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A letting agent is a United Kingdom term for a facilitator through which an agreement is made between a landlord and tenant for the rental of a residential property. In the UK the agreement between landlord and tenant is normally formalised by the signing of a tenancy agreement. A letting agency will normally charge a commission for their services, usually a percentage of the annual rent.
Although there are two main types of renting, letting agents deal primarily with tenancies between private individuals and landlords.
Services and fees
Services offered by lettings agents usually break down in to three parts:
- The basic service is the introduction of a Landlord to a tenant. The cost to the Landlord for this service is normally a percentage of the total rent over the term of the tenancy and is charged up-front. The commission for this service is normally between 7% & 12.5%.
- Tenants are charged an "administration fee" up-front. This includes the processing of the application, and usually involves prospective tenants undergoing credit searches. Fees can vary widely, and can range from £50.00 - £300.00. Often fees are non-refundable, unless the landlord withdraws from the process. Such fees are illegal in Scotland and tenants may reclaim any fees paid through the courts.
- Many agents will offer to collect the rent from a tenant for an additional 2-3% commission calculated as above.
- Full Management is the term most often used to describe the day-to-day management of a rental property. Many agents provide this service on properties which they have let for a commission of between 7% and 12.5%. This part of the commission is normally charged monthly.
A renewal fee will normally be charged if the tenant extends or renews their tenancy. This tends to be at a slightly lower rate than the original introduction fee. Additional charges are often made for drawing up the Assured Shorthold Tenancy agreement and protecting the tenant’s deposit to comply with the Tenancy Deposit Scheme legislation. Renewal fees can vary in cost, form £30.00 to over £100.00.
An increasing number of letting agents are charging an ever-expanding range of fees, especially toward tenants. A typical breakdown of these fees is listed below -
- Administration fee - see above
- Inventory fee - A separate fee often imposed by the letting agent, involving a physical check of the proposed rental property
- Tenancy extension/renewal fee - see above
- Exit fee - similar to the inventory fee, a final inspection carried out by the agent/landlord
To maximise the service that a letting agent provides it is important prospective tenants to make letting agents aware of their requirements before they arrange viewings so that properties are better matched to tenant's needs. Since letting agents act as a match-maker between property, landlord and tenant it is important for them to gain an understanding of customer requirements including; location and property size required, budget, the need for references, pets etc.
There are currently no statutory arrangements regarding the regulation of letting agents. Around half of UK lettings agents are currently self-regulated. The principal organisations for lettings agents are the Association of Residential Letting Agents (ARLA) and the Royal Institution of Chartered Surveyors (RICS). These have codes of practice and compliance controls which govern the activities of their members.
The English government also provides its own accrediting body for letting agents. This body is called NALS (National Assured Letting Scheme). See http://www.nalscheme.co.uk/whatis.htm
In Scotland all landlords must be registered with the local authority. Whilst agents are not required to register, they are actively encouraged to do so.
- "Letting agencies - Shelter Scotland". Scotland.shelter.org.uk. 2012-05-07. Retrieved 2012-06-16.