Am I paying my letting agent too much?

Agents almost always quote their percentage excluding VAT, so the headline number understates the real cost by a fifth. With VAT at 20%, a “12%” fee is really 14.4% of your rent, a “15%” fee is really 18%, and an “18%” fee is really 21.6%. When you compare your agent against the normal range, always do it on the VAT-inclusive figure: that's the money that actually leaves your rent.

Where you should sit inside the range depends on what you get. The top end can be defensible for a hands-on service on a demanding property; the same percentage for an agent who forwards emails and little else is not. Our letting agent fees guide breaks down the full menu of charges agents use.

Pull out your management agreement and look for each of these by name. We can't tell you what your agent charges for them (that's exactly why you need to check your own paperwork), but these are the clauses to find:

• Renewal or re-let commission: a fresh fee charged every time the tenancy renews, even though it's the same tenant the agent found once, years ago.
• “Management of works” markups: a percentage added on top of contractors' invoices for repairs the agent arranged, so every repair costs you more than the tradesperson charged.
• Inventory and checkout charges: separate fees for documenting the property's condition at the start and end of each tenancy, billed on top of the management percentage.
• Marketing fees: a charge for advertising the property each time it's re-let, even though finding tenants is the core of what the percentage supposedly pays for.

None of these is illegal to charge a landlord: the Tenant Fees Act 2019 banned most fees charged to tenants, not to you. But each one you find should be added to your true annual cost before you judge whether the headline percentage is fair.

Five steps, about five minutes with your statements in front of you:

1. Pull 12 months of statements. A single month hides one-off charges; a full year catches renewals, repairs and re-lets.
2. Total every deduction, including VAT. Management fees, markups, inventory charges, admin fees: everything the agent kept or charged, at the VAT-inclusive amount.
3. Divide by your annual rent. The result is your true percentage: the number to compare, not the one in the brochure.
4. Read the renewal-commission clause. If your agreement charges commission on renewals, your cost repeats every year the tenant stays. Factor that into any year that happens not to include one.
5. Compare against the ranges above. Above 12–18% plus VAT all-in, or near the top of it for a basic service, and you have your answer.

Proper full management includes finding and referencing tenants, drawing up the tenancy agreement, protecting the deposit and serving the prescribed information, collecting rent and chasing arrears promptly, tracking compliance renewals (gas safety, electrical reports, alarms), arranging repairs with a route tenants can use in an emergency, and regular statements plus periodic inspections. If you're at the top of the range and still chasing the agent to chase the rent, forwarding repair requests yourself, or discovering lapsed certificates on your own, you're paying full-service prices for a part-service, which is overpaying even at a “normal” percentage.

Renegotiate. Take your true annual percentage from the audit back to the agent and ask them to justify it or cut it. Agents lose money when managed landlords leave, so a specific, evidenced number often gets a real reduction, especially on renewal commission. The catch: you're still on a percentage, so every rent rise raises your fee too.

Self-manage. Cheapest in fees, and entirely legal, but you take on rent chasing, compliance deadlines, repairs and the 3am phone call yourself. It suits landlords who live near the property and have the time; it's hardest for anyone remote or abroad.

Switch to flat-fee. A fixed monthly price for the management work, with no percentage and no commission, so your cost stays the same when your rent goes up. The trade-off is that it's a leaner, systems-driven model rather than a high-street office. See fixed fee vs percentage management for the honest comparison, and how to switch from your agent for the mid-tenancy steps: switching is usually just notice under your agreement's termination clause and a handover of documents and deposit. The tenancy itself carries on undisturbed.

The numbers make the stakes concrete. On a rent of £1,800 a month, a 15% + VAT agent takes 18% all-in: £3,888 a year. Cheerfulrent Standard is £40 a month flat, £480 a year, with no commission on anything. Same tenancy, £3,408 a year kept instead of paid away.