An agent has told contractors to add a 10% margin to their bills, in order to help mitigate the loss of income because of the fees ban.
In a letter sent out by the Belvoir franchisee, and which EYE has seen, the contractors are told: “Please send us your invoice for the full amount with no reference to the commissions.”
The wording is underlined, as above.
The letter, from Ramona Hirschi, managing director of Belvoir in Hanley, Stoke-on-Trent, explains: “Thank you very much for being one of our trusted contractors, which helps us deliver good service to our customers.
“We have been restructuring many aspects of the business to make it more sustainable long term.
“The Government is going to ban tenant fees, which means letting agents like us will lose a lot of income. This will impact staffing levels.
“We are also project-managing lots of property refurbishments for free for landlords during the vacant periods, when no management fee is collected. This clearly cannot continue.
“Therefore, we have decided to put commission arrangements into place with all our contractors, just like other Belvoir offices nationwide.”
It says this will not cost contractors anything, but that they should “build in a 10% margin as commissions to us.” If the landlord pays the contractor directly, the contractor is asked to send the 10% commission on separately.
The new commission arrangement has come in, as from this week.
A Belvoir spokesperson said: “All of our franchisees are free, and have the flexibility, to set up their own commercial arrangements with landlords.
“In this particular case the franchise owner is entitled to charge their normal management fee, which is 10%.
“This is for handling and overseeing maintenance works, some of which might be considerable refurbishment works, as long as the commission element has been disclosed to the landlord, by the agent, by means of their terms of business.
“Hanley office’s terms declare that commissions will be taken on ancillary services, including contractors, and it doesn’t make any difference whether the commission is charged separately to the landlord or is included within the contractor’s invoice.
“However, the content of the letter issued by the Hanley office was not approved by central office and we accept that it could have been worded much better.
“To help our franchise owners to overcome the effect of the tenant fee ban Belvoir has already scored considerable success with its Franchisee Assisted Acquisition programme.
“To date it has helped 23 offices expand their businesses. We also continue to introduce other new income streams, including the recent launch of financial services.”