By Eric Walker
My head hurts and it’s not from over-indulgence – well, not of the nice variety: rather the excessive consumption of new rules and regulations, guidelines and red tape in general.
I agree with many of the principles behind these rules, but genuinely believe the didactic patronising tone is rendering compliance near impossible.
In a recent ASA ruling, it appears you can’t quote a fee without calculating and adding VAT. So a tenant find at 10% must be quoted at 12% including VAT.
Honestly, if I told some of my landlords that our fee was 10% plus VAT which comes to 12% inclusive I would imagine they would think I was being sarcastic.
We have opened a business in a part of the country where fees are more complex.
Full management is 6% plus VAT, sorry 7.2% inclusive, but there is a set-up fee typically 80% of the first month’s rent which will now of course be 96% inclusive calculated on a variable rent.
The immediate effect is that compliant agents will look very expensive compared to those which ignore the rules – and believe me, many will.
There are lots of agents still not complying with EPC requirements, current fee disclosures, CPRs, etc.
It’s not so bad for the large agents with a compliance team to interpret the effects of new regulations.
No disrespect to smaller agents, but even the bodies who issue the rules usually have to provide clarification over several years.
Further, these regulations rely upon an agent finding out that there have been changes, since seldom are they informed.
Frankly, what this red tape will achieve is to make roguishness far more profitable and as such far more attractive.
It is all rather like the dying days of HIPs.
Then, there were agents who said to vendors: “Oh don’t worry about that. Keep your money, we can sort it out when we get a buyer.”
Agents benefited as a result of Mr Shapps’s procrastination. They were breaking the law, but no one policed it and no one cared. Bluntly, breaking the law was used as an instruction winner.
In my local high street there is an excellent ‘old school’ local agent who is the epitome of professionalism. He has never received a complaint and is highly respected.
That said, if Trading Standards visited his office, they would probably faint and return mob handed with burning torches.
He provides a far better service than the adjacent corporate with their revolving door inexperienced staffing and targeted cross-selling, but simply lacks the back office ‘box ticking’ support.
The vast majority of agents want a properly regulated and policed industry, but resentment is building as the gulf grows between compliance and the associated costs and those who simply ignore these changes.
That said, compliant agents need to report those who transgress to Trading Standards, as otherwise the situation will not change. What remains astonishing is that different TSOs have entirely different views in the severity of breaches. There is no consistency and it’s consumers along with many well-intentioned agents who suffer.
Wouldn’t it be better making smoke detectors, carbon monoxide alarms, electrical tests, Client Money Protection,etc, compulsory in all cases? At least, we would then all know where we were.
But there are no signs of such common sense. Instead, we are now unpaid employees of UK Border Control.
When agents go bad and pinch deposits, it’s often deemed as over-trading, with the perpetrator sent to the naughty step and nothing more.
MPs of whatever party should be focusing on the basics, not the headline grabbers: issues that save lives and really protect consumers’ hard-earned cash.
Is it necessary to treat consumers as if they are completely stupid? If you are leasing a car, you will have seen the “3 + 36 months – £420 pcm (excl vat) – 10,000 miles – non maint”.
Why is this different? Are all these rules about really helping consumers, or rather currying favour with voters by giving lettings agents a damn good kicking?
I had lunch at Le Pont de la Tour last week. I ordered an orange juice and soda – which may surprise anyone who knows me.
It cost £8 – £4.50 for the orange and £3.50 on the soda – plus 12.5% service charge. The inevitable bottle of vino is usually £7.99 in Waitrose, but in such establishments is charged at £37 plus another 12.5% for unscrewing the lid. Now that, surely, is a much stronger case for transparency.
* Eric Walker is managing director of Northwood
Comments (15)
"Sorry for breaking the law, guv, but surely you want to leave me be and go after someone else who has more hidden charges than I do."
Otherwise, a very well written point of view (and one I largely agree with – regulation ≠ better industry standards).
Here is interesting question – Is a Landlord Agent relationship a B2B one?
By definition of court ruling …. YES.
That's my understanding as far as HMRC and HSE are concerned.
"In a recent ASA ruling, it appears you can’t quote a fee without calculating and adding VAT. So a tenant find at 10% must be quoted at 12% including VAT."……………….
I think we need to qualify "quote". In my book there is a difference between an advert and ones T&C's; does the ASA have a say in what appears in our T&C's? My interpretation is that it is OK to continue as before, quoting % excluding VAT in our T&C's but if we want to advertise your rate, say a special December offer or you want to promote how cheap you are, then VAT should be included. I wonder how many agents actually advertise their vendor/landlord fees.
Good to hear from you Eric.
From and old South coast Mate.
Perhaps even a flaming softie? 🙂
There's much gtuth in what Eric says. The trouble is that our industry is made up of 3 parts. Legislation. Front line agency and IT. Very few understand all…………….. Large companies do have compliance to ensure managers tick the training box to try and get it right AND to have a head tk roll if they get it wrong…………….But again there is often quango legislation when really bits like the 79 Estate Agents Act isnt as it should be to pull in some of the real cowboy traders who sit with passive models on the side line claiming they are not agents and therefore outside regulation…………….Basically the industry is in a mess
Come on Eric. You say that agents should report others who transgress to their local TSO so presumably you will be following your own advice? Complying with the law isn't box ticking and agents who are professional keep up to speed. Telling other agents to report transgressors while not doing it yourself is surely playing it safe to protect your own relationships while quite happily encouraging others to do differently. You are either a safe agent or not? Which is it?
After working in Bermondsey & East London for 11 years, you tend not to publicise being a 'grass'.
Calls for ‘regulation’ are usually from people with a vested interest (make it too difficult or expensive for small firms) or simply ignorant of what regulation would inevitably result in; needless bureaucracy that rarely delivers the intended benefits to the consumer. Just look at banking or the broader financial services sector, heavily regulated but who trusts their products? We really do need to be careful what we wish for, I am a strong believer in market forces and we do have a legislative framework that if enforced would help. The vast majority of letting agents deliver a first class and complex service along with value for money, landlords and tenants have choice.
VAT is a tax and, as such, it must be included in prices provided for ordinary consumers in order to give clarity. Car leases for businesses do not need to have VAT included in them and their advertising (only in B2B publications) and can therefore be stated as plus VAT. It has been in the VAT rules for years but Eric has obviously been too busy at the wrong wine bar (how last century is that?) where the service charges have left him even more confused. More fool him for paying – Eric, say you will unscrew your own lid! If Eric hasn't been advertising his costs as VAT inclusive then he's no better than the "old school" agent he's now tempted to report to Trading Standards. Pot, kettle, and black spring to mind.
I am not entirely sure the jewel in D & D restaurants crown can really be described as a 'wine bar'. I certainly didn't suggest reporting my local agent to anyone, but hey – that's PR for you. 😉
Eric's spot on, as usual. No doubt the complacent bureaucrats will be too busy with their expense claim forms to read or even care about the very, very good points made in this article.
I'm giving up having a 'quiet word' with offenders, from here on in, I'm reporting them