A letting agent is a term used in the UK for brokers who help in settling agreements among tenants and property owners for renting private properties. These agreements are formalized by signing tenancy agreements. A letting agent normally charges a commission for his services, generally a percentage of the yearly rent.
Letting agents often work under the umbrella of an Estate Agent because of the synergy between the two professions, however many agents deal only with lettings.
Renting is of two types, letting agents mainly deal with tenancies between landlords and private individuals.
Fees and services of letting agents
Services that letting agents offer can be divided into three parts:
- Their fundamental service is to introduce a landlord to a tenant. For this service, they charge the Landlord a percentage of the total rent during the period of the tenancy and are on up-front basis. Normally, their commission ranges from 7% to 12.5%. Some charge more and some charge less.
- Letting agents charge tenants an up-front fee as “administration free”. This up-front fee is charged for the processing of the application and normally involves potential tenants going through credit searches. Their fees are different, and can vary between £50.00 and £300.00. Most of the time, the fees are non-refundable. However, in case of cancellation of agreement the fees are sometimes refunded.
- Many letting agents offer the service of collecting rent from the tenant for an extra 2-3% commission. The calculation procedure of this type of commission is the same.
- A term “Full Management” is used to delineate the routine management of a rental property. A letting agent who provides Full Management service on a property charges a commission of between 7% and 12%. This type of commission is usually charged on monthly basis.
When the tenant wants to renew or extend the tenancy agreement, a renewal fee is charged by letting agents. This fee is a little lower as compared to the original introduction fee. Extra charges occur for the preparation of Assured Shorthold Tenancy agreement and for the protection of tenant’s deposit to act in accordance with the Tenancy Deposit Scheme legislation. Renewal fees are between £30.00 to over £100.00
Nowadays, more and more letting agents have begun to charge various fees to tenants. These fees include inventory fee – Letting agents impose this extra fee for a physical examination of the rental property, administration fee, tenancy renewal/extension fee and exit fee that is somewhat similar to the inventory fee.
If you are looking rent or let a property, a letting agent can take a lot of the associated stress away, just check and compare them using a quality review site would be my recommendation.