Introduction
A Landlord’s Guide to Fees
If you’re a landlord considering using a letting agent, one of the first questions you’re likely to ask is:
“How much is this going to cost me?”
It’s a perfectly reasonable question, but comparing letting agents isn’t always as straightforward as comparing one percentage with another.
Some agents advertise a low headline management fee but charge additional fees for services such as inspections, renewals, inventories, tenancy administration or arranging maintenance.
Others offer a higher headline percentage but include considerably more within their management service.
So how do you work out which agent represents the best value?
What do letting agents charge?
There isn’t a single standard letting agent fee across Yorkshire.
The cost will depend on the property, the location, the level of service and the individual agent’s pricing structure.
Broadly, landlords will encounter three main types of service:
Tenant-find or let-only
The agent finds a tenant and sets up the tenancy, but the landlord manages the property once the tenancy begins.
This is generally the lowest-cost option and can suit landlords who are comfortable dealing directly with tenants and managing repairs, compliance and rent collection themselves.
Rent collection
The agent finds the tenant and subsequently collects the rent on the landlord’s behalf.
The landlord may still be responsible for maintenance, inspections and other aspects of managing the tenancy.
Fully managed
The agent takes responsibility for the ongoing management of the property.
This typically includes dealing with tenants, collecting rent, organising repairs, managing compliance, carrying out inspections and dealing with the day-to-day issues that arise during a tenancy.
For many landlords, particularly those who don’t live close to their properties or who own several properties, fully managed is the most convenient option.
Don’t compare percentages, compare the whole package
One of the biggest mistakes landlords make when comparing letting agents is focusing on the headline percentage.
An agent charging 8% may initially appear cheaper than an agent charging 10%.
But what happens when you look at the small print?
Are inspections included?
Is there a separate inventory charge?
Is there a fee when the tenancy is renewed?
Is there a charge for registering the deposit?
Does the agent charge an administration fee for arranging repairs?
Are contractor invoices marked up?
Are compliance services included, or does the agent add an administration charge?
These costs can make a significant difference over the lifetime of a tenancy.
The cheapest headline percentage isn’t necessarily the cheapest service.
Watch out for hidden and additional fees
Before signing up with a letting agent, ask for a complete schedule of charges.
In particular, look out for:
- Initial setup or onboarding fees
- Tenant-find fees
- Inventory charges
- Check-in and check-out charges
- Inspection fees
- Renewal fees
- Deposit registration charges
- Tenancy administration fees
- Contractor or maintenance commissions
- Compliance administration fees
- Minimum monthly management fees
None of these charges are necessarily unreasonable. A letting agent is providing a professional service and needs to charge appropriately for its time and expertise.
The important thing is that you know about them before you sign the agreement.
What does a transparent letting agent look like?
We believe landlords should be able to understand the cost of managing their property without having to work through a complicated list of potential extras.
At Davis & Co, we’ve deliberately built our pricing structure around three principles:
Simple
Our pricing structure is straightforward and easy to understand.
Competitive
We benchmark our pricing against the market and aim to provide a highly competitive professional management service.
Transparent
We don’t believe in surprising landlords with charges they weren’t expecting.
Our approach is to provide a clear price for the service you choose and make it obvious what is included.
We don’t rely on a long list of additional charges to make our management model work.
What about maintenance?
Maintenance is one area where landlords should ask particularly careful questions.
If your boiler breaks down or a tenant reports a leaking tap, how does the agent handle the contractor invoice?
Some agents may charge an additional administration fee or apply a management percentage to contractor costs.
That’s why it is worth asking:
“Do you make money from arranging maintenance?”
At Davis & Co, our approach is straightforward. Where an external contractor is required, we believe landlords should understand exactly what the work costs rather than having unexpected management margins added to the bill.
What about compliance?
Landlords have a number of legal responsibilities when letting a property.
Depending on the property and circumstances, these can include:
- Gas safety
- Electrical safety
- Energy Performance Certificates
- Deposit protection
- Right to Rent checks
- Smoke and carbon monoxide alarm requirements
- Appropriate documentation and record keeping
Some of these are property costs rather than letting agent fees.
However, landlords should establish whether their agent simply arranges the work at cost or adds separate administration charges.
Again, transparency matters.
How much could a letting agent really cost you?
The easiest way to understand the cost of an agent is to look beyond the first month’s invoice.
Imagine you own a property that rents for £1,000 per month and the tenant stays for three years.
Rather than simply asking what percentage the agent charges, consider:
Management fees + setup costs + renewal charges + inspection fees + tenancy administration + maintenance charges + other extras.
Even relatively small additional charges can add up over several years.
This is why we recommend that landlords ask agents to provide a complete breakdown of the likely costs over the life of a typical tenancy.
It makes comparisons much easier.
What should you ask a letting agent?
Before appointing an agent, ask these ten questions:
- What is your management fee?
- Is VAT included?
- Is there a minimum management charge?
- What does the management fee actually include?
- Do you charge separately for inspections?
- Are inventories and check-ins included?
- Are there renewal or tenancy administration fees?
- Do you charge for arranging maintenance?
- Do you add a markup to contractor invoices?
- What would my total cost be over a typical two- or three-year tenancy?
If an agent is reluctant to provide a clear answer, that should make you pause.
How Davis & Co compares
At Davis & Co, we’ve taken a deliberately different approach.
We’re an independent Yorkshire letting and property management company, and we’ve built our business around professional management, efficient technology and straightforward pricing.
We don’t try to compete simply by advertising the lowest possible headline percentage.
Instead, we aim to offer landlords a highly competitive overall package, with a simple pricing structure and no unnecessary hidden extras.
We want you to know what you’re paying for.
We also believe technology should make property management more efficient rather than simply adding another layer of complexity. Our integrated systems allow us to manage properties, accounts, communications and tenancy information efficiently while keeping landlords informed.
The result is a professional property management service without the cost structure of a traditional large high-street agency.
The right question isn’t “Who is cheapest?”
When comparing letting agents, it can be tempting to choose the lowest percentage.
But property management isn’t a commodity.
The right agent should help you:
- Minimise void periods
- Find suitable tenants
- Achieve an appropriate market rent
- Keep your property compliant
- Deal with maintenance efficiently
- Collect rent reliably
- Communicate with tenants
- Protect your investment
- Keep you informed
A slightly cheaper management fee is of little benefit if poor management results in longer voids, poor tenant selection, delayed maintenance or missed compliance requirements.
Value is about the whole service, not just the percentage.
Want to know what we’d charge?
Every property and landlord is different, so rather than publishing a complicated tariff of charges, we’d prefer to give you a straightforward quote based on your individual property.
Our pricing is designed to be competitive, simple and transparent, with no unnecessary hidden fees.
If you’re currently using another letting agent and want to know whether you’re getting good value, we’re happy to have a conversation.
You don’t need to be unhappy with your current agent either.
Sometimes it’s simply useful to know what another professional property manager would charge and what you’d receive in return.
Ask Davis & Co for a straightforward, no-obligation quote for your property.
You may be surprised how competitive professional property management can be.
