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How Much Does A Letting Or Estate Agent Earn?
How Much Can Letting and Estate Agents Earn?
Follow the training and guidance in our Business Package and you can set up a Letting or Estate Agency and become financially independent.
Continue reading to find out how you can achieve a satisfying income in either lettings, sales or both. This can be achieved full time or part time, from home or office.
Letting Agent Income
There are two main services that Letting Agents offer to property owners:
The first is the rent-only service (also called “tenant find”) – this is where you find a tenant, and the landlord manages the property afterwards
The second is the full management service – this is where you continue to manage the property after you’ve found a tenant
The rent-only service provides sizeable fees of around 2 weeks rent for each tenancy you create. However, the management of tenanted properties is particularly attractive due to the residual commission income. This is because your total residual monthly income grows with each property added. So in year 2, you’re still earning from year 1 without much extra work, and so on.
Tenants pay their rent by standing order directly into your agency bank account. This system is automatic, and you don’t physically collect any money and there is no need to send reminders. Once each payment has reached your account, you deduct your commission and forward the balance to the landlord.
Management fees vary, but we have used the UK average commission rate of 12% of the rent.
Letting Agent Income Growth
Monthly
At the modest work rate of just one property added each week, the following examples show how your commission income quickly builds
a) on a monthly basis, and
b) on a yearly basis.
Bear in mind that the process is cumulative – existing properties are providing ongoing commission each month while you’re adding new ones. The examples are based on average UK rent of £900 per month, and just 1 property per week.
£1296 Per Month After 3 Months
£2592 Per Month After 6 Months
£5184 Per Month After 12 Months
Annual
At average rentals of £900 per month your commission income at end of:
Year 1 = £64,800,
Year 2 = £129,600,
Year 3 = £194,400 and so on…
Subject to market conditions and a little effort, you could well exceed these figures using our methods and techniques. Remember that many landlords will give you not just one property, but their entire portfolio to manage. It is not uncommon these days for a single branch letting agency to manage over 500 properties.
£65k Per Year After 1 Year
£130k Per Year After 2 Years
£194k Per Year After 3 Years
Additional Revenue Streams Available to Letting Agents
The above fees do not include additional streams of income available to letting agents such as:
- Financial advisor referral fees
- Photography fees
- Property letting fees
- Utility referral fees
- Tradesman commissions
- Inventory fees
- Tenants and landlords insurance
- Property inspection fees
- Landlord renewal fees
- Rent Guarantee Insurance Commissions
Estate Agent Income
Most estate agents work on commissions of 1% to 1.5% of the sale price of a property. This means that for an average UK property, you’ll receive around £3500 when sold.
Selling just 2 properties per month will generate an income of around £7000 per month using average UK prices.
If you’re in London or the South East, your income can be significantly more.
The advantage of running an estate agency is that you can handle several sales simultaneously, each of which can be worth thousands in commission.
By having several properties on your books at once, your role will be to identify buyers for the properties that you’re selling. When you become an estate agent you’ll be able to use the processes and methods that we show you to get in a position to start generating this income.
Once a price has been agreed, you’ll be carrying out some straightforward admin tasks. This happens while the solicitors are working on the contracts and searches and surveys are taking place. On the day of completion, the sellers solicitor will pay your commission directly into your bank account.
Property values vary across the country, so in the examples below we’ve used an average property value of £230,000 and a typical commission rate of 1.5%.
Estate Agent Income Growth
Monthly Income
Starting at a rate of just 1 property per month rising to 3 properties per month after 12 months, at the average UK property price of £230,000 and a commission of 1.5%, the following examples show how your commission income quickly builds. On top of this you can add your fixed fee income for marketing properties.
Running an estate agency alongside a letting agency is particularly attractive. You’ll be able to leverage your combined skill-set and achieve the win-win where you sell a property to an investor, who then asks you to find a tenant and manage it for him/her.
£3450 Per Month After 3 Months
£6900 Per Month After 6 Months
£10350 Per Month After 12 Months
Annual Income
At an average house price of £230,000 and commission of 1.5%, your annual income growth can look like this:
Year 1 = £104,500
Year 2 = £212,500
Year 3 = £319,500 and so on…
Subject to market conditions and a little effort, you could well exceed these figures using our methods and techniques.
£104k Per Year After 1 Year
£212k Per Year After 2 Years
£319k Per Year After 3 Years
Why It's The Ideal Business
As well as being able to run the business full or part-time, from home or an office, if you’re running both a lettings and estate agency business business, the lettings business can feed clients to your estate agency business, and vice versa.
For example, someone who’s thinking of selling their house, may decide to rent due to a change in circumstances. Someone who’s been renting with you may decide to sell with you or buy one of your properties. Either way, you’ll be able to help with a competent service, and you benefit financially either way while providing a useful and much needed local service.
This is one of the few businesses in the UK where it’s truly recession proof. Even in times of pandemic or recession, your lettings commissions continue to be paid, while in times of growth, property sales can soar.
It’s really the best of both worlds.
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Angelwoods Residential Sales and Lettings
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Citylocations Tooting, London
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VA Property Consultants
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Chris Blake
AT Property Lettings
"After embarking upon research in to opening an Estate Agency to complement our legal practice, I had the good fortune to discover Southcourt Property. Not only was I to obtain excellent advice on setting up an Agency but also to create a most professional and easily maintainable website at a fraction of the price quoted by traditional web designers. Steve and his team made the whole process so straightforward and operating the website in conjunction with their associated cloud software delivered efficiency to the whole processs. I would recommend Southcourt to anyone wishing to open an Agency. Their manual is a bible to be relied on and proved really educational for me as a beginner"
Diarmuid McKeown
McKeowns Solicitors
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