Letting agent fees for landlords explained

Letting agent fees work quite differently depending on which side of the tenancy you are looking at, and it is worth understanding both halves clearly if you are a landlord weighing up whether to use an agent and how much that is likely to cost. The Tenant Fees Act 2019 dramatically changed what can be charged to tenants, while fees charged to landlords remain a matter of market competition rather than legal caps.

The Tenant Fees Act 2019 banned most fees that letting agents and landlords could previously charge tenants directly, and it is worth knowing what remains permitted, since anything outside this list is now a "prohibited payment." Tenants can still be asked to pay rent, and a refundable tenancy deposit, capped at five weeks' rent for tenancies where the annual rent is under £50,000, or six weeks' rent where it is £50,000 or more. A refundable holding deposit, capped at one week's rent, can be taken to reserve a property while referencing is completed, and only one holding deposit can be held for a given property at a time. A capped £50 admin fee applies only if a tenant specifically asks to change the tenancy, unless the landlord can demonstrate reasonably higher costs. Default fees for things like late rent or lost keys are permitted only if set out clearly in the tenancy agreement, and early-termination costs can be charged, but only when the tenant requests to leave early, and only up to the landlord or agent's reasonably incurred costs. Utilities, council tax, TV licence and communications costs remain chargeable where required by the tenancy. Everything else — referencing fees, inventory fees, check-out fees, "administration" fees unconnected to a tenant-requested change, and similar charges that used to be routine before 2019 — is now banned.

In practice, the holding deposit is usually the first payment a prospective tenant makes, taken once an application is accepted in principle, to reserve the property while referencing — credit checks, employment and previous landlord references — is carried out. It should be returned in full, or put towards the first month's rent, once the tenancy agreement is signed, and can only be withheld in specific circumstances, such as the tenant providing false or misleading information, or withdrawing from the tenancy after referencing has started for no good reason.

On the landlord side, fees remain unregulated by any legal cap and are set by market competition between agents, which means it is worth comparing more than one quote. Let-only, sometimes called tenant-find, covers finding and referencing a tenant and getting the tenancy set up, without ongoing management afterwards; this is commonly charged either as a percentage of the first year's rent, typically around 8% to 12%, or as a flat fee equivalent to roughly 50% to 100% of one month's rent. Full management, where the agent handles rent collection, repairs, compliance and day-to-day tenant contact throughout the tenancy, is commonly quoted at 10% to 15% of the monthly rent plus VAT. It is worth being aware that the realistic all-in cost, once VAT and any additional charges are added to a headline management percentage, often works out closer to 15% to 20% of your rental income overall, so it is worth asking an agent for a complete breakdown of every charge rather than judging on the headline percentage alone.

Because landlord-side fees are entirely down to market competition rather than any legal cap, it is worth treating them the same way you would treat any other service quote — asking at least two or three local agents what they charge for both let-only and full management, and getting a complete written breakdown of every additional charge, such as inventory preparation, check-out reports, or renewal administration, rather than assuming the headline percentage is the whole story.

Client money protection, usually shortened to CMP, is a separate but important safeguard worth checking before appointing any letting agent, and it is not optional. Since 1 April 2019, letting agents in England who hold client money — rent, deposits, or funds for maintenance work — have been legally required to belong to a government-approved CMP scheme. This exists specifically to reimburse landlords and tenants if an agent misappropriates or loses client funds, for example if the agent becomes insolvent. Failure to belong to an approved scheme can carry a fine of up to £30,000, and failure to properly display the certificate of membership, both on the agent's website and in their office, can carry a separate fine of up to £5,000. Checking for a valid CMP certificate is one of the simplest and most important due-diligence steps before handing over rent or deposit funds to any agent.

This article is general information, not financial or legal advice, and fee levels and specific rules can change, so it is worth confirming current terms directly with any agent you are considering and checking official guidance for anything you rely on. Our directory lists UK letting agents and property managers by area if you are ready to compare.

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