How to Start a Letting Agency in the UK: A Complete Guide

Thinking about starting your own letting agency?

With millions of households renting privately across the UK, landlords continue to need people they can trust to find tenants, manage properties and keep on top of an increasingly regulated rental market.

For the right person, that creates an opportunity to build a business with recurring monthly income and plenty of room to grow.

But where do you start?

In this guide, we’ll explain how to start a letting agency in the UK, what you’ll need to consider, how letting agencies make money and the different routes you can take to build your business.

What does a letting agency actually do?

A letting agency works on behalf of landlords to let and, depending on the service offered, manage their rental properties.

That can include:

• Marketing properties
• Finding and referencing tenants
• Preparing tenancy documentation
• Collecting rent
• Managing maintenance and repairs
• Carrying out inspections
• Handling landlord and tenant queries
• Managing compliance
• Renewing tenancies
• Managing properties on an ongoing basis

Some agencies focus on finding tenants, while others build portfolios of fully managed properties and charge landlords an ongoing management fee.

That recurring revenue is what can make building a managed portfolio particularly attractive as a long-term business.

Can anyone start a letting agency in the UK?

You don’t necessarily need years of experience working for an estate or letting agency to start your own lettings business.

However, you’re going to be responsible for other people’s properties, tenants and potentially client money, so understanding your responsibilities is essential.

The requirements also vary depending on whether you’re operating in England, Wales, Scotland or Northern Ireland, so you should always check the current rules that apply to where you’ll operate.

For someone entering the industry for the first time, there are broadly two routes.

You can start independently and build the knowledge, processes, technology, brand and infrastructure yourself.

Or you can join an established lettings franchise, where training, systems and ongoing business support are already in place.

Do you need qualifications to start a letting agency?

The qualification and registration requirements vary across the UK.

Even where a specific qualification isn’t mandatory, proper industry training is important. You’ll be dealing with legislation, compliance and people’s homes, so this isn’t an industry where you want to learn everything through trial and error.

You’ll need to understand areas such as:

• Tenancy legislation
• Landlord and tenant responsibilities
• Deposits
• Property safety
• Referencing
• Property inspections
• Rent collection
• Maintenance
• Client money
• Data protection

And that knowledge needs to stay current as legislation changes.

What do you need to start a letting agency?

Starting a letting agency involves much more than finding a landlord and advertising their property.

Depending on where and how you operate, you’ll need to understand the legal and regulatory requirements affecting your business. This can include areas such as redress scheme membership, Client Money Protection where applicable, data protection, handling tenancy deposits and other relevant obligations.

You’ll also need to think about how the business will actually operate day to day.

Technology

How will you manage landlords, tenants, properties, maintenance, rent and communications?

The right property management system can become the backbone of the business as your portfolio grows.

Marketing

Where are your landlords going to come from?

You’ll need a plan for building awareness locally and consistently generating new landlord opportunities.

Property advertising

How and where will you market available properties to prospective tenants?

Processes

What happens from the moment a landlord first contacts you through to marketing their property, finding a tenant and managing the tenancy?

Creating strong processes early makes it much easier to scale later.

Compliance

Who is responsible for keeping your processes up to date as legislation changes?

Business finances

You’ll need systems for managing your own company finances and, where relevant, correctly handling client money.

Getting these foundations right at the beginning can save considerable time and problems later.

Can you start a letting agency from home?

Yes. Starting a letting agency doesn’t necessarily mean opening a high-street branch from day one.

Technology has made it possible to manage many parts of a modern lettings business remotely, potentially reducing your initial overheads while you build your landlord base.

As the business grows, you might choose to open an office or build a team. Alternatively, you may prefer to maintain a more flexible model.

The important thing isn’t necessarily where you work.

It’s whether landlords and tenants receive a professional, reliable service.

How much does it cost to start a letting agency?

There isn’t one figure that applies to every letting agency.

Your costs will depend on the business model you choose and whether you’re starting independently, from home, from commercial premises or through a franchise.

Potential costs can include:

• Business setup
• Insurance
• Training
• Compliance
• Property management software
• Website
• Marketing
• Property advertising
• Professional memberships
• Accounting
• Office space
• Employees

Starting from home may keep overheads lower, while opening a traditional high-street agency with employees will naturally require more capital.

A franchise works differently. You’ll usually pay an initial franchise fee in return for access to an established model, which can include training, systems, technology, marketing and ongoing support.

So don’t only ask:

“What’s the cheapest way to start?”

Also ask:

“Which route gives me the best platform to build the business I want?”

How do letting agencies make money?

One of the main ways a letting agency generates revenue is through management fees.

Rather than earning a one-off fee for finding a tenant, an agency can manage the property on the landlord’s behalf and receive an ongoing fee.

As you grow from 10 managed properties to 20, 50, 100 and beyond, you’re building a base of recurring management income.

Depending on the business model, there may also be opportunities to generate revenue through additional property and management services.

That’s why the size and quality of your managed portfolio can become such an important part of the value of a lettings business.

How do you find landlords for a new letting agency?

This is arguably one of the biggest challenges when starting a letting agency.

You can have the technology, training and processes in place, but without landlords, you don’t have a business.

Ways to generate landlord opportunities can include:

• Local networking
• Social media
• Digital advertising
• Direct outreach
• Referrals
• Local partnerships
• SEO
• Landlord events
• Existing property contacts
• Building a strong reputation in your local area

The key is consistency.

Rather than waiting for landlords to discover you, you need a clear business development plan for generating conversations, winning instructions and gradually building your managed portfolio.

How can you grow a letting agency?

Starting the business is only the beginning.

Once you’ve secured your first landlords, the next question is how you turn a small portfolio into a scalable business.

There are two particularly interesting routes.

Grow organically

The traditional route is to win landlords yourself and add managed properties one by one.

This allows you to build relationships with your landlords from the beginning and gradually increase your recurring income.

But building a significant portfolio property by property can take time.

Acquire an existing letting agency or portfolio

The alternative is acquisition.

Instead of winning every management instruction individually, you can purchase an existing letting agency or managed portfolio.

Depending on the acquisition, this can give you immediate access to existing landlords, managed properties, recurring revenue, experienced employees and established business infrastructure.

The challenge for many would-be agency owners is finding and funding the right opportunity.

This is an area where the Sourced Living model is different.

Eligible Sourced Living Partners can explore opportunities to acquire established letting agencies and portfolios, with Sourced able to fund up to 100% of an approved acquisition.

It creates another potential route to growth beyond simply building a portfolio one landlord at a time.

Should you start independently or join a lettings franchise?

There’s no single route that’s right for everyone.

Starting independently gives you complete control. You can create your own brand, select your own technology and develop your own processes.

But you’re also responsible for building everything yourself.

A lettings franchise gives you an established model to work from.

Depending on the franchise, this can include:

• Initial training
• Property management technology
• Business development support
• Marketing
• Ongoing coaching
• Established processes
• Industry partnerships
• A wider network of business owners

The decision ultimately comes down to your experience, ambitions and how much support you want around you while building the business.

What is Sourced Living?

Sourced Living is a lettings and property management franchise designed to help people build and scale their own lettings business.

You don’t need previous letting agency experience to get started.

Living Partners receive training, technology and ongoing support to help them win landlords, manage properties and grow their business.

But you’re not limited to one route.

You can grow your managed portfolio organically, explore opportunities through our Flexi-Let model, or potentially accelerate your growth through the acquisition of an established letting agency or property portfolio.

And because Sourced Living is part of the wider Sourced property ecosystem, you’re building your business with a wider network, infrastructure and specialist property expertise around you.

Is starting a letting agency worth it?

For the right person, a letting agency can offer the opportunity to build a scalable business with recurring revenue.

But success isn’t as simple as setting up a website and waiting for landlords to arrive.

You’ll need to understand your responsibilities, consistently win new business, deliver a strong service and have a plan for growth.

So perhaps the more important question isn’t:

“Should I start a letting agency?”

It’s:

“What’s the best way for me to build one?”

You could start independently and build everything yourself.

Or you could build your business with an established model, training, technology and ongoing support already behind you.

Frequently asked questions

Do you need a licence to start a letting agency in the UK?

Requirements vary depending on where in the UK you operate and the services you provide. Scotland and Wales have different requirements from England, for example. Always check the latest rules for the part of the UK where your business will operate before getting started.

Can I start a letting agency from home?

Yes. You don’t necessarily need a high-street office to start a letting agency. A home-based model can help reduce initial overheads while you build your managed portfolio.

How much does it cost to start a letting agency?

There isn’t a single startup cost. It depends on factors including your technology, marketing, training, insurance, compliance requirements, staffing and whether you operate from home or commercial premises.

Do I need previous property experience to start a letting agency?

Previous experience can be useful, but it isn’t the only route into the industry. Proper training, systems and support can help someone coming from another professional background develop the knowledge required to build a lettings business.

Want to start your own lettings business?

Starting a letting agency doesn’t have to mean building everything from scratch.

With Sourced Living, you can build your own lettings and property management business with training, technology and ongoing support behind you, with routes to grow organically, through Flexi-Let and potentially through the acquisition of established letting agencies and portfolios.

Download the Sourced Living prospectus to discover how the opportunity works, what’s included and the different ways you could build and scale your own lettings business.