 
  • Providing information on the latest safety regulations
  • Preparing the tenancy agreement
  • Organising the collection and protection of the tenant's deposit
  • Preparing the inventory and conducting a state of repair assessment on the property
  • Checking in the tenant and agreeing the inventory
  • Collecting rent from the tenant
  • Transferring monthly rental income to the landlord’s account 
  • Arranging any necessary repairs
  • Inspecting the property periodically and providing feedback
  • Providing tenants with notice at the end of the tenancy
  • Re-letting the property as quickly as possible and minimising any void periods

How can I find a reputable letting agent?

Always choose a letting agent who is a member of The Association of Residential Letting Agents (ARLA) or another professional body such as:-

- National Approved Letting Scheme (NALS),
- The Royal Institution of Chartered Surveyors (RICS)
- UK Association of Letting Agents (UKALA)
- The Guild of Letting and Management

As with choosing an agent to sell a property, landlords need to pick a letting agent who is already successfully letting properties like their own in that area. It’s worthwhile talking to several different agents to negotiate and understand their terms before deciding which one to go with. Be sure to know exactly which services are included as part of a package and which would be at an additional cost.

Letting agents must, by law, be signed up to one of three government-approved redress schemes: The Property Ombudsman, The Property Redress Scheme or Ombudsman Services. They should also clearly display which they are a member of. If they don’t appear to be a member of one of these, stay well clear.

This legislation ensures that if a landlord or tenant has a complaint against an agent that they can’t resolve, their complaint can be handled by an independent third party.

As well as being a member of a redress scheme, it’s worthwhile making sure the agent has Client Money Protection Insurance in place. This covers a landlord’s rent and tenant’s deposit if the agent were to go bust.

This requires them to be members of ARLA, NALS, RICS or UKALA or, as bare minimum, ‘SafeAgent’. They’ll also need to belong to a redress scheme. Landlords can also look at reviews of their chosen agent from other landlords and tenants by visiting www.AllAgents.co.uk

What are the typical management fees of a letting agent?

As of 27 May 2015, all letting agents must display their fees in offices and on websites so landlords have a clear idea of any charges that are due.

Letting agents typically charge landlords a set-up fee and a percentage of the rent they collect (between 5% and 15%) on a monthly basis. They may also charge for certificates such as EPSs, gas and electrical safety.

Those that charge a low commission rate tend to charge a higher set-up fee and vice-versa, so most end up costing roughly the same overall. One piece of good news is that letting agent fees are all tax deductible.

What contract agreements will there be between the letting agent and landlord?

There are two main types of agreement and landlords must be clear which they are signing up to.

  1. Let only - Between landlord and agent where the agent will just find a tenant but the landlord manages the property thereafter
  2. Fully Managed - Between landlord and agent where the agent will take over full management of the property

The agreement should cover all contractual areas with the agent, and landlords should ask agents to take them through this so they understand each section. For example: 

  • What the agent is responsible for
  • What the landlord is responsible for
  • How the landlord/letting agent relationship will work 
  • What fees and charges apply 
  • How the agreement can be terminated 

Other things to look out for:

Deposits – landlords should be clear about who is protecting the deposit in one of the government-approved schemes (Deposit Protection Service, MyDeposits or Tenancy Deposit Scheme).

If the agent will be responsible for this, the landlord should know which scheme it will be held with. If an agent fails to protect a tenant’s deposit or (worst case scenario) runs off with it – landlords are still responsible for paying the money back to the tenant.

Fees – some agents will have all-inclusive fees while others will charge for add-ons. Landlords should be clear on exactly what is included.

Rent – when and exactly how will this be paid to the landlord?

Termination – it’s not unknown for agency agreements to be heavy on fees and light on how to terminate the agreement. Landlords must be clear exactly how the agreement can be ended, and how much notice is required.

Clauses – landlords should beware of clauses which mean they must give six months’ notice or more if they wish to cancel the agreement. Three months is suggested as a reasonable cancellation period. Also watch out for clauses which suggest the agent be paid commission on renewals of the tenancy with the tenants they found, whether or not they are actually managing the property (some of these clauses may be invalid).

If a landlord is not happy with any clause in the agreement, it should be crossed out and both agent and landlord should initial the crossing out to make it clear that this clause is not included.

Landlords must ensure they are provided with a copy of the agreement after they have signed it.

What other costs would I incur as a landlord?

The maintenance of a property can be costly. So it pays to keep on top of small everyday jobs to avoid them becoming larger and more expensive tasks. As well as letting and management fees, landlords need to consider the following:-

- Landlord Insurance
- Refurbishment and decoration
- Repairs
- Exterior maintenance – window cleaning, gardening
- Cleaning costs
- Loss of rent from a void period
- Tax on any profit made from rental income

Are there instances where the agent would not pay rent to the landlord?

If an agent is collecting rent from the tenant on behalf of the landlord, this should be passed on to the landlord as per the date specified in the agreement.

Reasons for not passing the rent on may include:

  1. Agreed fees being deducted from the first months’ rent
  2. The agent has deducted the cost of refurbishment or maintenance from the rent

In both these instances, there should be written communication to prove that this was agreed between both parties.

If the tenant has defaulted on their rent payment, the agent will not have passed anything on to the landlord. But they should have notified the landlord at the first opportunity and got in contact with the tenant to find out why there is a delay with the payment.

Unfortunately Landlord Action has also come across cases of rogue agents who have pocketed the tenant’s rent and not passed this onto the landlord. They often become very difficult to contact in this instance.

Landlords who find themselves in this situation can call Landlord Action’s free advice line on 020 8906 3838 Monday to Friday 9am-5.30pm


With the ever changing laws and regulations surrounding buy-to-let, it’s not surprising landlords struggle to keep up. The services of a lettings and management agent can be essential for landlords who have properties far away, have very little experience of the industry or have a large portfolio to manage.

It can be tempting for landlords to cut costs and go it alone. But for those who aren’t fully versed in what is involved, how much time it takes and the responsibilities involved, my advice is to seek professional help. In the long-run it will be well worth it, particularly if you use a good reputable agent who supports your buy-to-let investment.

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Last Updated: 8 Mar 2018