Whether you’re a serial landlord with dozens of properties or have one in your portfolio to pay towards your retirement, you’ll know that letting agent fees are one of the biggest expenses you’ll face. Over the years, you’ll hand over thousands of pounds to agents to collect your rental income and find your next tenant. We’re certainly not underestimating the value or importance of agents, but it’s often the case landlords can do the job themselves.
Below, we’ve put together some ways to reduce agent fees and hold onto more of your cash.
Perhaps the simplest way to cut letting agent fees is to shop around for the right deal. Head to your local high street and call into three or four local letting agents, allowing them to give you their sales pitch and sell the benefits of their services. Once you’ve collected details on a few agents, you can compare your options and work out which one is best for your needs.
Let’s face it: most letting agents will be able to find you a tenant pretty quickly through sites like Rightmove and Zoopla, and collecting rent from tenants is also straightforward. Where you can really compare their services is in pricing, customer service, and landlord reviews.
Stay focused on the task at hand; you’re looking for an affordable agent. Don’t be tempted by their add-ons like property management and rental guarantees; they’ll drive up the cost. On the other hand, don’t compromise on quality to save a few pounds: it’s much better to work with a reliable, trusted agent who is contactable, rather than a slow, faceless outlet.
Landlords are increasingly turning to the internet and choosing letting agent disruptors over standard high-street rivals. Though there are some downsides (you’ll need to supply pictures for advertisements, conduct your own inspections, and meet potential tenants face-to-face for viewings), you’ll find that online letting agents are significantly cheaper by comparison.
An added benefit to online agents is that they only charge a one-off fee for their services and this involves finding a tenant and drafting a tenancy agreement that you both need to sign on your phones. Online agents can also collect deposits and rents, or you can have it sent to your bank account directly to cut out the middleman. Again, try to shop around for the best deal; there aren’t hundreds of online agents offering this service, but a few good players.
One thing to bear in mind is that viewings, inspections, and other property-based services will either need to be done by your team or paid for as an add-on service from your online agent. These agents often outsource on-site tasks to local agencies, but it’s usually cheaper.
You’re a successful entrepreneur with a portfolio of properties - so use your skills and try to negotiate on a cheaper letting agent fee. If you’re happy with your current agent and have built up a good relationship with them, arrange a call and let them know you’re considering making the switch. The chances are, agents will want to hold onto your business, especially in these challenging times, and thus might be able to cut your monthly fees. Granted, you’re not going to save thousands of pounds a month, but even if they can shave off 5%, you’ll be in the green by the end of the year. Remember: agents have very low margins, and most of their work is automated, so don’t be afraid to haggle and push them hard on a discount.
You’ll have more power if you have a portfolio of properties. It’s also wise to have all of your buy-to-lets managed by the same team, even if they’re in different parts of the country. Let your agent know that you’d be willing to make the switch if they offered a discounted rate.
Finally, consider cutting out the middleman and managing your properties. Self-management offers you a greater level of control over day-to-day operations, helps you build a closer relationship with your tenants, and allows you to gain experience in the field, which could prove useful as your property empire grows. There are financial savings to be had, too - that 10-12% you typically give to your lettings agent will be yours to keep. However, you’ll need to make space in your diary for your added responsibilities and be prepared for another layer of stress. If a tenant’s heating goes off at two in the morning, it’s you that will be responsible for getting it fixed. A lack of experience can also work against you - you’ll need to brush up on the latest government regulations and best practices, set your rent at the current market rate and negotiate rental increases and tenancy extensions every six to twelve months.
Whatever you decide to do, remember that Billing Better can help you increase your monthly rental income from tenants. Our ready-to-go revenue generator for landlords and agencies helps to improve your tenants’ moving experience and reduces unnecessary admin. Get in touch today to find out more, and check back to Billing Better soon for more landlord advice.