When comparing 'tenant find only' services, what are the typical upfront costs for advertising, referencing, and AST creation from agents in London, and how can I negotiate these down effectively?
Quick Answer
Tenant find only services in London typically cost £500-£1,500. Negotiate by offering good tenant leads, longer contracts, or bundling services to secure better rates.
## Navigating London's Tenant Find Costs Effectively
Finding the right tenant for your London property is crucial for a successful investment. While 'tenant find only' services can be invaluable, understanding their associated costs, particularly for advertising, referencing, and Assured Shorthold Tenancy (AST) creation, and knowing how to negotiate them is key. Agents in London, given the competitive market and higher operating expenses, will typically charge more than in other parts of the UK. These costs are a direct reflection of the work involved in attracting, vetting, and legally onboarding a new tenant.
* **Advertising Costs:** Landlords often don't see a separate line item for advertising, as it's usually bundled into the overall 'tenant find' fee. However, the agent's ability to market your property effectively across major portals like Rightmove and Zoopla, alongside their own website and network, forms a large part of the service's value. The underlying cost for such exposure is significant for agents, which is passed onto you. Without this broad reach, finding quality tenants quickly would be much harder, leading to longer void periods.
* **Referencing Fees:** Comprehensive referencing is non-negotiable. This involves credit checks, employment verification, previous landlord references, and affordability assessments. High-quality referencing minimises your risk. Typically, agents use third-party referencing companies, incurring a cost per applicant. While you won't pay this directly today – tenant fees were banned in 2019 – it's factored into the agent's overall 'tenant find' charge. Poor referencing can cost you thousands in lost rent and potential eviction costs down the line.
* **AST Creation Fees:** The Assured Shorthold Tenancy agreement is the backbone of your landlord-tenant relationship. A well-drafted, legally compliant AST is vital. Agents typically use templates refined by legal professionals, ensuring it covers all necessary clauses, including those regarding repairs, rent payments, and notice periods. Getting this wrong can lead to serious legal complications. A bespoke, comprehensive AST ensures you're protected and compliant with all relevant housing legislation.
Typical 'tenant find only' service fees in London can range significantly, but generally, you're looking at a figure between £500 and £1,500, or a percentage of the first month's rent, often 75-125%. For a property with a first month's rent of £1,500, this could mean a fee of £1,125 to £1,875. This upfront cost covers the agent's time, resources, and expertise in securing a suitable tenant and setting up the tenancy correctly. Remember, the value here isn't just the flat fee, but the reduction in your stress and the professional handling of the entire process.
## Smart Ways to Reduce Your Tenant Find Fees
Negotiating with agents isn't about being aggressive, it's about demonstrating value and understanding where they have margin. Many landlords simply accept the first quote, missing opportunities to save hundreds of pounds.
* **Bring Your Own Leads:** If you've already found a prospective tenant through your own networking, word-of-mouth, or social media, and simply need the agent to perform the referencing and AST creation, highlight this. You're effectively taking away a significant portion of their work, like advertising and initial viewings. Be upfront and ask for a reduced fee based on the services they *are* providing.
* **Offer a Longer Contract:** While 'tenant find only' is a one-off service, if you can commit to using the agent for a longer period, perhaps for future 'tenant find' requirements or even transitioning to a 'fully managed' service down the line, agents may be willing to offer a discount. This provides them with potential future revenue, making a present concession worthwhile.
* **Bundle Services (If Applicable):** If you require other services like an Energy Performance Certificate (EPC), gas safety certificate, or electrical safety report, ask if they can bundle these into a discounted package. While the current minimum EPC rating for rentals is E, the proposed shift to C by 2030 for new tenancies means many properties will need upgrades, and agents often have preferred contractors who can offer competitive rates when part of a larger service agreement. This is a great area for landlords to save money if they need multiple services.
* **Provide a Well-Presented Property:** A clean, well-maintained property that requires minimal preparation from the agent is a plus. It minimises their workload in terms of advising on presentation and reduces the time it takes to secure a tenant. A clear, current set of photos you've taken might even help, showing you're proactive.
* **Emphasise Repeat Business:** If you have multiple properties or plan to acquire more, subtly mention this potential for repeat business. Agents value long-term relationships and a good landlord client is a significant asset to their business. This can open the door to preferential rates or service levels.
* **Request an Itemised Breakdown:** Ask what exactly is included in the 'tenant find only' fee. Sometimes, agents might include legal expenses insurance or rent guarantee insurance, which you might not need or prefer to source yourself. Knowing the breakdown allows you to negotiate on specific components. Also, ensure there are no hidden fees for things like inventory checks, which should typically be separate or clearly stated.
## Investor Rule of Thumb
Always view agency fees as an investment in a secure tenancy, not merely an expense; a well-negotiated fee ensures expert service without overpaying, protecting your asset and income stream.
## What This Means For You
Most landlords don't lose money because they're overcharged on 'tenant find', they lose money because they don't understand the value of a good agent or how to negotiate effectively. Understanding the true cost components and an agent's motivations allows you to secure better terms for your property. If you want to dive deeper into optimising every aspect of your property business, from finding deals to managing tenants, this is exactly what we unpick inside Property Legacy Education.
Steven's Take
Listen, in London especially, every pound counts towards your profit margin, which, let's be honest, is already squeezed by higher property prices. Many agents will quote you their standard rate, and sometimes it feels like a take-it-or-leave-it situation. But that's usually not the case. The trick is to demonstrate that you're an attractive client who values professionalism but is also savvy. Don't be afraid to ask for a reduced fee if you've done some of the legwork yourself, like finding a reliable tenant. Remember, a good agent wants a good landlord. If you're organised, responsive, and keep your property in top shape, they'll see the value in keeping you happy, which often means being flexible on fees. Focus on showcasing how easy you make their job, and you'll find them more willing to meet you halfway.
What You Can Do Next
**Research Multiple Agents:** Obtain quotes from at least three different letting agents in your London area to compare their 'tenant find only' fees and included services. Don't just look at the price, but understand what's covered.
**Understand the Breakdown:** Ask each agent for a detailed breakdown of what the 'tenant find only' fee includes, specifically for advertising, referencing, and AST creation. Identify any optional extras they might be bundling.
**Pre-vet Your Own Tenants:** If possible, conduct initial searches for potential tenants yourself through local networks or social media. If you bring a strong candidate to the agent, use this as leverage for negotiation on advertising fees.
**Highlight Your Property's Strengths:** Emphasise how quickly your property is likely to let due to its condition, location, or demand. A property that's easy to rent requires less effort from the agent, giving you negotiating power.
**Negotiate on Services, Not Just Price:** Instead of just asking for a lower price, propose changes to the service. For example, if you provide the tenant, ask for a reduction in the advertising component. Or, inquire about a reduced fee if you commit to using them for a renewal AST at the end of the initial term.
**Be Ready to Walk Away (Tactically):** Having done your research, if an agent isn't willing to budge, be prepared to politely state you're considering other options. Sometimes, the threat of losing your business can prompt a better offer, especially if you're a desirable client.
Get Expert Coaching
Ready to take action on buying your first property? Join Steven Potter's Property Freedom Framework for comprehensive, hands-on property investment coaching.