Estate Agent fee; The Property Ombudsman interpretation.

principlecounts

To cut a long story short, I maybe getting short changed on an estate agent fee, and currently assessing the situation. For now I want to know what your interpretation is of the statement below from The Property Ombudsman Code of Conduct :

Fees and Charges

"Where you charge a fixed fee you should state the actual amount payable including VAT in the contract and ensure that the seller understands that the fee will not vary whatever the sale price."*

Does that mean the VAT must be *explicitly* stated in the contract? Or does the fixed fee assume VAT is included?

*http://www.tpos.co.uk/downloads/TPOE27-3%20Code%20of%20Practice%20for%20Residential%20Estate%20Agents%20-%20Effective%20from%201%20August%202014.pdf (paragraph 5j)

eddddy

Hi principlecounts

Are you saying that

1) the contract didn't mention vat at all (i.e. it was silent on vat)?

Or are you saying...

2) the contract said something like "the fee is £x plus vat" - but didn't explicitly state the amount of vat or the vat inclusive fee.


If it's 1 (the contract was silent on vat), it is generally accepted that the price quoted is inclusive of any vat due.

If it's 2, I don't think the ombudsman would support you (and a court certainly wouldn't)

googler

If the fixed fee is £1,000 plus VAT, and VAT is 20%, the contract should state that the fee payable is £1,200.

Optionally, it could state that the fee is £1,000, and VAT of £200 makes the total above.

I really don't think there's much room for misinterpretation on what the code of conduct says.

G_M

Your link is unhelpful. Link to the correct page please.

principlecounts wrote: »

Fees and Charges

"Where you charge a fixed fee you should state the actual amount payable including VAT in the contract and ensure that the seller understands that the fee will not vary whatever the sale price."*

Does that mean the VAT must be *explicitly* stated in the contract? Or does the fixed fee assume VAT is included?

*http://www.tpos.co.uk/

I would imagine the intenetion is that a consumer knows exactly what he will have to pay.

If the quoted fee is simply "£1000", then that is what he will pay so it must inclde VAT

If the fee quoted is "£1000 plus VAT" then clearly he will have to pay £1200.

I could be wrong though.

dodger1

OP is the agent a member of TPO? They may be registered with a different scheme and the rules may be different.

With effect from 1 October 2008, all estate agents are required to register with an Estate Agents Redress Scheme that has been approved by the Office of Fair Trading (OFT) and which investigates complaints against estate agents. The TPO is one of the schemes approved by the OFT.

principlecounts

eddddy wrote: »

Hi principlecounts

Are you saying that

1) the contract didn't mention vat at all (i.e. it was silent on vat)?

Or are you saying...

2) the contract said something like "the fee is £x plus vat" - but didn't explicitly state the amount of vat or the vat inclusive fee.


If it's 1 (the contract was silent on vat), it is generally accepted that the price quoted is inclusive of any vat due.

If it's 2, I don't think the ombudsman would support you (and a court certainly wouldn't)

It's 1. It was printed 'inc VAT'. But the total box was blank. Which strengthens the verbal agreement made on market inspection. i.e. VAT would not be paid. I'm slowly realising this is a marketing ploy by the Estate Agents. But I'm not buying it, and will go all the way. I am usually successful.

If the fixed fee is £1,000 plus VAT, and VAT is 20%, the contract should state that the fee payable is £1,200.

Optionally, it could state that the fee is £1,000, and VAT of £200 makes the total above.

I really don't think there's much room for misinterpretation on what the code of conduct says.

That's correct IMO. But if the estate agents says fixed fee and VAT will be paid by the estate agent, then doesn't make the total price explicit on the agreement, and later gives an inflated figure to the solicitors. Factor in the TPO Code of Conduct, it doesn't look good for the Estate Agent.

If the quoted fee is simply "£1000", then that is what he will pay so it must inclde VAT

I agree with this, and VAT included in the price should be made explicit, and my interpretation of the TPO CoC states that also.

OP is the agent a member of TPO? They may be registered with a different scheme and the rules may be different.

Not a member. Estate agents letter were printed with TPO.

jjlandlord

This is not even a question of what the TPO's interpretation is. This is about prices in consumer contracts.
The law says that they must include VAT. If they don't, e.g. because they also sell to VAT-registered companies, it must be clear what will be added.

Therefore, if your contract states a fee without reference to VAT, or (obviously) explicitly states that the fee includes VAT, then you only owe that fee.

pyueck

jjlandlord wrote: »

This is not even a question of what the TPO's interpretation is. This is about prices in consumer contracts.
The law says that they must include VAT. If they don't, e.g. because they also sell to VAT-registered companies, it must be clear what will be added.

Therefore, if your contract states a fee without reference to VAT, or explicitly states that the fee includes VAT, then you only owe that fee.

This is correct, this is tax law and applies to all rated items.

principlecounts

I'm getting close to exchange and the agent has ignored my original enquiry. I'll be writing a formal letter now. Can someone elaborate on the tax law. I will need to argue that point.

eddddy

I'm not sure there's any need to argue at this stage.

Usually, the EA's fee is paid by your solicitor out of completion funds. Just tell your solicitor how much to pay the EA.

If the EA believes you have not paid enough (so you are in breach of contract), they may make a claim against you and you can then argue - perhaps in court.

---

Edit to add:

...or you could play hardball with the EA, and say "I'm not going to exchange until you agree with me about the fees. And if I don't exchange you wont get any fee at all".

But you probably have more to lose than the EA does!

Annie1960

dodger1 wrote: »

OP is the agent a member of TPO? They may be registered with a different scheme and the rules may be different.

With effect from 1 October 2008, all estate agents are required to register with an Estate Agents Redress Scheme that has been approved by the Office of Fair Trading (OFT) and which investigates complaints against estate agents. The TPO is one of the schemes approved by the OFT.

The rules are exactly the same for any company that is VAT registered. The rules on this come from HMRC.