The buy-to-let mortgage is secured, and you’re about to complete on your property. Only now, the real work starts—you need to find tenants. As a buy-to-let landlord, dealing with the intricacies of finding and managing tenants can be a major burden. This is where using the services of a professional letting agent can prove helpful.
But what exactly do letting agents do? In this guide, we explore the varied roles and responsibilities involved when you bring a letting agent into your property investment. From marketing listings to vetting applicants and handling maintenance, learn what you can expect an agent to handle on your behalf.
What is a letting agent?
A letting agent is a third-party professional hired by landlords to oversee the marketing, letting and, in some cases, management of their rental properties. They essentially act as the main point of contact between you as the owner and your tenants.
While landlords can choose to self-manage their buy-to-let investments, instructing a letting agent’s services allows for delegating many of the time-consuming landlord duties involved. This typically offers convenience, especially for anyone with larger portfolios or rental properties in different areas.
The main responsibilities of a letting agent typically include:
Letting agents will professionally photograph and create listings for your property on major platforms like Rightmove and Zoopla to attract prospective tenant inquiries and viewings.
They handle advertising, taking viewings, screening applicants through referencing and credit checks and helping with Right to Rent. Ultimately, they advise you to select suitable tenants to move into the property.
Agents look after the legal tenancy agreements and make sure they are properly drafted and executed. They can also advise on your compliance responsibilities as a landlord regarding safety regulations during the initial tenancy set up.
Most agents will also offer to collect monthly rent payments from tenants and pass this rental income through to you as the property owner, usually less their agreed management fees.
So in essence, letting agents can manage the entire rental cycle, from initially listing and securing tenants through to rent collection and addressing any tenant issues that may arise during a tenancy.
More information:
Find out everything you need to know about becoming a new landlord.
Are there any additional letting agent services?
While the key responsibilities mentioned form the backbone of what a letting agent does, many also offer supplementary services that landlords can use. These expanded services can help provide an even more comprehensive, hands-off investment experience.
In addition to marketing and tenancy basics, agents carry out periodic inspections of rental properties to monitor their condition and flag any maintenance requirements. They may also be able to oversee contractors for repair work if needed.
For landlords looking for an entirely hands-off solution, some agents provide a complete property management service. This full-service package incorporates the day-to-day running of the property, from repairs and maintenance to general tenant queries.
The level of involvement from your letting agent really comes down to personal preference and cost considerations. But their services certainly provide flexibility whether you want a tailored passive investment or just support for certain landlord tasks.
How much do letting agents cost?
The convenience of having a letting agent handle time-intensive landlord duties does come at a cost. Fees can vary between agents and are usually charged as a percentage of the monthly rental income received, especially if there’s ongoing property management involved.
For finding tenants and setting up a tenancy, you can expect to pay somewhere between 5-10% of the first month’s rent as an upfront fee. This is known as ‘let only’ and usually covers marketing, reference checks, tenancy agreements and moving a tenant in.
There are then ongoing management fees if you want the agent to fully manage the tenancy. This includes factors like:
- Rent collection and transfer to landlord
- Periodic property inspections or visits
- Arranging repairs and coordinating contractors
- Tenant communication and queries
- Renewing tenancy agreements upon expiry
- Preparing inventory and check-in and check-out reports
- Handling tenant’s security deposit
- Serving required notice periods
- Potential eviction process if needed
- Rent guarantee insurance (some agents)
- Legal support for disputes (some agents).
Fees are typically 8-10% of the monthly rent, depending on the level of service provided. Some agents may structure their fees differently, perhaps as a fixed monthly payment regardless of rent amount. But as a rough guide, budgeting around 10% of the rental income is common for full management.
Yes, any fees paid to a letting agent for their services are considered allowable expenses that can be deducted from your rental income before calculating taxable profits.
This applies to both the upfront tenant-finding costs and any ongoing monthly or annual management fees charged by the letting agent. Keeping full records and receipts of agent fee payments is advisable.
So while not insignificant, the costs of instructing a letting agent can be offset against your rental income for tax purposes each year in most cases. This makes professional property management more affordable.
Do I need a letting agent?
There’s no legal requirement to use a letting agent when renting out buy-to-let properties. Many landlords choose to self-manage, particularly those with just one or two rental investments nearby.
However, the services of a letting agent become increasingly valuable in certain situations, such as if
- Your portfolio grows
- You don’t live close to your buy-to-lets
- You’re time sensitive.
- You don’t want the responsibility of self-managing the property or finding tenants.
Trying to coordinate marketing, viewings, referencing, legal compliance and tenancy management across multiple properties in different areas can be time-consuming. Using a letting agent allows you to spend less time on day-to-day landlord duties and more on growing your portfolio or focusing on your primary jobs. Their expertise also means staying on top of the latest regulations and avoiding costly mistakes.
While letting agent fees can seem high, they are tax-deductible and may be worthwhile versus your time spent self-managing.
Are letting agents regulated?
There is no legal obligation for a letting agent to be regulated in the UK. This has been a debate in parliament for decades, but as things stand, agents aren’t legally required to be regulated. That’s not to say that reputable agents don’t choose to belong to schemes and organisations that provide landlords and tenants with more protections.
The two main approved redress schemes are:
- The Property Ombudsman
- The Property Redress Scheme
Beyond basic redress membership, letting agents can also choose to become part of professional bodies and associations. This involves adhering to strict codes of conduct and higher service standards.
Some of the major professional bodies for letting agents include:
- ARLA Propertymark (Association of Residential Letting Agents)
- NALS (National Approved Letting Scheme)
- RICS (Royal Institution of Chartered Surveyors)
- NAEA Propertymark (National Association of Estate Agents)
Membership in organisations like these is voluntary but may give some landlords more confidence, as they know the agent has to meet the responsibilities and requirements of the scheme.
Final thoughts: Using a letting agent as a buy-to-let landlord
A letting agent can make a landlord’s life easier if they don’t fancy taking on the responsibility of finding tenants and managing them. The majority of landlords use letting agents, but whether you choose to instruct one comes down to your personal needs and appetite for handling all aspects of letting and managing a buy-to-let property.
