Estate and Letting Agents Tutorial

With the right training and aptitude, anyone can become an estate or letting agent, which can often be a good ‘add-on’ to other strategies, from sourcing to buy-to-let.

Years ago the term estate agent was generally taken to apply to those dealing exclusively with buying and selling property, but these days many agents include both sales and lettings departments. Some agencies still do either sales or lettings, but this is increasingly rare and hybrids are now common. The term estate agent is now therefore often used to apply to both sales and lettings where they co-exist, while the term letting agent is generally only used when that is the sole activity of the agent. I will use the term estate agent here unless specifically referring to lettings, where mentioned.

In any case, whether you are considering sales, lettings or a combination of both, estate agency can be quite a competitive area and don’t underestimate the work involved!

If you are unsure whether to start your own agency, you could consider working in a local estate agents office first.

For those with a background in working for an estate agent, it may seem like a natural choice to start their own agency or take up a franchise – as discussed further in The Complete Guide to Property Strategies.

Tips for Becoming an Estate Agent

You do not usually need to have previous experience in estate agency when you start out, but in order to join the National Association of Estate Agents (NAEA) you have to be working in the sector, to have professional indemnity insurance and to join the Property Ombudsman scheme.

If your focus is on property management (lettings), the professional body you should look to join is the Association of Residential Letting Agents (ARLA).

Team of estate agents

Whether working for yourself or others, it is vital to develop a good knowledge of the local property market in the area of specialisation you want to work in, as well as good customer service skills.

While industry-specific qualifications may not be required to start with, they are recommended for your ongoing professional development, as they will help your knowledge and understanding of the work involved, as well as strengthening your credentials.

Estate agency is very varied and interesting work. Many of the skills, roles and responsibilities will be the same or very similar for both sales and lettings, including:

  • Good organisational and general IT skills
  • Ability to communicate well with clients
  • Visiting properties to assess them, including measuring up and taking photographs
  • Being aware of health and safety matters and drawing attention to them if need be
  • Giving an appraisal of the sale price or rent achievable
  • Marketing properties effectively, either for sale or to rent, online and offline
  • Negotiating with or on behalf of clients to achieve the best outcome

Other roles and responsibilities can be specific to either sales or property management and lettings, as briefly shown below:

Roles Specific to Selling Properties

  • Producing a sales memorandum for all relevant parties
  • Representing sellers in negotiations with buyers
  • Liasing with mortgage brokers, solicitors, surveyors and others
  • Monitoring ongoing sales to ensure they stay on track right up to the exchange of contracts and sales completion

Roles Specific to Property Management & Letting

  • Undertake or arrange inventories to carefully record the property condition prior to the commencement of a tenancy
  • Vet prospective tenants by checking references and carrying-out credit checks
  • Drawing-up tenancy agreements
  • Organising the collection of rent payments and deposits
  • Ensure properties meet all legal and regulatory requirements

As you can see, there are many activities that must be undertaken and many of these will involve various forms and records that have to be kept. While various brands and types of software exist that can help agents to keep track of all this, good organisational skills are nevertheless required.

Service Levels Offered by Letting Agents

Most letting agents offer a variety of service level packages to their landlord clients, from tenant find only to full management, as briefly listed below.

  • Tenant Find Only

    Some landlords may be happy to self-manage their properties on an ongoing basis but want help at the initial stages of finding tenants, including advertising the property on the major platforms such as rightmove, conducting viewings, checking references and creditworthiness, setting up the tenancy agreement, inventories, and other regulatory requirements such as issuing tenants with all necessary documentation and arranging the deposit protection. The fee to landlords may be fixed, or a percentage of the monthly rent often equivalent to one month’s rent.

  • Rent Collection Service

    As well as setting up tenancies as above, agents collect and monitor rents on an ongoing basis, alerting the landlord to any problems as they arise; while the landlord remains responsible for organising works for any repairs and maintenance issues. Fees are normally a percentage of the monthly rent, often 5 - 7%.

  • Full Management

    Here the agent takes responsibility for all aspects of managing the property and the tenancy from start to finish, including any maintenance matters while liaising with the landlord about any costs that may be incurred. The fees for full management would be higher, often around 8 - 10% or more. (All fees may exclude VAT).

Should You Consider an Estate Agency Franchise?

Many people who consider setting up their own sales or lettings agency, or hybrid, find it all too daunting and may consider taking up a franchise instead of starting their business from scratch.

Becoming a franchisee is one way to start out with all the support you need and it can give you a great business if you are prepared to work hard. All franchise companies will require you to give a percentage of your profits to the franchisor as part of your ongoing agreement with them. In return they should offer benefits such as tapping into their systems and support from head office, as well as ongoing professional training and opportunities to get together with other franchisees for support.

More information about franchises can be found via the British Franchise Association (BFA). Since it can be expensive to be a member, not all franchises necessarily belong including ones that are quite newly established, although they can represent a good opportunity to join the franchise early at lower cost.

If you are very ambitious, you could aim to set-up a franchise and later sell the business!

Property Management and Lettings

You could set-up a management company to deal with the lettings of your own properties only and some investors like to structure their business that way as part of their tax planning strategy. You could of course start by managing your own properties and later manage for others too.

When considering this or any other strategy, you may choose to either adopt it or use others who offer the service as best suits you. Either way, knowledge is power - the more you know about it and appreciate what’s involved, the better you will be able to make necessary judgements.

High Street Premises or Work From Home?

A big question for agents will always be whether to set-up on the high street, or work from home. Alternatively, you could have an office in a cheaper part of town. The cost of renting high street premises can run into thousands and in many areas is unlikely to be viable for a start-up. Luckily, it is possible to run your business from home and many people do. In this internet age and with the advent of online agents, people are generally more open to dealing with agents that are not on the high street.