How to start a letting agency in the UK

To start a letting agency in the UK, choose your area and services, register with a property redress scheme, join a client money protection scheme if you’ll hold rent or deposits, set up insurance, software and processes, and build a plan to win landlords. You can start independently, or join a lettings franchise such as Sourced Living, which costs £9,999 + VAT upfront and £255 a month.

For the right person, lettings offers the chance to build a business with recurring monthly income. But getting started involves more than creating a website and advertising properties. This guide covers what you’ll need, the rules you must follow, the costs, how to find landlords and the different routes to building your business.

How to start a letting agency: 8 steps

Choose your area and services. Decide where you’ll operate, which property types you’ll cover, and whether you’ll offer tenant find, full management or both.
Choose your route. Start independently, or join a lettings franchise with training, systems and support already in place.
Set up your business. Register your company, open a business bank account and arrange accounting.
Meet the legal requirements. Join a redress scheme, a client money protection scheme if you’ll hold client money, register with the ICO, and arrange professional indemnity insurance.
Set up your systems. Choose property management software, a referencing provider, a deposit protection scheme and property portal listings.
Publish your fees. Letting agents must display their fees clearly on their website and in their office.
Win your first landlords. Build local relationships, make your agency easy to find online and follow up consistently.
Grow. Add managed properties one by one, or grow faster by acquiring an established agency or portfolio.

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 where appropriate

Some agencies focus on finding tenants, while others build portfolios of fully managed properties and charge landlords an ongoing management fee. That recurring revenue can make a managed portfolio attractive as a long-term business.

For a closer look at the management side, read our guide to getting into property management.

Is a property management company the same as a letting agency?

Mostly, yes. A letting agency finds tenants and can also manage properties, while a property management company focuses on managing them: collecting rent, arranging repairs, carrying out inspections and handling compliance. Most UK letting agencies do both, and the setup steps, legal requirements and costs are the same. The difference is where your income comes from: tenant-find fees are one-off, while management fees are paid every month.

Can anyone start a letting agency in the UK?

You don’t need years of experience working for an estate or letting agency to start your own lettings business. But you’ll be responsible for other people’s properties, tenants and potentially their money, so understanding your responsibilities is essential.

There are broadly two routes. You can start independently and build the knowledge, processes, technology and brand yourself. Or you can join an established franchise, such as Sourced Living, where training, systems and ongoing business support are already in place.

What are the legal requirements for a letting agency?

The rules differ across the UK. In England, these are the main requirements:

Requirement	What it means	Who it applies to
Property redress scheme	Membership of an approved scheme, such as The Property Ombudsman or the Property Redress Scheme, so landlords and tenants can complain independently	All letting agents
Client money protection (CMP)	Membership of an approved CMP scheme, with your certificate displayed	Agents who hold client money, such as rent or deposits
Published fees	Your full fees shown clearly on your website and in your office, including VAT	All letting agents
Tenant fees ban	Most fees can’t be charged to tenants under the Tenant Fees Act 2019	All letting agents
Deposit protection	Tenants’ deposits protected in a government-approved scheme within 30 days	Whoever holds the deposit
Data protection	Registration with the ICO, because you’ll handle personal data	All letting agents
Anti-money laundering	Registration with HMRC for supervision	Agents handling lets with a monthly rent of €10,000 or more
Renters’ Rights Act	New rules on tenancies, possession, rent increases and the landlord register	All letting agents

Scotland requires letting agents to join the Scottish Letting Agent Register and meet training requirements. Wales requires a Rent Smart Wales licence. Always check the current rules for the area where you’ll trade.

The Renters’ Rights Act is changing how letting works in England, so make sure your processes are up to date.

Do you need qualifications to start a letting agency?

In England, there’s no legal requirement for a specific qualification. In Scotland and Wales, letting agents must meet training requirements to register or get a licence.

Even where a qualification isn’t mandatory, proper training matters. You’ll need to understand tenancy law, landlord and tenant responsibilities, deposits, property safety, referencing, inspections, rent collection, maintenance, client money and data protection, and keep that knowledge current as the law changes.

Can you start a letting agency from home?

Yes. You can start a letting agency from home without a high-street branch, which keeps premises costs down while you build your business. You’ll still need professional systems for enquiries, viewings, inspections, rent collection and maintenance. Property management software lets you handle most of the administration remotely.

Before launching, decide which area and property types you’ll cover, whether you’ll offer tenant find or full management, how you’ll handle calls and maintenance, who will carry out visits, and how you’ll win your first landlords.

How much does it cost to start a letting agency?

There isn’t one figure that applies to every agency. Your costs depend on whether you start independently, from home, from an office or through a franchise. Budget for:

Company setup and accounting
Redress scheme and client money protection membership
Professional indemnity and other insurance
Property management software
Website and marketing
Property portal advertising
Training
Office space and staff, if you have them
Working capital while you build income

Starting from home keeps overheads lower. Opening a high-street agency with staff generally needs more capital.

A franchise works differently. You pay an initial fee for an established model, usually including training, systems, technology, marketing and ongoing support. The Sourced Living franchise costs £9,999 + VAT upfront, with a £255 monthly licence fee. Budget separately for any other setup and running costs.

Our guide to the initial costs of opening a property management franchise covers the different costs to consider.

How do letting agencies make money?

Most UK letting agents charge landlords 8% to 15% of the monthly rent for full management. On the UK average rent of £1,400 a month, a 10% fee is £140 per property, every month. Tenant find is usually a one-off fee, often linked to one month’s rent.

That’s why managed properties matter. As you grow from 10 managed properties to 50, 100 and beyond, you build a larger base of recurring income. Revenue isn’t profit, though: staff, software, advertising and compliance all need to come out of it.

Read our full guide to how much letting agents make.

How do you find landlords for a new letting agency?

Choose your target landlords. Focus on the area and property types you understand best, whether that’s traditional lets, HMOs or serviced accommodation.
Explain your service clearly. Show what you handle, how you communicate and what your fees include.
Build local relationships. Attend landlord events, speak to existing contacts and connect with local businesses.
Make your agency easy to find. Publish useful local content and make it easy for landlords to request a conversation.
Follow up consistently. Many landlords are interested long before they’re ready to switch agents.
Ask for referrals. Happy landlords introduce other owners.

Track which activities lead to signed management agreements, and focus your time and budget on those.

How can you grow a letting agency?

Grow organically

Win landlords and add managed properties one by one. It builds strong relationships, but reaching a substantial portfolio this way takes time and consistent business development. Read how Elisheva is building a multi-strategy lettings business with Sourced Living.

Acquire an existing letting agency or portfolio

Buying an established agency can give you landlords, managed properties, recurring revenue, staff and systems from day one. The challenge is finding the right opportunity, assessing it properly and funding it.

Through the Sourced Living Assisted Acquisitions Programme, eligible Partners can explore opportunities with up to 100% of the agreed purchase price funded by Sourced, subject to readiness, due diligence and approval. Partners normally launch and develop their business first, and availability and timing can’t be guaranteed.

Our guide explains how to buy a letting agency.

A real example: John’s route into agency ownership

Sourced Living Partner John Clark completed the purchase of an established letting agency just 49 days after joining. The business had 262 managed units and £293,000 annual turnover, and its £450,000 purchase price was fully funded by Sourced. Individual opportunities, funding approval and timescales vary.

Read John’s full story.

Should you start independently or join a lettings franchise?

Starting independently gives you full control over your brand, technology and processes, but you build all the infrastructure and support yourself.

A lettings franchise gives you an established model. Depending on the franchise, that can include training, property management technology, business development and marketing support, ongoing coaching, established processes, industry partnerships and a network of other business owners. In return, you pay an upfront fee and ongoing fees, and work within the franchise agreement.

The right choice depends on your experience, ambitions, budget and how much support you want.

What is Sourced Living?

Sourced Living is a lettings and property management franchise that helps people build and grow their own business. You don’t need previous letting agency experience. Partners get training, technology and ongoing support to win landlords, manage properties and grow.

The Flexi-Let model lets Partners offer traditional lettings, HMO management and serviced accommodation. Partners can grow organically and, where eligible, acquire established agencies or portfolios.

Is starting a letting agency worth it?

For the right person, a letting agency offers a business with recurring revenue that grows with every property you manage. But success takes more than a website. You’ll need to understand your responsibilities, win new business consistently, deliver a reliable service and manage your finances.

Before deciding, assess your local market, the investment required, the time you can commit, and whether you’d rather build a portfolio gradually or work towards acquiring an established agency.

Frequently asked questions

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

In England, there’s no licence, but you must join a property redress scheme, join a client money protection scheme if you hold client money, and register with the ICO. Scotland requires registration on the Scottish Letting Agent Register, and Wales requires a Rent Smart Wales licence.

Can I start a letting agency from home?

Yes. A home-based agency avoids high-street office costs. You’ll still need professional systems and arrangements for viewings, inspections, maintenance and client communication.

How much does it cost to start a letting agency?

It depends on your model, technology, insurance, training, marketing, staff and premises. The Sourced Living franchise costs £9,999 + VAT upfront, with a £255 monthly licence fee, plus any additional setup and running costs.

Do I need previous property experience?

No, though it helps. Training, systems and ongoing support can help someone from another career build the knowledge to run a lettings business.

How much can a letting agency make?

Most agents charge 8% to 15% of monthly rent for full management. At a 10% fee and the UK average rent, 100 managed properties would bring in around £168,000 a year in management fees, before costs.

How do I get landlords for my letting agency?

Start with a clear service and target market. Build local relationships, make your business easy to find online, follow up on enquiries and ask happy clients for referrals.

Can I grow by acquiring an existing agency?

Yes. Eligible Sourced Living Partners can explore approved opportunities with up to 100% of the agreed purchase price funded by Sourced. Partner readiness, due diligence and formal approval apply, and additional costs may still need to be covered.

Want to start your own lettings business?

With Sourced Living, you can build a lettings and property management business with training, technology and ongoing support behind you. Grow organically, offer different services through Flexi-Let and, where eligible, acquire an established agency or portfolio.

Download the Sourced Living prospectus, or explore how Sourced-funded lettings agency acquisitions work.