Do estate agents charge fees for renting?

When it comes to estate agent fees for renting, there is a lot for landlords to consider. There is a vast array of costs that come with owning a property and then being able to rent it out to tenants, and you probably want to know the costs landlords need to consider during the process. 

Here, we’ll take a look at estate agent fees for renting and all landlord costs involved in this, while also taking a look at the specific role estate agents play in this process. 

What do estate agents do?

Essentially, estate agents make sure that all the administrative tasks associated with marketing and renting out a property are completed so that you don’t have to worry about it. Estate agents provide a range of services to both landlords and tenants, including:

• Marketing properties: Estate agents will ensure that your property is being marketed through various channels to attract the right tenants for your property.
• Conducting viewings: Estate agents will also arrange and facilitate any viewings that your property may have with potential tenants. 
• Tenant screening: Estate agents will also work through the tenancy screening process, ensuring all background checks and referencing are complete. 
• Negotiating rental terms: Estate agents will find a happy medium between landlords and tenants when it comes to rental terms. 

It is worth noting that there are traditional estate agents who operate out of physical buildings and provide a larger amount of services, typically being more expensive, and there are online agencies that work remotely and charge lower fees. 

Types of fees charged by estate agents

Now that you know what estate agents are responsible for, let’s look at the different fees they charge. There are usually three different ‘levels’ of estate agency fees that you can expect to pay – let only service fees, rent collection service fees, or full property management fees. 

Let-only service:

This is probably the most basic service where the estate agency will find tenants for your property and usually the cost is a percentage of the first month’s rent. This typically ranges between 50%-80%. 

Rent collection service:

If you are not a fan of managing rent collection, especially when rent is in arrears, this is the perfect service for you. You can expect to pay between 8%-12% of the monthly rent you charge. 

Full property management

An estate agency will usually charge between 12%-15% of your monthly rent for a full property management service which covers all aspects of managing a property from marketing your property and tenant screening to property maintenance. 

Tenant fees

There may also be tenant fees to take into consideration if you want to ask an estate agency to manage your rental property. 

Tenants will most likely be concerned about any further costs that they may need to pay when looking to rent from a landlord using an estate agent to market their property, including:

• Application fees that cover the processing of tenant applications and any credit checks conducted by the estate agent.
• Referencing fees that are used to assess the rental history and financial background of any potential tenants.
• Inventory fees are sometimes charged for creating an inventory of the property’s condition and contents, both at the beginning and end of the tenancy.  

Additional estate agent fees for landlords

There may be additional fees that estate agents charge for besides the usual letting, rent collection and property management fees. These fees can include setup fees at the beginning of a new tenancy, inventory fees, renewal fees and exit fees. 

Also, some estate agents may charge for property inspections, handling legal disputes or preparing annual financial statements for tax purposes. 

So, make sure that you take a look at and make yourself aware of the estate agency’s chargeable fees. These should be available on their website so that you know exactly what you’re going to be charged for and so that you avoid any unexpected costs. 

Despite all of these added extra costs, you should keep in mind that letting agent fees are also considered a deductible expense against your rental income and tax returns, making using an estate agency a tax-efficient way to manage your property portfolio. 

Traditional vs online estate agencies

As a landlord, you have the choice of choosing a high-street traditional estate agency, or an online agency that will handle your property remotely. But as you can imagine, there are perks to using either type of estate agency, so let’s take a more detailed look at the difference between the two. 

Traditional estate agencies

You would have walked past a traditional estate agency whilst walking down any high street at some point in your life. They offer a presence for landlords that online agencies most likely cannot offer. 

Their knowledge of their surrounding area will be in-depth and extremely useful for you, as a landlord looking to invest. They can give you the insight that you need for your property, especially if you are new to town or don’t know much about the rental market. 

Online estate agencies

It comes as no surprise that online agencies are a lot cheaper than traditional high-street estate agents. Some online agencies may even market your property for no extra charge, but some will charge for this. 

It is also not unusual for online estate agencies to conduct viewings either, and they will display their fees on their website. This offers transparency for you and peace of mind that you won’t have any hidden costs that surprise you out of nowhere. 

Another perk of using online estate agencies is that you get to manage your property remotely and whenever you want. 

So,  you will need to decide which type of estate agency best suits your needs as a landlord, taking your lifestyle into consideration. You may like to manage your rental property remotely and in your own time, or you may prefer working with a more traditional estate agency. There are benefits to either type of estate agency. 

You may also be looking to acquire the best landlord insurance deals to find the best one that protects your property in the way that he needs. If you’re in need of landlord insurance, then make sure to contact one of our team of experts at CIA Landlords today on 01788 818 670.