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Rent to Rent - Does the landlord still pay the agent their management fees? #R2Rshortandsweet #25

Are you confused about who pays the agent fees?
I’ve explained in simple terms who pays these fees…

Hello, I’m back with our rent to rent short and sweet series and this week we have a lovely question from Jermaine through our YouTube channel where he commented on one of my previous videos -  how the letting agents make money when they're working with rent to renters.

Jermaine asked me three follow-up questions and in today’s video and blog, I'm going to cover the first one…

“Hello Stephanie, you truly have a wonderful and heart-warming smile. My first question is, does the landlord still pay the agent and management fees?”

This is something people really struggle with, so I want you to think about it this way…

There's three people in the relationship:

1.       The letting agent

2.       The landlord

3.       And you


You’re taking the place that would normally be occupied by the tenant. You as the tenant pay the letting agent the rent. For example, if the rent is £1,000 - you pay that to the letting agent, and the letting agent will keep their commission (let’s say it’s 10%) from the £1,000 rent and will therefore pay the landlord £900.

So, whatever the rent is, you pay it to the letting agent and then whatever arrangement the letting agent has with the landlord, they pay accordingly – it could be 10% or 15%.

Either way, it doesn't impact you. What you need to focus on is what is the rent that you're paying to the letting agent.

This is what can confuse a lot of people.

You will be managing the property, and this is why sometimes letting agents are resistant to working with rent to renters because they feel that the landlord could skip paying them and just work directly with you, which is true.

We like to work with letting agents in some cases because we can get more properties and it can be a fruitful partnership.

The letting agent bring the properties to you so you don’t have to go out there and find them – and then you manage the properties and pay the rent.

The letting agent is happy to be in the middle because they get to keep their commission and they don't have to do as much work as they normally would, and in some cases no work at all - which is great for them.

Everybody's a winner in that scenario.

What I have described above is where the letting agent is fully managing the property and is collecting the rent.

Another service letting agents provide is Tenant Find Only.

This is where a letting agent is only providing the tenant, and then the property owner (the landlord), will deal directly with the tenant once the tenant has moved in.

We've worked with letting agents before in this way. We would pay the letting agent a fee for moving in and the landlord also pays the letting agent a fee for finding the tenant.

Those fees are a one-off payment - and then we’re able to work directly with the landlord.

It's worthwhile asking your letting agents if they are not willing to do a sandwich arrangement where they stay in the middle (as I described above), if they would be willing to put you forward as a tenant if they only offer a ‘tenant find only’ service.

I hope that was useful and clarified any confusion you had on this subject.

If you have any other questions, please do get in touch.

Bye for now and all the best,

Stephanie & Nicky

xx

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