This is the pillar guide in our new-agency cluster. For the action items, jump to the setup checklist; for the legal must-dos, see the compliance checklist; for budget planning, see how much it costs.
Why 2026 is a Good Year to Start a Letting Agency
The UK lettings market is in a strange position. Demand is at a record high — average rental enquiries per property are at their highest level in a decade, and the chronic shortage of stock means even small agencies can build a portfolio quickly. At the same time, the Renters' Rights Act 2025 has reshaped the legal landscape, and many older agencies are struggling to keep up. Setting up now means you build your processes on top of the new rules from day one, instead of retrofitting an old workflow.
The other tailwind is software. Five years ago, opening a letting agency meant signing up for three or four separate systems — a CRM, a referencing platform, an accounting tool, a maintenance tracker. In 2026 you can run the whole operation from a single platform like LettingGuru, which makes a one-person agency genuinely viable.
Step 1: Choose Your Business Structure
Most new UK letting agencies set up as a private limited company. That gives you limited liability, a clear line between personal and business finances, and credibility with landlords. The alternative — sole trader — is cheaper to register but harder to scale and exposes your personal assets if something goes wrong.
Register your limited company at Companies House (one form, £12 online), and pick a name that doesn't accidentally collide with an existing letting agent in your area. You'll need a registered office address (can be your accountant's address if you don't want to use home), at least one director, and a shareholder.
Step 2: Register with the Mandatory Regulators
This is the part that catches new agencies out. You cannot trade legally in the UK lettings market without being registered with all of the following:
- A redress scheme — either The Property Ombudsman (TPO) or Property Redress Scheme (PRS). Membership is around £180–£300/year. Lets your customers escalate complaints if you don't resolve them.
- Client Money Protection (CMP) — Client Money Protect, Money Shield, RICS, or Propertymark. Around £150–£500/year. Insures any deposit, rent, or float you hold on behalf of a landlord against your business going bust.
- HMRC anti-money-laundering supervision — required if you handle property transactions over €10,000. ~£300/year. Critical because you'll be doing AML checks on every tenant.
- ICO data protection registration — £40–£60/year. Mandatory because you'll be processing personal data.
Budget around £700–£1,200 for the first-year regulatory cost. See our letting agency compliance checklist for a deeper walkthrough of each one.
Step 3: Sort Your Insurance
Two policies are non-negotiable for a letting agent: professional indemnity (covers you if a landlord sues over advice you gave) and public liability (covers you if someone is injured during a property visit). Expect £400–£800/year combined for a new one-person agency. Add cyber insurance if you're handling tenant data digitally — which you will be.
Step 4: Pick Your Software Stack
This is where new agencies historically over-spend. The temptation is to buy a separate tool for everything — Goodlord for referencing, Reapit or Alto for the CRM, Xero for accounting, a separate maintenance tool, a separate compliance reminder system, a separate document signing service. Each one costs £30–£150/month per user, and they don't talk to each other.
The modern approach is to use a single platform that covers all of it. LettingGuru bundles property management, tenant onboarding, referencing, AML, compliance reminders, maintenance, contractor management, financials, and seven dedicated mobile apps (tenant, landlord, contractor, inspector, viewer, buyer, vendor) into one subscription from £399/month. Pair it with Xero for accounting (we have a native integration) and you've got a complete stack for under £450/month.
For the full evaluation, see our breakdown of the best letting agent software for new agencies.
Step 5: Decide Your Pricing Structure
UK letting agencies typically offer three service tiers:
- Tenant Find Only — agency markets the property, vets tenants, and hands over to the landlord on move-in. One-off fee, usually 1× monthly rent or 8–10% of first year's rent.
- Rent Collection — Tenant Find plus monthly rent collection and arrears chasing. Ongoing fee of 5–8% of rent collected.
- Fully Managed — everything above plus maintenance, inspections, compliance management, and tenant communications. Ongoing fee of 10–15% of rent collected.
You'll want to offer all three from day one. Most new agencies underprice themselves in the early days; price for the value you're delivering, not for what feels comfortable to charge.
Step 6: Get Your First Landlords (the Hardest Part)
This is the bottleneck for almost every new agency. A few approaches that work:
- Switch your own contacts — landlord friends, family, former colleagues. Most new agencies' first 3–5 properties come from existing relationships.
- Local SEO + Google Business Profile — claim your Google Business Profile, get listed on every UK directory (Yell, Touch Local, ARLA's directory, etc.). Aim to rank for "letting agent in [your town]".
- Approach accidental landlords — people who inherited a property or relocated for work. Estate agent networks often refer these out because they don't manage rentals.
- Hyper-local content marketing — write a blog post on "How much rent will my [town] property achieve in 2026" and rank for that locally. This is slow but compounds.
- Cold approach for HMOs and student lets — these landlords are often DIY-managing and tired of the admin. Direct outreach with a clear pitch (especially with a fully-managed offer including compliance) converts well.
Step 7: Get Your Portal Listings Sorted
You'll need to list properties on Rightmove and OnTheMarket to get tenant enquiries. Rightmove especially is non-negotiable — they have ~95% market share for property searches in the UK. Account setup involves provisioning fees and a monthly listing fee that varies by location (£250–£1,500/month depending on volume). OnTheMarket is cheaper, around £150–£500/month.
Both portals have automated feed integrations so you don't have to upload listings manually. LettingGuru has a native Rightmove + OTM integration that pushes listings out automatically when you create a property in the CRM.
Step 8: Set Up Your Day-One Operations
Before your first tenancy completes, you need:
- A separate client account at your bank (HSBC Business, Lloyds Business, Starling Business all do this).
- Your CMP scheme registered against that account number.
- Three deposit protection scheme accounts — Deposit Protection Service (DPS), MyDeposits, and Tenancy Deposit Scheme (TDS). You don't have to use all three; pick one custodial scheme (free) and one insured (paid).
- Right to Rent check process documented — you must check every tenant's immigration status before move-in. Our Right to Rent guide covers exactly how.
- A standard tenancy agreement template — most agencies use an Assured Shorthold Tenancy (AST), modified to suit. LettingGuru ships with a Renters' Rights Act-compliant template you can customise.
- Standard contractor agreements + CIS deductions process if you're going to handle maintenance.
Step 9: Run Your First Tenancy End-to-End
The first tenancy will take you 2–3× longer than the tenth. That's normal. Treat it as your dry run for every process. Walk through every step — viewing, offer, referencing, AML, contract, deposit protection, move-in inspection, first rent payment, ongoing compliance — and document what worked and what didn't. By the time you've done five tenancies, your process is yours.
Pro tip: do a recorded video walkthrough of your CRM workflow on tenancy three or four. Future staff hires get a 20-minute training video instead of you re-explaining it from scratch.
Step 10: Build Toward 50 Properties
The economics of a UK letting agency get good around the 40–60 property mark. Below that, you're working hard for modest income. Above that, the recurring management fees start covering your fixed costs and you can hire your first non-founder team member. The fastest way to get there is via portfolio acquisitions — buying out a retiring agent's book — but organic growth at 1–2 properties per month is realistic for a hungry new agency.
By the time you hit 50, your operations are squeaking under the strain of a manual workflow. That's the moment you'll feel the value of having picked the right software at the start. See how to scale a letting agency past the first branch.
Ready to Launch?
Book a 30-minute demo and we'll walk you through how new agencies use LettingGuru to launch with one platform instead of seven. Or check our pricing — every plan includes every feature, no per-user fees, no per-property surprises.