Letting agent
A letting agent is a term for a facilitator through which an agreement is made between a landlord and tenant for the rental of a residential property. The term is common in countries using British English, including countries of the Commonwealth. In the UK, Australia and New Zealand 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.
Letting agents will often operate under the umbrella of an Estate Agent due to the synergies that exists between the two professions, but there are many agents that deal exclusively with lettings.
Although there are two main types of renting, letting agents deal primarily with tenancies between private individuals and landlords.
Services and fees
There are a number of services offered by lettings agents, including:
- An Introductory Service - Finding a tenant for a landlord's property. The cost can vary depending on the agent and is usually charged up-front.
- Administration Services - This is anything that is involved in processing of the application. This can include referencing (credit searches etc.), drawing up a tenancy agreement, conducting a check-in, drawing up a schedule of condition, among other things. Fees for this service can vary widely and often non-refundable, unless the landlord withdraws from the process. Such fees have been made illegal in Scotland and tenants may reclaim any fees paid through the courts.[1]
- Rent Collection - Many agents will offer to collect the rent from a tenant for an additional commission. This cost can vary.
- Full Management - This is the term used to describe the day-to-day management of a rental property. Many agents will provide this service for landlords who wish to have a hands off approach to their investment. This service can cost between 7% and 12.5%.
Typical letting agent fees to tenants may include:
- Administration fee - To cover the Administration Services mentioned above
- Inventory fee - To cover the costs of inspecting the property and drawing up an inventory
- Tenancy extension/renewal fee - A renewal fee can be charged if the tenant extends their tenancy beyond the initial term. Renewal fees can vary in cost but tend to be at lower rate than the original referencing fee
- Exit fee - Similar to the inventory fee to cover the cost of a final inspection of the property to compare its condition to that at the start of the tenancy
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 matchmaker between property, landlord and tenant it is important for them to gain an understanding of customer requirements including; location, property size, budget, pets, etc.
Regulation
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.
References
- ↑ "Letting agencies - Shelter Scotland". Scotland.shelter.org.uk. 2012-05-07. Retrieved 2012-06-16.