A property maintenance firm which two years ago stopped working for Foxtons when it said the agent wanted to increase its commission from 15% to 20%, says the practice of agents charging contractors is rife.
Will Davies, managing director of London-based Aspect, said two years ago that the practice was a “letting agent scam which should be exposed to the public”.
Yesterday he revealed that his firm now works for very few agents because so many charge contractors commission in return for putting work their way.
He told Eye: “This has got to the point where it is essentially accepted as the norm.
“If you want to do work for estate agents then you must accept there is a cost for doing so and that will be a commission payment that can range from 5% to 20%.
“This is not to say that every single agent acts this way and there are certainly some we work for who will not charge commission and instead drive the best pricing they can for their clients, Hamptons for example, but we work for very few estate agents as we do not believe this practice to be acceptable.”
Davies said that contractors would not usually be aware of landlords being charged mark-ups on repair bills by agents.
He said: “This is not something that the contractor is generally privy to, but there is general consensus that it happens.
“Again as a business we will not work with agents that mark up our bills to clients but we cannot be certain whether it is happening or not.
“I think this is not as commonplace as it once was as landlords are now aware of the practice and will ask for copy invoices so they can check they are not being marked up.
“Aspect is not working for Foxtons and in fact we only work for a very small number of estate agents as we will not entertain paying a commission or having our invoices marked up.
“Rather than allocate commission to the agent within our charge structure, for those agents who are against it we will instead drop our pricing so they can in turn pass this on to their clients.”
Aspect has now been in business for ten years. Over the last two years, its van numbers have gone from 150 to 300, and in the last year, turnover has gone from £12m to £16m.
The business, run by Davies and Nick Bizley, who met at 13 when they were in the same rugby team, has also just moved offices in south-west London, doubling its workspace.
Davies said: “Business is going very well at the moment and we are doing more and more business direct for landlords.
“We have our own property management division which is going from strength to strength as landlords see the benefit of having their properties managed by a genuine 24-hours business with in-depth knowledge of all maintenance and refurbishment requirements.
“We pass on reduced pricing direct and charge a fraction of what they would pay an estate agent to manage the property for them.”
A class action is being mounted against Foxtons by a law firm which claims that the agent is charging landlords “secret” fees on their repairs bills. Foxtons insists that all of its charges are clear.
I have no real love for Foxtons but this seems to only be an articulate written from a disgruntled plumbing business that’s a previously had a falling out with foxton over other issues. it reads tht they are now selling sour grapes.
Good luck with your property management business. hookwinking landlords into thinking property management is being able to fix a tap 24 a days is far worse crIme than anything foxtons have alledgey done.
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I never charge commissions for work done, surely it’s our duty to get the best prices and quality of work we can for our Principals – the landlord? I firmly believe that by providing a quality service, being principled and fair will win the day – 1 by 1 landlords come to my firm for this very reason.
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this is not news it’s advertising
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This is standard practice and well known to ARLA RICS etc…..so much so software packages are designed to deduct a commission without showing on Landlords Statement. In addition the Agent then adds on a commission as detailed in their Landlord contract which does show on statement.
However not withstanding this many Landlords do not appreciate the time and resources required to “change a tap washer or light bulb” and as long as he is shown the cost plus any admin fee then there should be no issue.
However to demonstrate the general mind set we have one Landlord who stated that the cost for supply and fitting smoke and CO2 alarm was too high and expected us to order, pay and delivery to our office from an online supplier and thereafter for staff to fit in a property 20 miles from our office “free of charge”
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My agency charges the landlords we manage for, 10%. We also make some money on the repairs/works (that’s because we’re buying in the parts and labour in bulk and is a result of 20 years of negotiations). Even with the extra on top, our landlords pay vastly less than they would by going it alone. Small repairs here and there is one thing, but landlords expect virtually any and every repair from re-wiring to a new roof to be assessed, organised and checked for nothing (well, for their 10%). It can’t be done. I can up the commission charged to landlords but unless others did the same, business would go elsewhere.
I had similar complaints about smoke alarms/CO detectors. They see £8.99 on Argos and expect that to be about the price of the job. I was charging £25.00 and I got landlords upset…who pays for the labour? The researching of the units, the ordering, the fuel, the tools etc. An £8.99 smoke alarm is not £8.99 to put up!
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I would guess that these additional charges/secret commissions are not fully explained to landlords prior to signing agreements. Sure, the headline management fee would be, but I doubt it goes much further than that. If that is the case, then that is completely dishonest and any agent that indulges in such practices deserves to be repremanded
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My agency never charges additional fees on contractors invoices nor do we accept payments of commissions from contractors who offer it to us. It is more important to our agency that the contractor does a quick and efficient job and charges a fair and honest price for us to pass on to our clients. We use reliable contractors and all that we expect from the contractors in return for our business is that they prioritise us and our clients, which means that they sometimes have to accept the occasional emergency out-of-hours, bank holiday or New Years Eve call out!
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We never charge landlords for commission purposes. However, clients must be aware of these practices and should grab the copy of invoices to prevent these issues. So, I agree to this point.
http://www.davis-brown.co.uk/professional-services/residential-property-management
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