The landlord’s guide to working with letting agents

Do you need a letting agent to help manage your rental property? Learn what letting agents do and how to choose the right one to partner with.

For landlords, collaborating with a letting agent is a big decision that means entrusting a portion of their rental property’s management to someone else. If you decide to go down this route, you must choose which letting agent you partner with carefully to ensure your rental business’s continued success and growth.

It’s important to note that not all landlords require a letting agent service. If you can do without, this will help minimise your expenses and maximise your rental income. So, you must think carefully to determine whether you would benefit from using a letting agent and, if so, the optimal timing for such a partnership. This is usually a decision only you can make based on your circumstances and the demands of your rental business.

In this article, we’ll explain what letting agents do, explore reasons that landlords choose to partner with one and learn how to choose the right letting agent for you and your rental property.

What do letting agents do for landlords?

Ok, first things first – you need to understand exactly what they do before you can figure out whether you need a letting agent.

Most letting agents tend to be pretty flexible, so it’s not usually an all-or-nothing decision. They usually offer several different levels of service.

The main services letting agents offer are usually a let-only or fully managed service. Some letting agents also offer a rent collection service.

• Let-only – Landlords can use a let-only service to help them find tenants for their property. The letting agent will handle all the time-consuming admin involved in advertising and marketing your property, attracting prospective tenants, and conducting property viewings. Let-only services often cover tenant screening checks and managing the tenancy agreement and inventory. Usually, this service is charged as a one-off fee.
• Rent collection – This ongoing service is usually charged at around 5% of the monthly rent charged to tenants. For this price, the letting agent will manage everything related to collecting rent from tenants, including handling rent arrears and serving notices to tenants if they stop paying rent for a prolonged period.
• Fully managed service – When you choose a fully managed service, the letting agent manages every aspect of running the rental property, from finding tenants to maintaining the property and handling tenant communications. As you would expect, this one will set you back a bit. Fully managed letting agent services usually cost 15-20% of your rental income.

Do I need a letting agent?

Whether or not you decide to use a letting agent is a personal decision that depends on your needs and circumstances at the time.

When considering whether or not it’s the right route for you, you should weigh up how much time you can dedicate to your rental business, how hands-on you want to be, your budget, and more. Working with a letting agent has both its pros and cons. The main benefit is that it will save you time and hassle. The downside, though, is cost. Forking out for a letting agent will take a bite out of your rental income. Plus, you’ll have to let go of some control since the agent will take care of some, or even all, of the tasks.

Here are a few reasons why landlords decide to work with letting agents:

• They don’t have enough time – If you’re short on time because of other commitments, whether that’s work, family, or something else entirely, then a letting agent can take on the bulk of the work for you, allowing you to profit from your rental business without putting in much time.
• They’re new to being a landlord—If you’re new to the game and aren’t yet experienced in the rental market, the laws and regulations governing it, or the responsibilities of being a landlord, a letting agent can provide guidance when you first start out, helping you to navigate issues while you’re still finding your feet.
• They have a large property portfolio to manage – If you’re expanding your property portfolio and have multiple properties to manage, it may become unrealistic to think you can do it all yourself and still offer a good service.
• They’re managing from a distance or overseas – Managing a rental property when you don’t live close can be a logistical nightmare. Carrying out property viewings, check-ins, and property inspections must be done in person, and having an in-person point of contact can also help improve the tenant experience. If you can’t be there yourself, a letting agent can act as the in-person face for your business.
• They want to reduce stress – Let’s be honest, running a rental property can be stressful at times, particularly on top of everything else that life throws at you. Some landlords like to take a step back and let a letting agent handle tasks like tenant communications, non-payment of rent, and property viewings to minimise stress and hassle.

As you can see, landlords enlist the help of a letting agent for many different reasons, from not having enough hours in the day to wanting to take a step back for the sake of their mental well-being. Only you can weigh up whether the benefits of partnering with a letting agent are worth the cost.

High street letting agents versus online agents: Which is best?

To further complicate things, as well as deciding whether you need a letting agent, you also need to decide what type. Let’s look at what the options are.

Online letting agents – As the name suggests, online letting agents only operate online; they don’t have brick-and-mortar offices. Because they have fewer overheads, the cost of using an online letting agent is usually significantly lower than using a traditional letting agent. However, they also offer a narrower and less personal range of services. Opt for an online agent, and you’ll probably find yourself handling property viewings, inspections, maintenance, and more independently, as they don’t offer comprehensive, fully managed services like traditional letting agents. Their nationwide focus can also mean they don’t have the same level of local market insight, which can result in a less targeted and inefficient approach to marketing your property.

Local independent letting agents – If you value the personal touch, it’s hard to beat small, independent letting agents. If you’re new to the role of landlord and need a bit of hand-holding or are looking for insights about the local rental market, then an independent letting agent should be able to offer you more of what you want. Just make sure you find out about their marketing strategies to ensure that your property will get exposure on the major property platforms.

National high street letting agents – Well-known national agents bring the advantage of broad visibility and a full suite of services, often providing a more hands-on and personalised experience than online alternatives. However, they are unlikely to have the same level of local market knowledge as an indie letting agent.

Both local independent letting agents and national high street letting agents will set you back more than an online letting agent. The type of letting agent that is right for you depends on the level of service you require and what you hope to achieve from working with a letting agent. If you want to leverage their knowledge and experience because you’re new to the game, then an online letting agent is probably not the right choice for you. However, if you’re managing multiple rental properties nationwide and want some help marketing your properties and finding tenants faster, an online agent could be a good shout.

How to choose the right letting agent

Ok, if you’ve come to the conclusion that you could benefit from partnering with a letting agent, it’s time to start shopping around to find one that’s a good fit.

Reputation and professionalism

First and foremost, the most important thing to check when choosing a letting agent to partner with is their reputation and credentials. You want to work with a letting agent who will help you grow and improve your rental business, not drag you down.

There are several schemes in place that can help you to identify professional and well-regarded letting agents.

Four things to check before you proceed with a letting agent are:

• They are a member of a professional governing body (e.g. Association of Residential Letting Agents).
• They are enrolled in a government-approved redress scheme (e.g., The Property Ombudsman or the Property Redress Scheme).
• They have Client Money Protection Insurance to safeguard your finances.
• Online reviews.

Local knowledge

Depending on why you’re partnering with a letting agent, choosing an agent based local to the rental property can be beneficial. This allows you to leverage their knowledge of the local area and rental market, helping you to nail the right rental price, understand your target demographic, and market your property more effectively.

Okay, so those two points should help narrow your search a bit, but then it’s time to get into the nitty-gritty. Remember, even if you use a letting agent, it is you, the landlord, who ultimately bears responsibility for ensuring that your rental property complies with all relevant laws and regulations. With this in mind, it’s important to do your due diligence and understand exactly how the letting agent operates.

Beyond their credentials, here are a few further things to verify when choosing a letting agent to work with.

• Roles and responsibilities – Clarify what you are accountable for and what the agent will handle. This division of duties should be crystal clear.
• Fee transparency – Look for an agent who is upfront about their fees. Find out what’s included and under what circumstances extra charges could be applied.
• The contract – Make sure you understand the full terms of the agreement, including the services provided, fee structure, and any potential additional costs (like renewal fees or safety checks for gas and electricity).
• Deposit protection – Clarify who will protect the tenant’s deposit. If the letting agent does this, find out which government-approved tenancy deposit scheme they use.
• Marketing strategy – Find out where the agent will advertise your property to ensure that it will get good exposure to help minimise void periods.
• Tenant screening – Ask about their tenant screening process. Rigorous tenant checks can help save headaches later.
• Handling rent issues – Understand their approach to dealing with late or missed payments.
• Responsiveness to tenants – Find out how quickly they aim to address tenant concerns. A responsive agent can enhance tenant satisfaction and retention.
• Maintenance and inspections – Learn about their processes for managing repairs, conducting inspections, and maintaining the property. This is vital for the upkeep and long-term value of your investment.
• Communication and reporting – Ask what kind of communication and updates you’ll receive from them. Some letting agents offer a digital platform or app where you can log in and view property documentation and updates in real-time.

Of course, the exact questions you ask will depend on what level of service you require from a letting agent. If you’re looking for a let-only service, it hardly matters how the letting agent deals with non-payment of rent unless you plan to increase your service level later.

You may also want to consider particular challenges you face or your business objectives and concentrate on looking for letting agents equipped to help you in these areas.

Maintaining a rewarding partnership with your letting agent

The best thing you can do to help foster a successful relationship with your letting agent is to choose who you partner with wisely. It’s important to have a clear vision of what you aim to achieve by working with a letting agent and then ensure that the agent you choose offers services that align with your expectations and objectives. This will help to set your partnership up for success from the get-go. It’s also important to be transparent about your needs and expectations and establish and maintain open lines of communication to help foster a mutually beneficial relationship. Having the right letting agent by your side can transform your rental business, boost its profitability, and ensure its ongoing success.