Estate agents need to accept payments for the various services they provide, including commission payments, holding deposits for tenants or monthly fees for property management. In addition to this, payments can be a one-off fixed fee, recurring as part of a retainer, or charged by the hour.
Different payments are also associated with rental properties, and the singular transactions when buying and selling properties. Therefore, estate agencies need to have a variety of secure and suitable methods of accepting payments to accommodate the various types of payment they deal with.
There are typically three main ways that you can accept payment, these are:
Each payment method for estate agents has benefits, and some are more suitable for certain circumstances than others.
Here, we will discuss the types of payments that estate agents typically accept, and the best payment method fo
First, let’s look at rental or letting payments for estate agents. These are often a mix of recurring and one-off fixed-rate payments, from taking deposits to collecting rent payments and charging landlords a retainer for your letting agent services.
The rental market can be quite competitive, with multiple potential tenants viewing properties on the same day. To secure a property, letting agents commonly take a holding deposit from renters while other necessary checks are made, but before a tenancy is agreed upon.
It’s important to note that holding deposits are capped at one week’s rent by the UK Tenant Fees Act, which came into force back in 2019.
Once a tenancy has been agreed upon, tenants must usually pay their tenancy deposit and first month’s rent in advance. This is normally 5-6 weeks of rent, which is a significant sum of money, especially as many are likely to be awaiting the return of their previous deposit.
Two payment methods stand out as the most efficient for these one-off holding deposit payments: card machines and online payments.
Having a card machine in your estate agent’s office that can take debit and credit card payments will enable estate agents to take one-off payments from interested potential tenants on the spot.
Receipts can be sent digitally to the account linked to the machine, saving time and effort. This will also make it easier to return holding deposits to the payee when needed. Be sure to compare card readers to find the best option for you and your customer’s preferred payment method.
Similarly, online credit and debit card payments will allow renters to pay these larger sums of money using credit in a convenient and secure way for them and your business. Online bank transfer is a very common way that tenants choose to pay these one-off amounts.
Generally, landlords and estate agents alike require tenants to set up recurring standing orders for monthly rental payments. This ensures some security in the knowledge that on the agreed date, rent will be received into the correct property account, with no input from the estate agent.
However, a smaller number of tenants like the flexibility of manually making their payment each month online, using a credit or debit card, as this benefits those whose paydays may vary, or who are self-employed and have an irregular income.
While allowing some flexibility to renters can be helpful, ultimately, having a standing order set up for recurring rent collection decreases the chance you will have to chase payments manually each month. So, in this case, a standing order or bank transfer is the preferred payment option.
In most cases, property management fees will be charged via a retainer. This recurring, set payment each month will cover the estate agent responding to any tenant enquiries, conducting inspections, finding new tenants where necessary and generally dealing with property management on behalf of the landlord. And the exact services charged for will depend upon the agency.
When agreeing to a retainer fee – usually a percentage of monthly rent cost – it’s good to ask landlords to set up an automatic recurring payment, like a standing order.
While retainer fees are recurring, estate agents sometimes need to accept payments outside of the agreed retainer, for example, for emergency repair callouts. These can be charged by the hour or as a fixed fee.
Increasingly, landlords with multiple properties are based overseas and outside the UK. So, it’s important to ensure you’re able to receive international payments. A solid online payment function will allow for a seamless set-up of recurring payments and smooth transactions with landlords, wherever they are based.
This will, in turn, give you a regular, reliable, guaranteed income from retainers and help you attract and retain great landlords.
When it comes to buying and selling property, estate agents must negotiate a multitude of payments and handle transactions from various parties – including through solicitors.
From paying commissions, to individual estate agents, to ad-hoc administrative costs that may occur in the selling process – here are the key payments you can expect to accept when selling a property as an estate agent, and how best to facilitate them…
The main payment when estate agents sell a property is commission. Typically, this varies between 1% and 4% of the final sale price of the property.
This will be negotiated and agreed upon with the seller at the very beginning of the relationship but typically won’t be paid until the property has been exchanged, although some estate agents do negotiate up-front commission payments.
The commission will cover costs such as providing a valuation, taking great property photography and marketing the property, conducting viewings and handling any negotiations with potential buyers. The more time it takes to sell a property and any price reductions can impact the actual amount estate agents will take home.
Once the property has sold, the seller or the seller’s solicitor will pay the estate agent commission from the sale proceeds. With this often being a significant sum, a bank transfer is likely the most efficient way to deal with these payments.
It’s worth noting that aside from commission-based payments, some online agents will charge a flat fee up front, rather than a percentage of the sale price. These payments are also best made using a one-off bank transfer, but usually at the beginning of the sale process once the seller has commissioned the agent’s services.
Alongside commission, there are sometimes other miscellaneous payments that estate agents may have to facilitate or handle when selling a property. These include Stamp Duty, legal fees and various administrative tasks outside those covered in your commission contract. Having a way to accept these payments is important in the later stages of completing a house sale.
With the recent adjustments to Stamp Duty in the UK, some buyers will likely have to use credit cards to pay this additional fee. While it isn’t common for estate agents to handle this payment, in some cases, they will need to facilitate this.
When handling payments for estate agents, they are usually dealing with large sums of money. Therefore having a robust payment system in place will allow you to handle these important transactions that instil trust from renters, landlords, buyers and sellers.
Whichever payment is required, you must be equipped to accept payment using the most appropriate method. Ensuring that your business has secure payment systems and you are adhering to the correct regulations, such as using a government-approved deposit protection scheme, will enable you to accept all payments associated with running a successful estate agency.
"*" indicates required fields
