In the biggest shake-up yet for the industry, property firms will have to register as not-for-profit organisations.
The change will affect all developers, estate agents and letting agents, as well as landlords regardless as to whether they operate as companies or individuals.
A Private Member’s Bill passed its first reading last week, but amid all the noise on Brexit votes failed to attract any news coverage.
The Government has said it will not block the progress of the Estate Agents, Landlords and Property Developers (Profits Prohibition) (England and Wales) Bill 2019.
The Bill, dubbed “Persimmon’s Law” after the developer’s huge profits, is likely to be implemented either this October or next April.
From then on, it will be illegal for any property company to make a profit.
If a profit is inadvertently made – for example, because an estate agent has not lowered its commission fee sufficiently – then the surplus must be handed to an “authorised” charity.
Landlords are unlikely to be in the position of making profits, as from next year the Bill says they must be be taxed – on turnover, not profits – at a new ‘super-rate’ of 75%.
Penalties for any property business that makes a profit and then fails to hand it on to Shelter – so far the only “authorised” charity mentioned in the Bill – will include civil penalties of a £30,000 fine or 20% of turnover, whichever is the greater; plus criminal sanctions including prison sentences of up to three years for the firm’s directors.
There will be some exemptions – notably property portals, which will be allowed to continue as profit-making enterprises, and also the compliance industry which is expected to burgeon in the new regime. The social housing sector is exempt.
The Bill also has a series of ‘anti-loophole’ clauses designed to prevent breaches – for example, bosses will not be able to award themselves or their staff pay rises higher than inflation, and must also register details as to how much they have spent on lunches, golf club subscriptions, gifts and holidays, specifically including honeymoons.
A spokesperson for the Ministry of Housing, Communities and Local Government, told EYE: “We look forward to working with our stakeholders to communicate details over the next few months.
“The Bill came about largely because of the unacceptable profits being made by some developers.
“However once we looked at estate agents we noticed a precedent had been set because there are a number of high-profile firms, especially in the online sector, which have successfully kept going despite not having once made a profit.
“Also, there was another precedent, as we are already banning letting agents from making money out of tenants.
“Removing agents’ ability to make a profit will at a stroke create a level playing field for all members of the public.”
The Bill is set to have its second reading just before noon today.
- Please note the date that this story was originally published – April 1.
Copy this post and paste it back in it in ten years. Might be spot on then!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Nice one Ros!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
When I win the euro millions, I’m going to set up a new company selling houses FOC… Just for the hell of it!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
You could use the line – ‘AVOID CONMISERY – FOC IT!’
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Christ for a minute i just thought this is the way our industry is going. But yeah cracking read, had me going….
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
A company that advertises property online only, takes the clients money upfront, whether they sell the clients property or not? Charges the client more for not using their recommended solicitor?
Takes a big lump of commission from the solicitors fee if the client uses their solicitor?
Called what, Purplebricks?
You must be joking?!
Must be April Fools Day!
“Be an April Fool Every Day – if you choose Purplebricks to sell your home”
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Heart attack inducing for all of 5 minutes emergency cobra meeting and all went off in my head.
lol very good but wouldn’t be a ****** surprise
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Many a true word spoken in Jest.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Hehe
The alarming thing is that many agents won’t fall foul of this if it were true – CW springs to mind as a bigggy….
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
If that were not a joke it would be really easy to implement after June !
The good news tho is as none of us will be making profit we wont have to give it that shower in Shelter ha
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I’m sure you’ve accurately foreseen the next govt moves Ros! It’s coming, it’s definitely coming…
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
No doubt the Duck will be hailing this news! Lol.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Have Corbyn and McDonnell conducted an overnight coup?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
…Give it a couple of weeks, the Tories have done the work for them!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Had me going for a minute there! Nearly cancelled my holiday 🙂
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
My Sales Manager had a 5 minute panic attack before she caught on.
Confidence inspiring. 😀
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
By the time Govt have finished, Landlords won’t be able to afford a holiday !
( other than Butlins, whilst our tenants go to more exotic places )
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register