Letting Agents' Fees for Property Management

Published: 18/09/2024 By Cavender Estate Agent

Understanding the various lettings agent fees can be a daunting task for landlords who are new to the process, as well as those who have been in the industry for quite some time. Since there are so many services provided by these accounting firms, and each of them charges differently, it becomes very important to know the basis of these charges and what the charges include. One needs to know what service is required, which fees are applicable to your property, and the prevailing situation. This article is designed to provide everything that you need to know about letting agent fees for property management and assist you in managing your property investment more effectively.

How Much Do Letting Agents Charge to Manage a Property?

Full property management services commonly attract commission fees, which are usually a percentage of the monthly rent. The amount of commission paid to the agent is not fixed; it depends on the location of the property, the type of service being offered, and the level of management required.

Standard Rates: Full property management fees are usually between 7% and 15% of the monthly rent collected from the tenant. In high-demand areas like London, the fees can go as high as 20%.

Geographical Variations: Some landlords may be able to secure more reasonable charges away from large urban centres such as London. However, it is crucial to consider the quality of services offered when calculating charges since cheap services may not be as attentive and dependable as the leading agents.

For instance, Cavender Estate Agent is an independent agency that offers services in Guildford and Kingston Upon Thames. Their charges are reasonable and comparable with other local agents, and they provide specific service delivery to each and every landlord, depending on their needs. 

What Fees Can Letting Agents Charge?

Letting agents can charge landlords for various services, with fees typically falling into three main categories: let-only, rent collection, and full property management.

Let-Only Fees: Let-only services consist of sourcing tenants, obtaining references, and organising tenancy agreements. The charges for this service are usually a lump sum payment and range from fifty percent to eighty percent of the first month’s rent. This service is useful for homeowners who intend to manage the property on their own but require help in tenanting the house and preparing the lease agreements.

Rent Collection Fees: For landlords who may want to refrain from collecting rent, letting agents provide rent collection services. Apart from finding tenants, the agent is responsible for ensuring that they collect the rent on a monthly basis and address issues related to arrears. Charges for this service vary, with the majority charging between 5% and 10% of the monthly rent.

Full Management Fees: This entails tenant acquisition, rental income management, and general property management services. This service includes general maintenance and repair, tenant-related issues and legal issues. Full management fees typically stand between 12 and 15 percent of monthly rent; nonetheless, it may rise to 20 percent within prime locations, such as London.

Cavender Estate Agents have a flexible pricing structure. They offer services at three levels, each with an accompanying package. The cost of their services is reasonable in Surrey, and the excellent service the company delivers gives landlords value for their money. 

On the other hand, other services and the fees that are associated with them include the following; 

1. Let-Only Service

What It Includes:

• Property marketing (for example, advertising on websites such as Rightmove). 
• Viewing the property and screening tenants for the property. 
• Referencing and credit checks. 
• Drafting the tenancy agreement. 
• Setting up rent collection. 

Fee Structure: Let-only services usually charge a fee in the form of a percentage of the first month’s rent. For instance, suppose a property has a monthly rent of £1,000; in that case, the fee could be between £500 and £800.

2. Rent Collection Service

What It Includes:

• All let-only services. 
• Monthly rent collection. 
• Deal with payments which are made after the due date or are in arrears. 

Fee Structure: The costs associated with rent collection fees are normally a percentage of the amount of rent collected, commonly between 5% and 10%. This is a good choice for landlords who do not wish to be involved in the payment process but will be in charge of property management.

3. Full Property Management

What It Includes:

• All let-only and rent collection-only services. 
• Maintenance of the property on a day-to-day basis, any repairs that may be necessary, or any problems that are experienced. 
• Arranging for contractors for repairs and other things such as ensuring that the house is legal, for example, getting gas safety certificates. 
• Other services that may require attention include repairing a broken boiler or attending to a tenant who is locked out. 

Full management fees are charged as a percentage of the monthly rent, usually 12% to 20%. In super-prime markets such as London, landlords charge fees at the higher end of this scale.

Additional Fees Charged by Letting Agents

Besides the core services, letting agents can request payment for other services. Hence, it is crucial that landlords explain these fees at the onset to prevent any surprises on the part of the landlord and the tenant regarding what is included in the property management fee.

Common Additional Fees:

Property Inventory: Assessing the condition of the property, especially in the case of furnished properties, is very often a separate service. This can vary between £100 and £300, depending on the size of the property and its details.

Energy Performance Certificates (EPC): It is also possible to let letting agents arrange for the EPCs which are compulsory for rented houses and properties. The prices normally fall between £60 and £120.

Gas Safety Certificates: It is also possible to coordinate the inspection of gas safety since it is compulsory for all properties that have gas-powered appliances. The cost for these certificates usually is between £50 and £100.

Lease Renewals and Exit Fees: Some agents will also demand extra charges once the tenant has renewed his or her lease or if the landlord wants to terminate the contract with the agent. These charges may differ from one case to another and that is why it is advisable to make sure that you confirm on these charges when making the initial agreement.
The Cavender Estate Agents have a price list for other services that are needed, thus not hiding charges. This way landlords are able to work within their means and also meet all the legal regulations that are required of them. 

Are Letting Agent Fees Tax Deductible?

Actually, letting agent fees are also allowed as a tax deduction for landlords. These are allowable expenses which are admissible as business expenses and it is allowable to adjust these expenses against rental income for tax calculation. This is because there is the need to have records of all the agent fees that was paid within a given year.

Tax-Deductible Expenses Include:

• Fees for a letting agent (for all types of service). 
• Marketing expenses such as; Advertising on property websites. 
• Maintenance and repair costs are paid for by the letting agent, as well as costs incurred by them in arranging the same. 
• Cost of attorneys for matters pertaining to the tenancy agreement and tenancy-related litigations. 

Cavender Estate Agents can assist landlords on the right course when it comes to tax implications and fees they need to pay and the things that they can claim as deductions to increase their rental income.

Can I Claim Letting Agent Fees?

Letting agent fees are considered as allowable expenses, and thus, the profit that landlords earn from their rental property will be reduced. This includes all the management fees and charges which may be accrued in relation to legal matters and property maintenance. This information should be kept safe as proof of transactions that have been made when seeking the services of a letting agent, as they will be required in the preparation of the tax returns.

How to Negotiate Letting Agent Fees

Although letting agent fees are advertised in the form of percentages it is important to note that many agents are willing to negotiate especially if you are dealing with several properties or if you need the services of the agent in the long run.

Tips for Negotiating Fees:

• Bundle Services: If you own more than one property, you should ask for a discount because all the properties will be managed under a single contract. 
• Long-Term Contracts: Subscribe to a longer term contract so that you can be able to agree with the payment processor to charge a lower percentage fee. 
• DIY Where Possible: Perhaps, you can cut some expenses by performing some tasks by yourself, for instance, property viewings or simple maintenance works. 

Cavender Estate Agents boasts of providing its clients with a range of services that are flexible and conditional to the agreement of the landlord. Thus, being in close contact with clients, they are able to offer rates that are competitive as to the quality of the service.

Choosing the Right Agent for Your Needs

It should also be noted that the issue of fees should not be the only factor of consideration when searching for a letting agent because there are many other factors that are also important. Not only should you look for an agent who gives you the best value for your money, but also one who can help you in the administration of your property.
 
Key Considerations:

Local Expertise: It would be advisable to have a good knowledge of the local property market. Cavender Estate Agents are well positioned to manage these markets, having dealt with them for many years in Guildford, Kingston Upon Thames, and Godalming, to mention but a few.

Reputation and Trust: It is advisable to compare the agents with the previous records of service delivery. Look for reviews as well as their membership in industry bodies like ARLA and the testimonials given by previous clients.

Personalised Service: Cavender being an independent agent, will give you a more personal and client-oriented service as compared to some of the big national firms who may not pay as much attention to you and your property.

Let Cavender Estate Agents Manage Your Rental Property

Letting agent fees is something that every landlord needs to consider, but it is important to know exactly what you are paying for and whether or not you are getting a good deal. To this end, landlords should choose the right agent and ensure that they negotiate the right fees to enable them to get the best returns on their properties with little or no stress. Cavender Estate Agents is a professional and reputable company which is focused on providing high-quality services for the landlords in the Surrey area. To enquire about a letting agent, please contact the team on 01483 457728.