Letting fees make up a key proportion of a landlords expenses. Depending on what type of service you as a landlord take up with a letting agent, usually letting fees will account for 10-15% of the monthly rent received.
Below are 4 ways of how landlords can reduce their letting fees when in negotiation with a letting agent:
1. Compare letting fees
When negotiating with a letting agent at the start of letting out a property, finding a new tenant or switching letting agents, it’s key to establish what competitor prices are.
Landlords are far more equipped going into letting agent negotiations when they have letting fees of the agents competitors to hand.
If a rival agent is charging much lower fees for similar services, this information can be used to squeeze discounts from letting agents.
Even better for landlords, is that Under the Consumer Rights Act 2015 it is now a legal requirement for all letting and managing agents to publicise details of their fees.
A simple search on Google therefore can give you the ammunition you need for hammering down your letting fees. Multiple agent pages can be screened in a few minutes.
Using this approach, you can quickly understand that costs for tenant finding services will cost you:
- Haart: Four weeks rent
- Foxtons: 12% of monthly rent on renewal, 7.2% thereafter
- Your Move: £474 one off
Saving landlords even more time when trying to gather information on letting fees, is Rent Round.
This platform enables you to type in your postcode, then all listed agents in your proximity will be shown, along with their fees for different services.
2. Consolidate your letting agents
If landlords hold multiple properties when entering negotiations with letting agents, it strengthens their bargaining power.
A letting agent is likely to offer reduced letting fees for a landlord who brings more to the table.
Firstly for an agent, there’s more profit to be made taking on more & more properties.
Secondly if a landlord has a couple/a few properties, that number is only likely to grow as the year’s progress and the landlord buys up more – meaning even more profit for the letting agent.
This also works in your favor to another extent, if you’re lucky enough to have multiple rental properties. A letting agent is inclined to want to impress you more, as you have the potential to become a profitable cash cow. Expect quicker responses, more urgency when issues arise & even a heads up when similar properties become available for you to buy!
This behavior is common across industries, not just in the letting industry. AXA have specific ‘Multicar’ discount for those drivers that purchase insurance products for multiple cars.
3. Consider online letting agents
It’s difficult to ignore the industry disrupters, online letting agents.
Commonly these agents offer a much lower letting fee when compared to traditional letting agents.
Under many of the services online letting agents offer, landlords are expected to undertake a proportion of the activities a letting agent would normally complete.
One example of which is property viewings. 99Home have a letting service where landlords are expected to conduct their own viewings in exchange for a lower letting fee.
Therefore if you have the time, online letting agents may be a good option.
4. Do more, save more on letting fees
Usually the more you ask a letting agent to do for you, the higher the letting fees charged.
If you’re a landlord that has time to spend on rental property activities, then a suitable option is you do more.
Under this approach, you can select the minimum amount of services from a letting agent.
For example, you may have one property where a letting agent found you the tenants, now collects the monthly rent and fixes any issues with the property.
If you have the time, you may decide to collect the rent yourself or if you’re DIY savvy, you fixing issues with the property independently of the agent.
Additionally you can start taking on more risk to reduce your costs. Some landlords opt for guaranteed rent services, where if a tenant doesn’t pay rent, you’re covered via a payment from an insurance product.
If you’re willing to live without this protection, you’d be saving £50 a month taking a cheaper package if you were a Howsy client for example (note, the more costly package does include other services as well).
Overall, there are many ways for a landlord to reduce their letting fees.
There’s a balance between time and how profitable you can make yourself to the agent.
Don’t forget good old negotiation skills. If you only have one property and need the letting agent to do most of the work, using your charm could help in saving money.
If you’re looking to compare letting agent fees in your area, enter your postcode below and enter a few details about your property. Rent Round will then show you a list of fees across letting agents for a range of services on offer.
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