The looming letting commission conundrum
Tuesday 17th February 2026
The Renters’ Wrongs Act will have many adverse effects for both Landlords and Tenants, and in turn for letting agents. You can spot the letting agent in me by the way I write that!
Nobody ever feels sorry for estate agents, and nor should they. However, there is a big problem coming down the track. We all know about it, but are not discussing it publicly.
I have had considerable numbers of agents contacting me to quietly discuss their concerns about how they will charge landlords commission once we, by statute, have to use periodic assured tenancies for lets under £100k per annum to private individuals; no defined end dates or, critically, with commission in mind renewal dates.
Most London letting agencies take their commission upfront for a year and then again when renewals occur. The continuity commission from renewals creates an income flow which allows agents to charge a reasonable commission percentage from the outset.
If we did not charge renewal commissions, we would have to charge much more.
We are none of us profiteering. If we did not charge renewal commissions, we would have to charge much more – probably double – at the initial letting point, in order to be profitable.
Continuity commission also keeps the agency aligned with their clients’ interests.
This latter point is little understood by clients and indeed by some agencies, who sometimes offer one-off commissions to try to grapple market share but regret it down the line when each new let becomes hand to mouth – like sales fees.
A wiser head than me pointed out that if we end up going the route of charging at the outset only, we will quickly reach a situation which replicates the lower quality companies in the recruitment industry, where unpicking a recently placed candidate can lead to another fee generation opportunity.
Under the new tenancy regime, tenants will be able to give two months’ notice at any time from the off.”
Under the new tenancy regime, tenants will be able to give two months’ notice at any time from the off. Tenant commitment will be a huge issue for landlords.
If the commission is only a one-off fee, letting negotiators will naturally try to pick the tenant they have just placed into a property out of that same property into another they have available. They will then get the first property back to let again, so getting a fresh fee.
This poor practice happens already with some of the ‘graspy’ bigger firms, where the branches are given no reward for renewals. If we are not careful, it could become rife across the industry.
For me, the solution is to make sure our interests are completely aligned with our clients.
For me, the solution is to make sure our interests are completely aligned with our clients.
In my firm, we propose to take our commission as we collect the rent for our clients and for the full length of time the tenant is in place.
If the clients have any sense, they will see the imperative for this. Indeed, those who are really serious will ask us to manage the property for them too. There are so many pitfalls these days that it is madness for a landlord to go it alone.
Final point, for those firms who are struggling with how to remunerate their negotiators.
I suggest the firm pay the negotiator for the first 12 months commission, then put a system in place whereby if a tenant leaves before the 12 months are up, the overpaid commission is deducted from the negotiator’s monthly commission.
There will be some painful adjustments required by all in this process. Hopefully, it will all work out. The key word is alignment.
Share this article
k L E D