Agent tells contractors to add 10% to bills to help off-set loss of income because of fees ban

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.”

 

 

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6 Comments

  1. Jonesd1597

    So do they right to all their landlords   Highliting that all invoices have an additional 10% added  for the privilege of Belvoir using their contractors to carry out work on their behalf? Sounds like they may need to issue new terms and conditions to all Landlords before this takes effect otherwise is this not obtaining monies by deception as it’s not the true cost of the work being carried out by the tradesmen.

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  2. RichardHill61

    This is news?

    This has been standard practice for a lot of corporate, and some independent,  agents for a very long time already!

    Many will not give contractors work at all unless they agree to the commission..

    Sorry jonesd1597 but I know I am write but I wanted to highlit it!

     

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    1. Jonesd1597

      I know it’s gone on for a long time and as an agent and landlord I disagree with it. I’ve been asked by contractors many times if I want the bill inflating as it’s ok the landlord pays and doesn’t know any different. When I said I was the landlord as well the look on their face was priceless. As long as the person who’s paying the bill is made aware there’s not a problem with it! Or as I said it’s written into the contract between agent and landlord. Why should a LL who’s already paying a management fee then be charged at extra 10% on all invoices for standard services offered such as cleaning and CP12’s etc I agree about agents charging a fee for managing larger jobs on behalf of a landlord which is justified but that would be charged separately and not added to the contractors bill!!

       

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  3. CountryLass

    I was surprised when I started at my current company to discover that there is not built in commission on contractor invoices, and we don’t get any sort of ‘kickback’ from the contractors, other than the occasional bottle of wine or box of chocolates at Christmas. Oh, and a free boiler service once a year.

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  4. jonJames43

    Really, I agree with Richard is this really a story? Any commissions taken must be open and visible and clarity is a must.  It appears that the letter sent is rather naively written and I am sure that lessons will be learnt. Personally my view has always been that agents management fees should cover everything and that agents shouldn’t charge commission on top hence why some Agents charge higher monthly fees.  Very conscious that many agents do charge for extras and I imagine that this is common practice across the industry.

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  5. BillyTheFish

    Unless the agents ToBs specifically state that they will be charging commission on contractor’s invoices this practice is in breach of consumer regs. The management fee (EG 10%) includes overseeing maintenance so adding (EG 10%) to contractor’s invoices is effectively a double charge.

    It has been going on for years, that does not make it right. Any Landlords reading ask your agent if they charge commission on contractor’s invoices by email, I doubt any will say ‘yes’ but you will have the response in writing should you ever need it.

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