How to choose a letting agent

Renting out a property can be time-consuming. Letting agents can help you with the management of your property, but although they save you time, their fees will affect your returns. Find out whether you need a letting agent, and how to choose a good one.

Do you need a letting agent?

Most landlords use a letting agent to advertise their property and find tenants, but you will also need to decide how much of the management and maintenance of the property you are willing and able to do yourself.

Fees vary depending how much you want the agent to do. They will usually be taken as a percentage of your rent. If you just want an agent to advertise the property and find tenants for you, they will usually charge around 10%. A full management service will cost you around 15%. The more the agent does for you, the more you can expect to pay.

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What will a letting agent do for you?

There are different levels of service to choose from:

  • Tenant find: the agent will advertise the property, show tenants around and deal with enquiries from potential tenants. It can be a good idea to put your property on the books of two or three agencies for this service, in order to get more exposure.
  • Let only: the above service, plus drawing up tenancy agreements, credit and reference checks on potential tenants, arranging the inventory and taking the tenant's deposit (including dealing with deposit protection schemes). They'll also set up a standing order with the tenant for future rent payments, and notify the authorities of the change in occupancy. Essentially, they look after every step until the tenant moves in.
  • Let with rent collection: the above service, plus collection of rent and chasing up late or missed payments.
  • Full management: all the above, plus carrying out inspections, arranging for repairs and maintenance work to be carried out, and communicating with tenants. You will usually pay 15% of your rent for this level of service, plus you'll need to pay for any repair and maintenance work yourself.
  • Hybrid: you can also forego the full management service, but use the agent as a middleman when dealing with tenants. This could include communicating rent reviews, arbitration and sorting out gas and electricity safety certificates.

If you're renting out a property in your own area and you can spare the time to do all the above yourself, you may not need a letting agent (or you may only need a tenant find service). However, if your rental property isn't where you live, or you have a full time job alongside your landlord responsibilities, it can be a good idea to let an agent take the strain.

Remember that if you do use an agent, you'll still need to cover the cost of any repair and maintenance work carried out at the property, so you'll need to budget for this. You may want to ask the agent to show you copies of invoices for work carried out, so you know exactly what you're paying for.

How to choose a letting agent

Once you've decided that you need a letting agent, it's important to choose a good one. A poor service from a letting agent can mean more hassle and expense for you. Here are some tips for choosing the right agent:

  • Letting agents aren't regulated, but it's usually a good sign if they belong to the National Approved Lettings Scheme (NALS), the Association of Residential Letting Agents (ARLA) or the Royal Institution of Chartered Surveyors (RICS). You can check the NALS register here.
  • Since October 2014, all letting agents must be registered with one of three government-approved redress schemes: The Property Ombudsman (TPO), the Property Redress Scheme, or Ombudsman Services Property. This is in case you are unsatisfied with their services and need to make a complaint. Don't get involved with an agent who isn't registered with one of these schemes.
  • If you know someone else in your area who uses a letting agent, a personal recommendation can be useful.
  • Look for an agent with a few properties like yours on the books. For example, if you're renting out a flat, an agent who has only dealt with detached houses may not be right for you.
  • Check that they have professional indemnity insurance, and that they use approved deposit holding schemes (such as the Deposit Protection Service). If the agent runs off with the tenant's deposit, you are obliged to repay it.
  • If there are a few who you think are suitable, see who has been established in the area for the longest.
  • Go with your gut: if you get a bad feeling about a particular agent, it may mean they're untrustworthy.

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Getting the letting agreement right

When you've chosen a letting agent, you'll need to agree exactly what you want them to do. The services they're providing will be set down in the letting agreement, which you'll need to sign and keep a copy of.

Things to look out for

As with any legal document, you'll need to check the agreement very carefully before you sign. There will usually be extra charges set out in the agreement, most of which will be normal, but it's important to know exactly what they are. These could include:

  • Charges for when the property is vacant
  • Commission for the agent when a tenancy is renewed
  • Admin charges for services like inventory checks, drawing up of documents, phone calls abroad etc

Either you or the agent will be responsible for ensuring that the property meets legal requirements (for example getting a gas safety certificate) so make sure the agreement is clear on who should do what.

You should also check the agreement for an "exclusion of liability" or "indemnity" clause, which states what the agent is not responsible for, and the "termination of the agreement" which tells you the notice period you'll need to give when you want to end your agreement.

As well as the agreement itself, you should keep copies of all correspondence between you and the agent.

How to deal with a poor service

Hopefully you've chosen a reputable letting agent who will carry out their duties professionally – but this isn't always the case. If you need to make a complaint, start by speaking to the management directly. They should try to resolve the issue, and will have procedures in place to deal with any misconduct on their part.

If you don't get a satisfactory response, you can complain to the redress scheme the agent is registered with. If you have a legitimate claim, the scheme will take your case further. In extreme cases, you can also complain to the Office of Fair Trading, who have the authority to shut an agency down if they are unfit to perform estate agency services.

Mistakes by your letting agent could end up costing you money, so make sure you have an easy-access emergency fund in place to cover unexpected expenses.

Next steps

In order to maximise your returns, make sure you're getting the best deal possible on your buy-to-let mortgage. Visit our guide or compare today's rates.

Last updated: 07 October 2015