How much should you be paying your letting agent for full property management?
There is no industry standard figure for full management of a tenancy. And if the tenant always pays their rent without any issues, you may feel that this fee each month is unnecessary. The truth is that the payment of the rent, and chasing that payment if it isn't forthcoming from the tenants, is only a fraction of the job.
How much should you be paying your letting agent for full tenancy management?
There is no industry standard figure for full management of a tenancy. However, the average across the UK is in the region of 12-15% of the monthly rent.
Based on the average rent amount in the UK of £830 (as of 2023), that could be anywhere between £99 and £124 per month. Before any other property ownership costs, this would leave you with a little over £700 each month.
And if the tenant always pays their rent without any issues, you may feel that this fee each month is unnecessary - why would you pay out that much to ensure that the rent is collected when the tenants are great, and they always pay their rent anyway?
The truth is that the payment of the rent, and chasing that payment if it isn't forthcoming from the tenants, is only a fraction of the job.
Many landlords feel they can manage their properties without assistance, but these tenancies often don't end well, and these landlords have horror stories to tell. This could be down to mismanagement of expectations for the landlords, assuming that the property will be fine, only to receive the keys back from the tenants when they move out, and to be disappointed.
There would have been wear and tear unless the property was brand new and had never been lived in, and this needs to have been recorded honestly and objectively. Many landlords are unaware of the fair wear and tear rule and expect the property to be exactly as it was before, as if no one had ever lived there. Many landlords even have a rose-tinted memory of the property and how it was before, convincing themselves there was nothing wrong with it before the tenants moved in.
So, after simply ensuring the rent is paid each month, what do letting agents DO to manage a tenancy?
Compliance: The legal aspect of property rentals is multi-faceted, complex and ever-changing. Unless you are qualified and always have your finger on the pulse for new legislative changes, it is near impossible to have everything right. And sadly, when laws are concerned, ignorance is not a defence. If you get things wrong, the repercussions can be very high and leave you in hot water.
Inspections: A vital element of any tenancy, you, as the landlord, need to know if the property is being looked after properly by the tenants and ensure that there is nothing you should be doing to the property to keep the tenants safe and happy. Life gets in the way of you attending these appointments as regularly as they are needed. Still, a letting agent will keep them up to date and provide you with an unbiased report of the property to allow you an objective view of its condition regularly and consistently.
Maintenance: If something goes wrong in the property, the tenants will make contact and report it, expecting you to arrange a contractor as quickly as possible to put the issue right. It doesn't matter whether you're busy at work or on holiday. You're responsible for the property and must deal with any repairs. And some of those repairs are emergencies; there is no option to delay until you return from holiday. A letting agent is always available and provides out-of-hours options for tenants to report issues. They have contractors they work well with and can arrange the repair without delay, leaving you to get on with your life.
Reviews: The rental property market changes regularly, and rental values fluctuate. The average tenant stays in the same property for 2-3 years. Often self-managing landlords will leave the rental amount the same for this time, only reviewing the potential rental values when the tenants move out, and the property goes back on the market. When you have a letting agent managing the tenancy for you, they will also provide annual rent reviews, informing you of the potential rent increase and then they will action that rent increase with the tenants. This ensures that you earn everything you are due from the property.
Rent collection: If the rent is paid on time every month, that's great. But, if it's late, the actions needed to pay the rent must happen fast. If not, the next month will come around quickly, so the tenant will no longer be late with their rental payment; they will be in arrears. And if rent gets into arrears, it can be very difficult for the tenant to work their way out of that situation. Most tenants are not in a position where they have £830 available in spare cash each month to enable them to get caught up with their rent. Having a letting agent handle, this process for you will drastically reduce the chances of initial late payments and subsequent arrears.
Ensuring that your rental properties are managed professionally and adequately will not only protect you from a legal perspective but will also protect your rental income, the condition of the property, and the overall value of your asset.
Contact our team of experts today to find out how employing a letting agent can help you manage your tenancies; even if you have a tenant in situ, management can start anytime during a tenancy.