Online letting agents typically provide all that a high street letting agency would be expected to do, but far more cheaply, efficiently and in most cases, at a higher service level. A landlord could save on average £1,900 in fees.
Where a typical agency requires a local office which usually attracts a high rent, a fleet of branded company vehicles and employees that are usually out of the office and difficult to get hold of, online letting agents operates without such overheads and constraints. The considerable cost savings are then passed onto the landlords and tenants.
Online letting agents are not geographically bound and can, therefore, provide a letting service to any landlord, anywhere in the United Kingdom.
Essentially the actual process of letting a property through online letting agents is very similar whereas, a tenant calls the office, their details are registered, the landlord is contacted, a viewing is arranged and carried out by the landlord, the agreement is written and signed, the deposit is registered and the tenant moves in.
Even if letting out a property through a high street agent, the landlord would be responsible to comply with certain property regulations such as having a valid gas safety certificate and an energy performance certificate.
How do online letting agents work?
Apart from conducting the property viewings, online letting agents tend to operate similarly to that of a high street agent, taking into consideration the aforementioned cost savings that are being passed through to customers.
After you have created the property advertisement on the online letting agents website and selected the package that suits you, a member of the landlord team, with all their experience in online advertising, will review your ad and ensure that it is written in the best possible light. They will offer any advice which they believe will help your advert to attract a good level of tenant enquiries.
Once reviewed, the property details will be advertised on Rightmove, Zoopla and PrimeLocation – ready to be viewed by millions.
Most online letting agents employ a team of ‘real people’ that manage the tenant calls into the office 7 days a week. In the case of lettingaproperty.com, every tenant is spoken to and their details are registered and passed onto the landlord by means of a text message and email alert. The landlord is then in control of whether, when and at what time they make contact with the enquirer to arrange an appointment that is suitable for both parties.
This part of the process is instant. As soon as the call has ended, the tenant’s details have been sent to the advertising landlord. In comparison to the high street model, this process is far more time efficient as often the enquiry may take days to filter through to an actual booking of an appointment. By this time, the tenant may have already found another property.
Should the tenant wish to proceed with the property, the landlord would then be able to instruct us to carry out a comprehensive reference check on the tenant(s). This would include a 6 year credit check which determines whether the tenant(s) have had any County Court Judgements (CCJ’s) registered against them, an employment reference to determine their salary, length of employment and contract type as well as a previous landlord reference which would determine whether the tenant has paid their rent on time, in full and whether there has been any damage caused to the property.
Once the references are successfully completed, which usually takes around 3 – 4 days; the landlord is then presented with the final reports and has then the decision to make as to whether to proceed with the tenant. Should the landlord proceed, we would at that point be able to assist the landlord with additional services such as creating the tenancy agreement, registering the deposit or rent guarantee and collection. The landlord may also wish to carry out these administrative actions themselves.
Choosing the right online letting agents?
First and foremost, you would want to know where your property is going to be advertised. If the online letting agents that you are considering do not advertise your property on the biggest property websites in the UK i.e. Rightmove, Zoopla and Primelocation, we would suggest that you discount them altogether.
Where Will My Property Be Advertised?
Your property needs to be seen by the millions of potential tenants that flock to the bigger property sites such as Rightmove.co.uk, Zoopla.co.uk and PrimeLocation.com for starters. These sites are exactly where your local High Street Agent should be advertising. In fact, we upload our properties instantly to Rightmove and 4 times a day to Zoopla and PrimeLocation. According to the latest insight report from Rightmove.co.uk, 97% of tenants are searching Rightmove.co.uk for property versus just 37% for local newspapers.
What Services Are Being Offered?
Secondly, we believe you should consider the services offered by the online letting agents. As property professionals ourselves, we offer our landlords a suite of packages tailored to suit most ‘types’ of landlords. Whether experienced in lettings or not, we will have a service to suit your requirements – from simply generating enquiries through our find a tenant package right the way through to moving a tenant into the property and offering guaranteed rent collection on your behalf.
Do They Have A Good Reputation?
Finally, we suggest researching the site’s reputation, trading history and accreditation / memberships.
We have seen many online letting agents open to the public over the last few years and they quickly learn that it takes a lot more than just building a website to run a successful agency. We’ve assisted tens of thousands of landlords and tenants since it first launched and over 98% of our customers that have written reviews about the service that they have received would recommend us. We score a 4.9 / 5 on independent review website www.reviewcentre.com and achieved an astounding 100% recommendation rate from a recent survey run by the Property Ombudsman for Lettings.
In terms of accreditation and memberships, Government have recently set their sights on dealing with rogue letting agents and are taking steps to protect landlords and tenants from bad practices. There are already consumer protection laws in place for tenants, however, there’s growing evidence that concerns and complaints about letting agents are not being properly addressed.
A recent report from the Office of Fair Trading about the performance of letting agents, and a survey by Which? revealed that one in five tenants and one in six landlords were dissatisfied with the service they received.
Since inception, we’ve embraced the opportunity to reassure our customers by belonging to a redress scheme and strongly supports the Government’s strategy to target rogue letting agents. LettingaProperty.com are members of The Property Ombudsman, The UK Association of Letting Agents (UKALA) and SafeAgent. Each membership organisation is focused on improving standards of service delivered by those operating within the lettings industry.
How much can online letting agents save me in fees?
To understand how much you can save you in letting fees, let’s first take a look at what services you could have from a High Street Letting Agent. Most High Street Letting Agents offer 3 levels of service namely, Tenant Find only, Rent Collection and Full Management.
Would typically include advertising the property – The first part of the process would be to market the property to find prospective tenants. This could be done in a number of ways which are typically online, in the local newspaper, with a To-Let board and in the High Street Agent’s window. The online method is hands down the most effective tool of finding tenants. It is estimated that around 95% of all lets are as a result of advertising on Zoopla, Rightmove and Primelocation. These sites account for the majority of tenant enquiries.
Once a tenant has been secured, the agent would then initiate tenant referencing. Typically, the agent would charge the tenant around £250 per application to carry out these references.
Next would be the creation of the tenancy agreement. The majority of lets would fall under the Assured Shorthold Tenancy Agreement. Examples of where they would not be either letting to a Company, Holiday lets or where the landlord is living in the property i.e. taking on a lodger.
The deposit would then be secured with one of the tenancy deposit protection schemes. This would protect the tenant from unlawful deductions of the deposit and is a legal requirement. Failure to lodge the deposit and notify the tenant as to the whereabouts of their deposit could result in a fine imposed to the landlord for up to 3 times the deposit amount.
Once these elements of the tenant Find service have been completed, the landlord would then pay the Agent a % fee of the rent or a pre agreed fixed fee. Typically, a charge of around 75% plus VAT of the first month’s rent. Say the first month’s rent was £1000, the agent would, therefore, deduct £750 + vat, totalling £900.
The landlord would be left with £100 from the rent.
As in the tenant find service, the marketing of the property and the legal aspects would be taken care of. The main point of difference is, of course, monthly rent collection.
The agent would set about creating a standing order mandate with the tenant as per a condition of the tenancy agreement. Most agents would choose either to collect the rent on the 1st of the month or on the monthly anniversary of the start date of the agreement i.e. the 15th of every month.
The agent should then collect the rent from the tenant and transfer the balance to the landlord within an agreed timescale. This is an important aspect of the agreement between the landlord and the agent. Unfortunately, not all agents transfer the rent to the landlord on the same day they receive it from the tenant. We have heard some horror stories where it takes the agent up to 2 weeks to transfer the balance. By this time, the landlord’s mortgage payment is overdue and they may have incurred charges from the bank.
The agent would typically charge a fee of around £250 – £300 + vat to set up the advertising and rent collection service and then deduct a further % from the rent. This is normally in the region of 8 – 12% + vat per month. So if you rent is £1000, the agent would deduct £80 – £120 + vat per month. Over a 12 month let, this would set the landlord back £960 – £1440 + Vat. This is equivalent to around 10% – 14% of the annual income.
As in the tenant Find and Rent Collection services, the marketing and legal aspects will be covered. So too will the rent be collected monthly. The main point of difference would be the management of any maintenance issues that may arise during the course of the year.
The agent would typically have a network of trade’s people on hand to deal with maintenance issues such as electricians, plumbers, carpenters etc. They will, of course, need to contact you before any work is carried out unless the issue is of a serious nature and the tenant has the right to the service namely the boiler breaks down in winter and the tenant has no heating or hot water.
In extreme cases, we would expect on average between 2 – 3 calls per 12 months from the tenant to the agent. Generally speaking, most of these issues are resolved within 24 – 48 hours by sending out the relevant trade person to the property. In our experience, the most common causes for these calls are down to boiler services or plumbing leaks. The more serious of calls would be due to damp or fire.
As an enhanced service, the agent would typically look to charge a fee of around 15 – 20% + vat of the monthly rent. A fully managed property at £1000 per month would, therefore, cost in the region of £2100 + vat per year – equivalent to 20% of the total rental income.
How Can I Save On My Letting Agent Fees And Still Have The Same Level Of Service, If Not Better!
In comparison, we charge the following for these services for a property let at £1000 per month:
|Typical 12 Month Let||High Street||Letting a Property|
All Pricing Includes VAT
As you can see from the above, letting a property online is a far more cost effective method in finding tenants, the collection of rent or indeed managing the property.
A growing number of private landlords are opting for the online agent and taking over the management themselves. With the internet being a valuable source of tenants, it makes sense to try the online route first and if you are not amazed, you could then fall back on the High Street Agent with very little risk associated.
Would you use online letting agents?
Only 7% of landlords would use an online letting agent according to a recent poll run by the Property Academy! A total of 8000 landlords and tenants were surveyed and although 56% of landlords said they “would not use an online agent”, 37% said they were “unsure”.
The online lettings industry is relatively new, as one of the first organisations of its kind, we’ve been servicing landlords and tenants since 2008 and yes, it was a tough start, in the beginning, having to reassure landlords that they can do it themselves with our help and support. However, the more landlords that became aware of the cost savings benefit of the online route and the support available, the quicker our industry has developed. The online lettings route has become a far more mainstream and widely accepted alternative to letting a property through a high street agency.
To the 37% of landlords unsure as to whether they would use an online letting agent, let me offer some guidance. Contrary to popular belief, letting a property online is not as much ‘DIY’ as you would think. Sure, if you are an experienced landlord you are most likely comfortable with property regulations and landlord and tenant law. You may also be knowledgeable on deposits and tenancy agreements – great! An online letting agent will complement your ‘landlord business’ by assisting you with the marketing of the property on the major property websites and referencing of the tenant(s).
On the other hand, if you are a ‘first time landlord’ (like Joanna featured in the above video), the support you would get from an online letting agent like LettingaProperty.com is similar (if not a better) than that you would receive from a high street agency. We can help with marketing the property, referencing the tenants, writing the agreements, securing the deposit, collecting and guaranteeing the rent and provide assistance if you do ever get into a sticky situation with your tenants.
What to look for when choosing which online letting agents?
Once you have your shortlist of companies, consider the following:
- Have a look at their reviews. What are other landlords saying about them? Do they seem reputable?
- Are they well established, have they been trading long enough for you to feel comfortable they will be there when you need them?
- Do they have accreditation with regulated organisations e.g. The Property Ombudsman, UKALA and Safe Agent?
- Do they have Client Money Protection Insurance in case they cease trading and are holding onto yours or your tenant’s money?
- Do they give out your contact details to any caller? You may want to manage communication between interested tenants by receiving their contact details only and not have yours being passed onto tenants who may call at unsociable or inconvenient times.
- Is there transparency in the services they provide and is the price they offer seem true value for money?
- Do they include VAT in their pricing or is this a hidden cost?
- Remember, if it looks too good and too cheap to be true you may need to dig further to find out more.
- And finally, where is your property going to be advertised? The main property websites that we use include Rightmove, Zoopla and Primelocation. You should be on all three to get the best listing value and quality interest.
For those of you considering the best way to find a tenant for rental property, we have produced a 30 point checklist for landlords and for those that like to get into the detail, the CMA have produced an informative guide for letting professionals on consumer law. Although aimed at agents, there are some great pointers that landlords could take away too.