Letting Agents Eat Profits

The True Cost of Convenience

Most landlords think that their letting agent saves them time. But most of what they pay for could be done faster, cheaper, and more accurately by themselves or software.

The standard story goes like this: you hire an agent, they take care of everything, and you collect rent with none of the hassle. In practice, agents automate very little, charge a lot, and still expect you to step in when something goes wrong. The 10 to 15 percent management fee is not really for peace of mind. It is the price of not paying attention.

Start with the numbers. A property renting for £1,200 a month means roughly £1,800 a year to the agent. Over ten years, that is £18,000. That is the cost of a new kitchen or a small car. Most landlords accept this as normal because the fee is presented monthly, and because everyone else does it. But this “cost of convenience” hides the real issue: agents rarely earn it.

Fees You Did Not Notice

Look closer at what that fee buys you. In theory: tenant vetting, rent collection, maintenance, inspections, renewals. In reality: a few templated forms, an outsourced credit check, and a network of contractors who charge more than the open market.

Agents profit from the spread. A £100 repair might quietly become £130 once their markup is added. Renewal fees appear even when nothing changes. “Admin” charges appear without clear justification. Small leaks in your margin add up faster than you think.

Misaligned Incentives

The deeper problem is not greed. It is misaligned incentives. Agents earn more the less efficiently they operate. A repair that takes three calls instead of one is fine, because you are paying for their time. A renewal that could be automated is not automated, because renewals generate fees. A contractor that charges extra does not hurt the agent, only you.

Some landlords justify this by saying agents deal with tenants. But even that is often overstated. When a tenant reports a problem, the agent usually passes it on without diagnosis or prioritisation. A leaky tap and a broken boiler enter the same queue. Tenants wait longer. You pay more. The agent still collects their fee.

How to Audit Your Agent

If you want to know whether your agent adds value, start by auditing them. Ask for itemised maintenance invoices. Check if they collect referral fees from contractors. Read your agreement carefully for renewal or admin charges that trigger automatically. Ask how often they inspect properties and how many they manage per staff member. If the answers are vague, you already have your answer.

Other Ways to Let

There are alternatives. Some landlords use hybrid services: online systems that handle rent collection and compliance while letting you control repairs directly. Others manage everything themselves using digital tools. The point is not to replace agents entirely. It is to understand where they actually create value, and where they do not.

The Quiet Loss of Attention

The surprising truth is that most landlords could improve returns by doing less outsourcing, not more. A good agent can be worth it, but only if they clearly increase your net yield or save you measurable time. For everyone else, the real saving lies in attention, in knowing what you are paying for and cutting what does not earn its keep.

You do not have to become a full-time property manager. You just have to stop treating inefficiency as inevitable. Once you see how quietly agents eat into your returns, you start asking a better question. Not “Who can manage this for me?” but “What actually needs managing at all?”