For most landlords who want to avoid the stress of letting out a property and have an expert letting agent do this for them is worth the price – but who should they use? High street or online letting agents?
Here we take a closer look at the differences between the two types of letting agent but for many, the services of an online agent should meet most of their needs.
There’s no doubt that the property market has been affected by technology in recent years with most landlords now turning to the internet to find an investment property to buy.
Also, the most important resource when it comes to finding quality tenants is online advertising.
This means that growing numbers of landlords are wanting to use an online letting agent to advertise rental property and help them run it on a day-to-day basis.
What is an online letting agent?
While they work in a similar way to traditional letting agents, there will be no high street presence which for many landlords will be a disadvantage.
However, most online letting agents will deliver all of the services that a landlord will require but at a cheaper rate.
And while they may not charge as much, these online fees will vary between agencies.
There are pros and cons to all online letting agents but the main aim is to run a property portfolio at a reduced cost.
Also, the online agents will have other tools at their disposal to give landlords more control in delivering higher profits which many landlords, particularly those with small portfolios or little experience, may find beneficial.
In addition to being cost-effective and giving landlords more control, an online agent usually has the ability to offer economy of scale because they tend to have more rental properties on their books and these lower advertising costs are passed on.
It’s also important to appreciate that online letting agents are growing quickly in popularity and they aren’t just small one-man bands.
What do letting agents do for landlords?
As mentioned previously, there are pros and cons about what letting agents do for landlords.
The downside for online agents is that there is still an element of DIY to their offering since the landlord will need to show tenants around a property and the agent may not have that element of local expertise a landlord may be looking for.
High street agents tend to know the area well and will know where tenants are looking to live.
They can also answer potential questions such as the location of the best pubs and restaurants that tenants might be interested in and good schools and parks that an online letting agent may not – though if a landlord is showing a potential tenant around the property then they should be able to answer these questions.
The other issue is that there are lots of people who prefer to do business with real human beings, which gives high street agents an advantage over their online rivals.
How much do letting agents charge to find a tenant?
While offering lower fees, online agents can attract potential tenants quickly and offer tenant referencing and rent collection services. Most will offer these services on a separate basis which may be a cost-effective way of sourcing and then checking new tenants.
Costs will vary between agencies but some may charge as little as £95 for finding a tenant for a rental property. The checking will also be a separate charge.
High street agents may charge three or four weeks rent to find suitable tenants. Others will look to charge between 6% and 8% of the tenancy contract.
For the money, they will find a tenant, take care of collecting the deposit and carrying out reference checks. They will also organise the tenancy agreement and ensure that an inventory is taken of the property.
For landlords who are interested in online agents, then Upad advertises that it will charge landlords one-third of the price of finding tenants than a high street outfit will want.
Opting for a high street letting agent may see fees rising as high as 15% of the rental income, though this is often negotiable, and you’ll need to take VAT into account.
For an accidental landlord, that is someone who is renting out a property they may have inherited, then these can be high costs which may put them off using an agent’s services.
Can a letting agent sign on behalf of a landlord?
The short answer of, ‘Can a letting agent sign on behalf of a landlord?’ is, ‘Yes’. But the agent needs to be aware of a landlord’s wishes when acting on their behalf.
Also, it’s a fairly common occurrence that a landlord may not be aware that their property has new tenants until after the event.
Essentially, the relationship between an agent and a landlord is known as a ‘fiduciary relationship’. This means that it is based on trust and the agent must behave honourably without taking advantage of their position.
Communication will be key between agents and landlords to ensure that the property is run as a landlord wants it to be.
How do I choose a letting agent?
For any landlord asking the question, ‘How do I choose a letting agent?’ then it may be a good idea to take a step back and not simply sign-up with a high street letting agent.
While there are lots of these agents about, you may find that the services being offered by high street and online agents will be fairly similar.
Both will essentially offer a landlord ways to boost their marketing and also carry out any tenant and guarantor checks as well as running the extra management services.
The only difference is that an online letting agent won’t have a bricks and mortar office in an expensive high street but they will be available outside of office hours and at weekends, either by phone or online.
This means an online letting agent not only has lower overheads but they can pass these savings on to landlords with lower costs.
This also extends to offering more control to landlords so they can create their own property advert, arrange and conduct viewings for tenants and then confirm the booking online.
Most online letting agents will offer a bespoke management package so the agent will take control of issues such as rent collection and property management while offering a dedicated landlord and tenant customer service.
But which is letting agent offering is the best?
For most landlords, it will be a tough decision to make and they will need to give this issue careful consideration.
When a landlord needs to determine which of the two types of agent will be best, a lot will be down to a landlord’s personal preferences but you should bear in mind that an online letting agent is more accessible and will have the same level of market knowledge as a high street letting agent.
In addition, the online agent can access marketing data to help advise landlords on what they should be charging in rent and also point to the best locations for a potential investment.
The big difference between online and high street agents will be down to property management. The high street agents will offer the service of showing prospective tenants around a property if the landlord does not live in the area.
With an online agent, the landlord may need a more hands-on approach for running their property and they will need to make themselves available for this during the week and weekends to show prospective tenants the property.
One of the upsides to this is that the landlord will meet their tenant face-to-face so they can establish a relationship rather than having to rely on third-party communication.
There’s also the issue of marketing and advertising; while high street agents will have a prominent office and can advertise rental homes in their windows, they will also be using property portals and their own website for advertising homes for rent.
Alternatively, online letting agents will also use the same property portals and should have more experience about digital marketing and have more expertise and knowledge on how to find potential tenants, particularly in what is an increasingly digital marketplace.
The best online letting agents – at-a-glance
With so many excellent online letting agents available today, you may find that our quick at-a-glance comparison table will help.
There are more details on the Property Road online letting agent reviews page but here’s a snapshot of what the best ones offer:
Lettingaproperty.com (Rating: 9.4)
With packages starting at £39 per month, this is a budget-friendly offering and their packages offer value for money. Landlords also get a wide range of extra services to select, including the collection of rent.
It’s not the best known of the online letting agents available but our team gave them a rating of 9.4.
OpenRent (rating: 9.3)
There’s the enticing prospect of their cheapest package being free, plus free trials of their paid offerings help to make this a very attractive prospect. The extra services are also reasonably priced.
The Property Road team rated OpenRent at 9.3, with the major downside of a fully managed ongoing service not being offered.
Upad (Rating: 8.9)
With more than 15,000 landlords signed up, Upad is one of the big players. Their cheapest package starts at £149 and their list of extra services is excellent.
While the team rated Upad at 8.9, the offering is suitable for accidental landlords and those with a large portfolio, with the option of paying upfront or on successful completion of a task.
The account managers are Arla certified – a big plus – and there are more than 30 extra services to choose from. The downsides include being dearer than rivals and they do not offer hosted tenant viewings.
An online letting agent will be substantially cheaper
Finally, there’s no hiding from the fact that an online letting agent will be substantially cheaper than one on the high street.
Both online and high street agents will have set fees for finding tenants and conducting a referencing exercise and then charge a property management fee as a proportion of the monthly rent.
On the other hand, an online agent may simply offer a fixed property management fee based on how many tenants are in the property.
The bottom line on whether you should use an online agent or one on the high street is down to how much of a hands-on approach you would like to take but for most landlords using an online agent will appear to be the perfect solution – and help boost profits by doing so.