How many agents are breaking rules on VAT?

How many estate and letting agents quote their fees and other charges without VAT?

And how many know that they should not be doing so – for example, stating £100 + VAT?

The rule is quite clear in the CAP (Committee of Advertising Practice) code:

3.18    Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.

Since almost all estate agency and letting agency customers are consumers, they cannot reclaim VAT.

It therefore stands to reason that agents (both the high street and online variety) should advertise fees and prices inclusive of VAT – and do so wherever they advertise, whether in print or online.

Indeed, if you don’t, you are in breach of the CAP code.

A property advertising manager for one local newspaper group tells us that he has to have constant conversations with his agent advertisers about the need to show prices that include VAT.

Eye took a random look round some agents’ websites.

eMoov, for example, quotes prices plus VAT. Hatched used to do the same, but following a brush with the Advertising Standards Authority last year on a largely unrelated matter, now quotes prices inclusive of VAT.

Sarah Beeny’s Tepilo does not include VAT. It says of its prices that they all are subject to VAT, making her a potential high-profile case for the advertising watchdog.

Purplebricks launched with a price of £599 including VAT, but has changed to a new price of £665 plus VAT.

Foxtons makes it clear that its prices include VAT, for example, stating of its charges to tenants that the usual £420 is inclusive of VAT.

Waterfords, in Hampshire, Berkshire and Surrey, goes even further. It sets out its tenancy fees in two columns, the first showing the fee without VAT and the second with VAT.

Leaders, however, quote prices plus VAT – for example, an admin charge of £275 plus VAT.

There’s an interesting blog below. We’d be interested in your feedback.

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  1. realpundit

    Finally proof that online agents, like eMoov, are not holier than thou (traditional agent).

    It would be nice to see an agent break out of this 'race to the bottom' (on fees) and offer a genuinely better service to consumers.

    When the industry can not be brandished with 'all agents are the same', agents will finally have dug their heads out of the sand.

    There will always be agents. They are needed. Wanted even. The actions of consumers speak louder than their petty complaints.

    But which agency will break out of the long tail and lead by (better) example?

    Starting with transparent fees (inclusive of VAT), agency needs to hire negotiators and staff that get off their (lazy) **** when people walk into the office. Humour me, and watch your negs talk to walk-ins without standing up, and walking out from behind their desks.

    When that changes, you'll see more smiles all round.

  2. MF

    Because the rate of VAT changes from time to time, It does cause a bit of a problem for quoting fees that will be charged in the future, like check outs and tenancy renewals, for example.

    1. ammik

      Did you really just write that? How often does VAT change..?!

    2. ray comer

      and why would that effect charges you've already agreed with a tenant when they move in? you DO have those fees in your tenancy agreement don't you?

      1. Steve Adams

        I understand the original post. However of course VAT changes seldomly but the point they are making is if a price is listed as £120 (obviously including VAT) then that is £100 plus VAT. What if VAT changes to 30% subsequently … you can still only charge a total of £120 ? That is the point being made.

        1. MF

          Thank you Steve Adams, yes – that is the point I was making. Equally, VAT rates could be reduced and that would mean the consumer is paying more. Quite a number of our tenancies last many years and in the past when rates changed we saw the effect of this.

          1. Ric

            The correct way is simply (for example)……..the fee will be £100 plus VAT (total inc VAT £120) or the prevailing rate of VAT when the invoice is raised.

  3. PeeBee

    Yet according to TPOS Code of Practice (Effective from 1 August 2014): "5i – Where the fee is a percentage you should clearly state whether VAT is chargeable and must express it as an actual amount plus VAT." ONLY when a Fee is at a 'Fixed Rate', does it state that this should be given on a VAT-inclusive basis. Don't ask me why – maybe TPOS don't think that we can work out what 120% of our Fee is… which is more reason that we SHOULD, rather than leave the vendor to work it out for themselves (or, worse, forget about it completely until they see the bill at the end…)

    1. JungleProperty

      I would take what TPOS say with a large pinch of salt. Some of the stuff they come out with is utter……. the subject of including VAT is not new and from memory goes back to price marking orders in 1991 and 1999 but like so many other 100s rules/regs agents will bend them as long as they can a) make a quick buck b) get away with it

      1. PeeBee

        Hmmm… taking TPOS "with a pinch of salt" isn't something that I would heartily recommend, JungleProperty – but at the end of the day I'd expect Mr Hamer to appear as defence witness were a Member agent, having followed the published Code, ever taken to court…

        1. JungleProperty

          'None' of the members I know follow the code and as far as I am aware nobody checks that members follow the code so although it is all written with good intent you may as well run the lot through the shredder and save yourself the money on expensive window stickers. I am not surprised the code has never had formal acceptance by the OFT/CMA

    2. PeeBee

      Interestingly, The CAP Code of Practice that Mr Day is quoting continues as follows… "3.19 If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer’s circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated." So I would suggest that it would be a reasonable argument that as the 'fee or charge' will not be immediately calculated at the point of the appraisal/Agreement, it would not be possible to accurately confirm the VAT element of the Fee. With those Agents who offer upfront Fees, of course, it IS possible to provide a VAT-inclusive figure… tut tut to those onlinies that aren't… ;o)

  4. Eric Walker

    As with all such things, they are seldom policed until a consumer makes a complaint which of course assumes landlords and tenants are familiar with the regs. I think many agents simply don't know.

  5. Jonnie

    Firstly good to see Hatched have got the old press release thing going again, in fairness hes picked a subject he feels strongly about and added a sprinkle of self promotion into it but is this really a problem the consumer is facing?

    We went through the highly complex process of including VAT in our quoted fees (ringing the printers and changing our text on agreements……….took literally minutes) ages ago and im with Hatched on the principle of the issue, I do very well from being an honest outfit that cares about the customer as its them paying my fees for acting for them that feeds my kids and I like being liked so I don’t mislead clients

    However, VAT is hundreds of pounds of unexpected cost to a customer, bit like paying fees upfront to list with an agent with no high street presence up front and they don’t sell it. Even more so when they compare upfront non refundable fees with payment on completion as though it’s the same thing

    Oddly a scam that does get highlighted much


  6. BBP

    How about saying £499+ no VAT? would that going to breach the code? Please advise. Thanks


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