Bookkeeping for Landlords - Recording Letting Agent Statement and Fees (Alternative Method)

This is an alternative approach to the Standard Method of recording letting agent statements and fees for landlords.

This alternative approach uses a holding account to reflect the full flow of funds between the tenant, agent, and landlord.

This workflow is useful when a letting agent collects rent, deducts their fee, and transfers the net amount to you.

It records the full gross rent and fee deduction while maintaining a clean trail of transactions through a separate holding account.

Step 1 - Create a Holding Account

1. Go to Banking >> Create Bank Account

2. Choose Other Bank Account

3. Name it something clear such as: Letting Agent Holding Account

4. Click Save

This account acts as a temporary balance point - recording the agent’s receipt of gross rent, their fee deduction, and the transfer of the remaining balance to you.

Step 2 - Record the Gross Rent Invoice

Create the invoice for the full amount of rent collected on your behalf by the agent.

1. Go to Sales >> Create New Invoice

2. Client: your letting agent (e.g. ABC Estate Agents Ltd)

3. Description: Rent – 56 Stanmore Lane (06/11/2025 – 05/12/2025)

4. Amount: £1,650.00

5. Category: 4000 - Rent Income

6. Add the Project Tag: 56-stanmore-lane

7. Click Save, then click the option to “send” the invoice, but click Mark as Sent

Step 3 - Record the Agent’s Management Fee

Create a purchase invoice for the letting agent’s commission and VAT (if applicable).

1. Go to Purchases >> Create New Purchase

2. Supplier: ABC Estate Agents Ltd

3. Enter the details:

   • Description: Management Fees (11 % + VAT)
   • Amount: £217.80 (gross)
   • Category: 7604 – Letting Agent / Management Fees

4. Add a project tag for the property, e.g. 56-stanmore-lane

5. Click Save, then Mark as Paid from your holding account we created above (e.g. Letting Agent Holding Account)

Step 4 - Record the Rent Receipt into the Holding Account

1. Go to Banking >> All Bank Accounts

2. Open Letting Agent Holding Account

3. Click Input New Transaction >> Select “Money In”

4. Enter the details, for example:

   • Date: the rent collection date
   • Description: Rent received – 56 Stanmore Lane
   • Amount: £1,650.00

5 .Click Save

Step 5 - Record the Agent Fee Deduction

1. In the Letting Agent Holding Account, click Input New Transaction and select Money Out

2. Enter the details:

   • Description: Management Fee – ABC Estate Agents Ltd
   • Amount: £217.80

3. Tag this payment to the purchase invoice created in Step 3 above.

This reduces the Holding Account by the amount of the fee.

Step 6 - Transfer the Net Rent to Your Main Bank Account

1. Go to Banking >> Letting Agent Holding Account

2. Click Input New Transaction and select Money Out

3. Enter the transaction:

   • Description: Net rent transferred to main bank
   • Amount: £1,432.20

4. Tag as a Bank Transfer to your main current account where the rent has been paid.

The Holding Account will now reconcile to £0.00, confirming that the rent, fee, and transfer are all correctly processed.

Why Use the Holding Account Method?

• It mirrors the agent’s statement flow exactly - gross rent, fee, and net payment.
• Provides a clear audit trail between tenant, agent, and landlord.
• Keeps your main bank ledger clean (showing only the net received).
• Still compatible with Project Tagging, so reports remain identical.

Both the standard and alternative methods achieve the same end result. The Holding Account Method simply provides greater visibility of the agent’s deductions and transfers, while the Standard Method is faster when you only need to record the net position.