I'm a new landlord. What upfront letting agent fees should I expect for tenant find only, and what are the specific fees they might try to add on for things like tenancy agreements, referencing, or inventory checks?
Quick Answer
Landlords should expect tenant find fees to be 50-100% of the first month's rent plus VAT. Since the Tenant Fees Act 2019, most tenant-related fees are restricted in England, but other UK regions may still permit them, including for inventory, agreements or referencing.
## Transparent Letting Agent Fees for Landlords
In England, since the Tenant Fees Act 2019, landlords are generally prohibited from passing on most tenant-related fees to tenants. However, landlords are still liable for a range of fees charged by letting agents for various services. For a 'tenant find only' service, you should typically expect to pay between 50% to 100% of the first month's rent plus VAT, which adds 20% to the base fee, for example £600 + £120 VAT = £720. This service usually covers advertising the property, conducting viewings, and securing a suitable tenant. This particular fee is often one of the largest upfront costs when engaging a letting agent, highlighting the need for clarity on what is included. Always request a full breakdown of services covered by the fee. Furthermore, some agents may offer tiered 'tenant find' services, with the higher-priced options potentially including more comprehensive checks or photography quality. Understanding these differentiations is crucial for landlords to compare costs accurately across different agencies.
### What specific fees might agents try to add on?
While the Tenant Fees Act 2019 in England restricts what can be charged to tenants, it doesn't prevent agents from charging landlords for all associated services. Outside of England, or for services not covered by the 'tenant find' package, agents may levy additional charges. For instance, in Wales, Scotland, or Northern Ireland, which have different regulatory frameworks, fees for services like referencing, tenancy agreement drafting, or inventory checks might still be passed on. In England, any itemised charges for these tenant-facing services, if not already included in the 'tenant find' fee, would be payable by the landlord and should be clearly detailed in the agent's terms of business. Landlords should scrutinize any quoted 'tenant find' fee to ensure it explicitly includes these crucial steps, such as thorough tenant referencing, to avoid unexpected costs. A landlord letting a property at £800/month could face an additional £80-£150 for an inventory check if not included in the initial fee, significantly impacting their initial cash flow.
### Does the Tenant Fees Act 2019 protect landlords from these additional fees?
The Tenant Fees Act 2019 primarily protects tenants in England from various fees, not directly landlords. It restricts what charges agents can pass on to tenants, making it illegal for agents to charge fees for things like referencing, inventory, tenancy agreement drafting, or renewals directly to tenants. Consequently, if these services are provided, the cost is shifted to the landlord. From an agent's perspective, they must either absorb these costs, include them within their overarching 'tenant find' or management fees, or charge them directly to the landlord. There are some exceptions for 'permitted payments' to tenants, such as holding deposits (capped at one week's rent) or default fees for late rent or lost keys. However, the overarching impact is that landlord fees for transparent and compliant agency services have generally increased in England since the act’s implementation, as agents now need to recover costs previously borne by tenants.
### How do these fees vary across the UK?
Regulations regarding letting agent fees differ significantly across the UK. In England, as noted, the Tenant Fees Act 2019 makes it illegal to charge tenants anything beyond rent, a refundable tenancy deposit (capped at five weeks' rent for annual rents under £50,000, six weeks otherwise), a refundable holding deposit (capped at one week's rent), and specific permitted payments. This generally means landlords directly bear the costs for services like referencing (£30-£60 per tenant), inventory creation (£80-£180), and tenancy agreement drafting (£50-£100). Scotland banned tenant fees in 2012, so similar costs fall on landlords. In Wales, the Renting Homes (Fees etc.) (Wales) Act 2019 largely mirrors the restrictions seen in England, effectively shifting costs to landlords. Northern Ireland has not introduced comparable legislation, meaning agents there may still charge tenants for referencing or administration fees, though this practice is becoming less common due to market competition and best practice guidelines. When considering agents, landlords should always clarify these costs based on their property's location within the UK.
## Understanding the True Cost of Tenant Find Services
When evaluating a 'tenant find only' service, the upfront fee (often 50-100% of the first month's rent + VAT) is just one component. Landlords must understand what integral services are included versus what might incur additional charges. For example, if advertising, professional photography, tenant referencing, and tenancy agreement preparation are not explicitly stated as inclusion, they are likely to be extra. A landlord with a property at £950 per month could pay £950 + VAT (£190) = £1,140 for the tenant find fee. If a professional inventory and check-in report (£150) plus guarantor referencing (£50) are needed and not included, the total upfront cost jumps to £1,340. Always ask for a detailed breakdown, similar to how you'd scrutinise the "rental yield calculations" before investing.
## Hidden Charges and How to Identify Them
Landlords should be wary of ambiguous clauses in agent contracts. Some agents might quote a low 'tenant find' fee but then itemise charges for services that are fundamental to securing a tenancy compliant with current regulations. These could include 'compliance checks,' 'deposit registration fees,' or 'key cutting charges,' which in England, under the Tenant Fees Act 2019, often cannot be charged to tenants and therefore become a landlord's cost if not bundled. Always request a clear contract outlining all potential fees. Examine the contract for terms like 'setup fee' or 'administration fee' which might thinly veil charges for referencing or agreement drafting.
## Investor Rule of Thumb
If a service is essential for a compliant tenancy and legally cannot be charged to the tenant, assume the cost will be borne by the landlord, either upfront or within the agent's main fee structure.
## What This Means For You
Most new landlords don't lose money because they use an agent, they lose money because they enter into agreements without fully understanding the fee structure. If you want to know how to properly budget for letting agent costs and ensure compliance, this is exactly what we cover within Property Legacy Education.
Steven's Take
The clarity around letting agent fees has significantly changed, particularly in England, since the Tenant Fees Act 2019. My advice to new landlords is to never assume what’s included in a headline 'tenant find' fee. Always ask for a detailed, itemised breakdown of all potential charges you, as the landlord, will incur. Pay particular attention to elements like professional photography, comprehensive referencing for all tenants and guarantors, inventory reports (both check-in and check-out), and the drafting of the tenancy agreement. These are non-negotiable for a professional, compliant tenancy, and if they're not explicitly bundled, they will likely be extra costs. A £700 tenant find fee could easily become £1,000+ once these essentials are factored in. Compare agent quotes thoroughly, not just on the headline fee, but on the full scope of services provided for that cost.
What You Can Do Next
Request a fully itemised list of all charges from at least three different letting agents for their 'tenant find only' service. Ensure this includes all potential landlord-borne costs for tenant referencing, inventory, and tenancy agreement drafting. This helps you compare 'apples to apples' rather than just headline fees.
Review the letting agent's terms of business and landlord agreement carefully before signing. Highlight any ambiguous fees like 'admin fees' or 'compliance charges' and ask for clarification in writing on what they cover and if they apply to you. Clarify the total cost of finding a tenant, including the 20% VAT.
Check gov.uk for the Tenant Fees Act 2019 guidance (England) or equivalent legislation for Wales and Scotland. Understand what fees are legally prohibited to avoid agents trying to pass on unlawful charges to your tenants, which could leave you liable if challenged. For Northern Ireland, consult industry bodies for best practice guidelines.
Consider directly asking agents: 'What is the absolute maximum I will pay for a tenant-find service, assuming a comprehensive reference check for two tenants, a professional inventory, and the drafting of a standard AST?'. This will force transparency and give you a clear budgeting figure.
Factor the base 'tenant find' fee (e.g., 50%-100% of first month's rent + VAT) into your upfront investment calculations. For a £1,200/month property, this could be £720-£1,440. Also, budget an additional £200-£400 for potential extra services like professional photography or independent inventory reports that may not be included.
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