The three fees agents usually charge
Commercial letting agents in the UK are paid in three ways, and a typical instruction involves at least two of them.
- The letting fee - the big one. A one-off fee when a tenant signs, calculated as a percentage of the first year's rent. 10% is the figure most commonly quoted; the usual range is 8-15%, and smaller units and shorter leases tend towards the top of it, because the agent's work is much the same whatever the rent. Most agents set a minimum fee as well - often £1,000-£2,500 - so a low-rent unit can end up paying well above 10% in practice. VAT is added on top.
- Marketing and set-up costs. Some agents roll marketing into the letting fee; many charge separately for the letting board, photographs, floor plans, particulars and portal listings. Expect anything from a couple of hundred pounds to £1,000 or more - and note that these are usually payable whether or not the unit lets.
- The management fee - if you want them to run it. If the agent collects the rent and deals with the tenant after the letting, they charge an ongoing percentage of everything collected - typically 5-10%, plus VAT. Over a five-year lease that is often the biggest number of the three.
On top of those, watch for the extras that live in the small print: fees for rent reviews and lease renewals (commonly a percentage of the new rent), a charge for arranging the EPC, and - the one that catches landlords out most often - a sole letting rights clause, which entitles the agent to the full letting fee even if you find the tenant yourself while the agreement is running.
What that looks like on a typical unit
Take a small industrial unit let at £15,000 a year - a very ordinary listing.
- Letting fee at 10%: £1,500, plus VAT = £1,800
- Marketing and set-up: say £500, plus VAT = £600
- Total to get a tenant through the door: around £2,400 - roughly two months' rent gone before the first payment arrives
- Add management at 8% and that is another £1,440 a year, plus VAT, for as long as the tenant stays
At £30,000 a year the letting fee alone is £3,600 with VAT. These are mid-range figures, not worst cases: joint-agency instructions, London rents and minimum fees all push them higher.
Now compare that with advertising the same unit yourself. A Boxpod Lite listing is £12 a month, so a unit that takes three months to let has cost £36 to advertise - and nothing at all on the day the tenant signs.
The flat-fee alternative
A flat-fee platform replaces the percentage with a subscription, and replaces the agent with you. On Boxpod you list the unit yourself - photos, size, rent, location - and enquiries from tenants come straight to your phone or inbox. There is no commission, no finder's fee and no cut of the rent when the deal is done.
What it costs. Plans start at £12 a month for one listing (Lite), £25 for up to five (Member) and £45 for up to ten (Premium), with around 20% off if you pay annually. Plans roll monthly and you can cancel when the unit lets. Portfolios above ten units are on Enterprise pricing.
What you do yourself. Answer enquiries, show the unit and agree terms. For the lease itself you use a solicitor - exactly as you would with an agent, since agents do not draft leases either. If that sounds like more than you want to take on, our guide to letting a commercial property without an agent walks through each step, and how Boxpod works shows what listing actually involves.
When an agent is still worth it
Percentage fees are not always bad value. An agent earns their money when:
- the unit is large, unusual or high-value and needs specialist marketing to the right occupiers;
- you are letting a multi-let building or a development and want one firm handling the whole scheme;
- you are not local, or genuinely have no time to handle viewings and enquiries;
- you want professional advice on the rent, the lease terms or a rent review - not just a listing.
For a straightforward unit - a workshop, a small office, a shop, a storage unit, a yard - most of what an agent does is advertise the space and answer the phone, and that is where a percentage of the rent stops making sense.
You can also do both. Plenty of landlords list on Boxpod alongside an agent to widen the net. Just check the agency agreement first: if it grants sole letting rights rather than sole agency, the agent is owed their fee whoever finds the tenant - so either negotiate that clause out or wait until the agreement ends.
Five questions to ask before you sign with an agent
- Is the letting fee a percentage of the first year's rent - and is there a minimum fee?
- Which marketing costs are charged separately, and are they payable if the unit does not let?
- Is this sole agency, sole letting rights or multiple agency - and for how long am I tied in?
- Do you charge for rent reviews, lease renewals or re-letting to the same tenant?
- Are all the figures quoted plus VAT?
Get the answers in writing. The gap between a 10% fee with marketing included and a 12% fee plus £800 of extras and a twelve-month sole-letting tie-in is several thousand pounds on an ordinary unit. If the numbers do not stack up, the cheapest ways to advertise a commercial unit are covered in the next guide.