Using a letting agent

Letting agents typically offer two or three levels of service:

1. Finding tenants and arranging the let: for a one-off fee, an agent will find tenants for your property.

Once they have found some potential tenants, they will also collect references, run credit checks, collect deposits, and draw up tenancy agreements and inventories.

2. Rent collection: the letting agent will collect the rent from your tenants each month and chase any late payments.

3. Full management: the letting agent manages all aspects of the rental, not just the rent collection but also dealing with any queries and sorting out maintenance and repair work.

Letting agent fees

Letting agent fees can vary dramatically depending on the location of the property and the level of service you require.

Agents will usually base their charges on a percentage of the monthly rent, rather than demanding a flat fee for the full contract term.

How much should you expect to spend?

Fees for agents can range from below 10% of the rent to above 20%, depending on the service.

Full property management can cost anything from 12% to 20% of the total rent, depending on the area and which managing agent you choose. As an example, below are the standard fees charged by Savills, which has more than 100 branches in the UK.

• Letting, tenancy renewal and receiving rent: 15% of the total rent (minimum overall fee of £1,800 in London, or £1,200 elsewhere)
• The above plus property management: 20.4% of the rent  (minimum overall fee of £3,000 in London, or £2,400 elsewhere) 

The above fees include VAT.

Can you negotiate on fees?

Yes: it's a competitive market, so you should compare several quotes and be prepared to haggle to get the best deal.

Not all deals are equal, either. Some agents might include services such as deposit registration and undertaking Right to Rent checks as part of the package, while others will charge extra.

Make a shortlist of what you're looking for from your agent and always read the small print before rushing in.

How to choose the right letting agent

When comparing agents, here are some things to consider:

Managing your own buy-to-let: how to find the right tenant

If you choose to manage your own property, finding the ideal tenant should be top of your to-do list.

Finding a quality tenant who will want to stay in the property for the long term will allow you to avoid costly void periods (when the property remains empty).

As a starting point, here are some tips to help you find your ideal tenant:

• Think about whether to furnish the property: what kind of property will most appeal to your ideal tenant? For example, if you're letting a family home, your target tenants might want an unfurnished property that they can see as a blank canvas. Student lets or young flatsharers, however, often prefer a fully furnished home.
• Do thorough background checks: take the time to ensure you're getting a trustworthy tenant. As a minimum, you'll need to have them undertake credit checks, and ask for employer and landlord references. If you're not comfortable doing this yourself, pay a managing agent to look after this part of the process for you.
• Choose the right amount of security deposit: some tenants are asked to pay six weeks' rent upfront, while others only pay a month. While the former offers you greater protection, it could price some prospective tenants out.
• Go with your instincts: while you don't want to take on an unreliable tenant, try not to be precious over finding the perfect individual. If you've met them, no alarm bells are ringing and they've passed the background checks, it's best to press ahead and avoid any costly void periods.

Tenancy agreements

When you let out a property, you'll need to have an Assured Shorthold Tenancy Agreement (AST) drawn up, outlining the contractual terms of the let.

If you use an agent, they'll deal with this for you. Many letting agents use templates provided by membership organisations such as ARLA, which offers seven different templates.

It is possible to draw up a contract yourself using online templates, or by copying the standard text used in other people's contracts and then adding the specifics of your property.

If you choose this route, it's best to take professional legal advice to ensure your contract covers the important areas and that you'll be legally covered.

Tenancy agreement checklist

Tenancy agreements should contain general contractual information but also some specifics about the property you're letting out - such as who needs to maintain the garden.

As a starting point, a contract should contain the following:

• The start and end dates of the tenancy
• Data protection information stating that the tenant's details can be shared only with relevant parties such as inventory clerks or utility companies
• Details of important fixtures and fittings within the property and the outside space, and an addendum including the items recorded in the inventory
• Details of how much deposit the landlord/agent will take and which tenancy deposit protection scheme is used to protect deposits should there be a dispute
• How much the rent will be, when it's due and how it is to be paid, plus what happens if the tenant defaults on the rent
• Notice the tenant has to give to leave the property, and how you can regain possession of the property
• Tenant obligations, such as keeping the home in good order and notifying the landlord/agent if there are any problems
• Details of 'fair wear and tear', highlighting that some parts of the property - eg carpets - may naturally deteriorate with age, and that the tenant should not be liable for this
• The signatures of both the landlord and tenant(s)

Deposit protection

Tenancy deposit protection schemes

There are three deposit protection schemes you can register your tenant's deposit in.

• Deposit Protection Service
• Mydeposits
• Tenancy Deposit Scheme

When you log the deposit, the tenant should be posted a certificate confirming the full amount that's been protected.

Releasing a deposit at the end of a tenancy and dispute resolution

At the end of a tenancy, provided the tenant has stuck to the terms of the tenancy agreement and is up to date with all bills, they should be entitled to their full deposit back.

If the tenant has broken the terms of the lease, however, you can raise a claim to have some or all of the deposit returned to you.

As a landlord, you should take the following steps at the end of a tenancy:

1. Encourage the tenant to thoroughly clean the home, move any belongings and look through the lease and inventory in advance of this.
2. Confirm with the tenant that any keys, fobs and permits have been returned, that utility accounts have been settled and that they have provided a forwarding address.
3. Arrange a check-out inspection.
4. After the inspection, identify any deductions you wish to claim (for cleaning, replacement of any items etc) and speak to the tenant directly about this.

If there's no dispute, you have 10 days to release the agreed amount of deposit back to the tenant.

If there is a dispute, either party can raise this with the company running the deposit protection scheme, which will offer a formal mediation service. A decision should be made within 28 days of the evidence being supplied.

Inventories

If you're using a letting agent, they'll arrange a check-in and check-out inventory on your behalf.

Inventory reports are particularly important if you're letting a furnished home, as in addition to providing full details on the condition of the property itself, they'll also itemise any items you're including in the let.

This will give you some evidence if anything goes missing or gets broken, or if the tenancy ends in a dispute.

While it is possible to conduct an inventory yourself using templates available online, paying an independent inventory clerk can be a worthwhile investment.

How quickly should you fix maintenance issues?

If you're managing your own let, you'll need to be on the ball when it comes to fixing any problems that arise during the tenancy.

The way in which you respond to maintenance issues can have a significant effect on the relationship you have with your tenant - as while the boiler not working for a day or two might not worry you too much, it'll certainly be an issue for the person shivering in the house.

In practice you should be contactable and have a list of contacts - such as plumbers, electricians and locksmiths - who you can call upon to fix any problems.

If you don't feel that you can commit to this, you might be better instructing a managing agent to look after the property.

Buy-to-let apps

If you do decide to go it alone, you can turn to technology for a helping hand.

There are now a range of apps available to help you stay on top of all elements of renting our your home.

Please note that the apps listed here are for illustrative purposes and are not endorsed by Which?.

• Calculate rental returns: landlords can stay on top of the financial states of all their properties with apps such as Rentr.
• Keep track of rent collection: apps such as Landlord Studio provide dashboards where landlords can keep track of whether rent has been received.
• Expand your portfolio: if you're investing somewhere new, check out AroundMe to find out what the local amenities are like.

Ending tenancies and evictions

Tenancy agreements initially last a set amount of time, usually 12 months.

After this period, the contract continues to roll on a month-by-month basis until it's either extended for another set period or the landlord or tenant serves notice.

If the fixed-term tenancy has expired or is set to end (or has a 'break' clause at a set point), you can formally serve your tenant with two months' 'notice to quit'. This notice should include the specific date that you expect to take the property back.

If you're still in the fixed term, you can only ask your tenant to leave if they're in arrears with their rent payments or have broken the rental contract.

In Wales, long-awaited rental reforms were introduced in December 2022, with contract-ending notice periods being significantly extended from two to six months. Landlords also cannot include a break clause to regain possession in fixed-term contracts of less than two years.

Remember to renew tenancy agreements

Once a tenancy agreement expires and moves on to a 'rolling' contract, either side can give notice. This is usually two months, but some tenancy agreements will specify different notice periods.

If you have a good tenant, it's worth thinking ahead of time and starting the ball rolling to renew a tenancy a couple of months before it's set to expire. This way both you and your tenant have the guarantee that the other party can't serve notice imminently.

Be aware of future rental law changes

While changes have been made in Wales, the government in England is edging nearer to a wide-ranging rental system shake-up.

Blanket bans on pets, families with children or those in receipt of benefits are proposed as part of the Renters’ Reform, which could become law in 2023.

No-fault evictions are due to be outlawed and tenants will be given more power to challenge landlords who fail to meet their obligations. The bill is in the process of becoming legislation, so key dates are yet to be determined.

Minimum tenancies

The government is currently debating bringing in minimum-term tenancies of three years.

Any such legislation would likely include 'break' clauses for tenants after six months.

It remains to be seen if and when these plans will come to fruition.

How to evict a tenant

Eviction can be a complicated process, even if you can prove that your tenant has broken the terms of the contract.

If you're looking to evict your tenant, for example if they haven't paid rent or have damaged your property, you'll need to follow a strict set of procedures to avoid breaking the law.

• Which? Consumer Rights has put together a full guide on the eviction process, including template letters that you can use to contact your tenant.