Negotiating with letting agents can be tricky. As a landlord you want to be charged the smallest fee possible. The typical letting agent fees can take out a substantial chunk of rental profits.
A small reduction in the letting agent fees won’t save you much over a course of a month. However over the course of a year and even many years, the savings you get from a small reduction can result in £1,000’s.
Therefore getting familiar with tips on how to negotiate with letting agents can therefore be extremely helpful.
1. WHAT ARE TYPICAL LETTING AGENT FEES?
The fees you’ll be charged by a letting agent will depend on 2 factors; The services you need and your expected monthly rent.
SERVICES YOU NEED FROM A LETTING AGENT
The services you need from a letting agent will be a major factor on how much you are charged.
Obviously the less onerous services you need, the lower the costs will be.
Tenant find services are usually the cheapest package you can get from a letting agent.
This service includes advertising to find tenants for your property. This will heavily be reliant on major property portals such as Zoopla, Right Move & On The Market.
Typically for traditional letting agents, this package will include conducting viewings as well. However for online agents, conducting viewings may include an additional fee.
Landlords should check that the fee for tenant find services include key tasks such as completing references for a tenant & collecting a deposit.
For both online & traditional high street agents, these tasks are likely to be included.
Full management of your property will incur a higher fee from your letting agent or property manager.
The management of your property goes above and beyond just finding you a tenant.
For this fee a letting agent will collect rent, take care of updating documentation, run inspections & manage maintenance of your property.
These types of services are perfect for landlords looking for a hands off approach. However landlords will need to ensure that they can absorb the hit of the higher fees.
THE STRUCTURE OF TYPICAL LETTING AGENT FEES
The fees a letting agent will typically charge you will be either fixed fee or a % of your monthly rental income.
Fixed fee is commonly cheaper and a structure followed by many online letting agents.
For tenant find activities, the fee is usually charged upfront and regardless of if a tenant is actually found for you or not.
If no tenant is found over a period of time, then you may need to pay an additional fee to restart the tenant find activity again.
A % of your monthly rent is commonly, but not restricted to, traditional high street agents.
The % can be based on the ongoing rent received over the course of a tenancy agreement. Or a % of the first month’s rent.
For finding a tenant, a traditional high street agent will charge appx 10% of the ongoing monthly rent.
Whereas an online agent, charging a fixed upfront fee will cost you between £49 – £400. However on the lower end, the service is unlikely to include the conducting of viewings.
For fully managed services, the % of monthly rent structures will likely cost you in the range of 15%-20% of your ongoing monthly rental income.
An online agent will charge between £150-300 a month for this. Again with such a variety of online letting agents, you will need to check the small print to ensure the services you need are included.
To see typical letting agent fees in your area, use or letting agent comparison tool. Enter your postcode and we will show you which letting agents are in your area. Against each letting agent, we will show how much they typically charge landlords for various services.
2. NEGOTIATING WITH LETTING AGENTS AND FEES
Every landlord wants to be able to negotiate letting agents down on their fees, without impacting the service they receive.
Below are some tips on how you might be able to get a cheaper deal from your letting agent.
USING MULTIPLE PROPERTIES TO GET A BETTER DEAL
If you’re able to offer up the chance for the letting agents multiple properties, the more likelihood of obtaining a better deal.
Finding tenants for more than 1 property or managing multiple properties means more income for the letting agent.
If you’re able to show you have more than 1 property on offer, that signifies you may add more in the future.
This also encourages the agent as it opens for the door for more growth.
NEGOTIATING WITH LETTING AGENTS: DOING IT YOURSELF
As alluded to earlier, online letting agents offer competitive prices as some of the work is handed back to the landlord (i.e. viewings).
You may offer to do some of the services the letting agent is proposing to do, in order to get a better deal.
For instance, collecting the rent may be something you’re comfortable doing yourself. In doing so, you’re lessening the burden for the letting agent. As a result, they may be accommodating to a lower fee.
SELLING A HOUSE THROUGH THE SAME AGENT
If you have another property you’re looking to sell, that may be enticing to the selling arm of the agency.
Offering the agent the chance to sell your property in exchange for a better deal on the letting fees could be possible.
A MODERN RENTAL PROPERTY
If you’ve recently undertaken some refurbishment in your rental property, that indicates less maintenance will be required.
The property is likely to be equipped with new furnishings & appliances that are less likely to need attention in the interim.
A better running property, also means less complaints from tenants.
The lower level of focus on your property can be used to get a better deal on letting fees. The less work your letting agent is likely to spend on maintaining your property should be reciprocated.
HAVING EXISTING GOOD TENANTS
You may not need your letting agent to find you a new tenant. Your property may have an existing tenant that has been long standing, looked after your property & always pays rent on time.
In this scenario, the management of your property is a lot easier than a ‘normal’ property.
Some of you may be thinking why you’d need a letting agent in the first place in this scenario.
As a landlord you may be moving to a different city or country. As a result, you aren’t able to visit the property should problems arise. This is when a letting agent would be required even though the property is ‘easy to manage’.
Furthermore you may just be busy. Being busy means you have less time to stay on top of laws & regulations impacting the rental market.
As a landlord, staying on top of these things helps you avoid fines & prosecutions. Letting agents being heavily regulated themselves, will be better positioned to cater for changes in laws & regulations.
NEGOTIATING WITH LETTING AGENTS: GO ONLINE
If you’re looking to get lower letting fees, looking for an online letting agent is a no brainer.
The lower overheads an online letting agent as is reflected in their fees to landlords.
As alluded to earlier, there are aspects of a typical letting agent’s services that you may need to do yourself, to take advantage of the better fees.
To see what the biggest online letting agents charge, use our online letting agent fee calculator.
RENT COLLECTED VS RENT DUE TERMS TO LOWER LETTING AGENT FEES
When negotiating with letting agents. checking how the fees will be charged can help save you money.
If fees are based on rent due, you could find yourself out of pocket. If the tenant doesn’t pay or is short on rent for whatever reason, your fees will still be the same.
The letting agent will not reduce their fees, based on the tenant impacting your own income.
You should try to ensure your terms are based on rent collected. This means that the letting agents fees will be impacted, should no rent or full rent not be paid.
This also encourages letting agents to reference tenants properly and push for full rent to be paid.
NEGOTIATING ON TENANCY RENEWAL FEES TO REDUCE LETTING FEES
Some letting agents will charge you to renew a tenancy for an existing tenant.
The tenancy agreement will need to be updated, to include new dates, rental amounts and stipulations related to regulations.
However of course a new tenant doesn’t need to be found as the existing tenant is remaining.
Tenancy renewal fees can be substantial. There are letting agents that will charge an ongoing % of the monthly rent under a new tenancy, even in the absence of ongoing property management.
In addition, some agents will be adamant you are breaking a contractual agreement if you keep the same tenant without paying the tenancy renewal fee.
It’s good for landlords when negotiating with letting agents to remove any tenancy renewal fees at the start of their engagement.
If an updated tenancy agreement is needed (i.e. to be updated to cover any new laws etc) you will be able to pay a fixed fee separately for this with the same agent or a competitor.
FINDING A TENANT: READ THE SMALL PRINT
We covered previously that some fixed fees are charged upfront.
When finding a tenant, the fee may only cover the activity of finding a tenant over a certain period of time, i.e. 8 weeks.
After this period has elapsed and no tenant is found, the same fixed fee is required to continue the search for a new tenant.
When negotiating with letting agents ensure the fixed fee covers you up until the point a tenant is found. This prevents you having to fork out for the same fee again to continue the search.
TENANT FIND FEES: REFERENCES & MOVING IN
Similar to the point above, you want to ensure the fixed fee covers you to the point where the tenant moves in.
Tenants fail reference checks, are short on deposits or can change their mind. All of which can mean you need to pay more money to find another tenant.
3. WHERE TO FIND A FAIR PRICED LETTING AGENT
Use Rentround to find your ideal letting agent.
Not only will we show you all the fees letting agents charge in your area, we’ll also show you their ratings.
Plus, we show you how far they are based from your property & what regulatory bodies they’re associated with.
We help landlords save on letting agent fees and give a peace of mind they are getting services from a reliable letting agent.
Searching for your letting agent is completely free, there’s no obligation & takes less than 30 seconds.