AML payments

House_owner

I recently saw this on an estate agent listing - can't remember having to pay this when I brought and sold about 3 years ago?

Aml Procedure - To comply with anti-money laundering regulations (AML) all estate agents must be registered with HMRC. Gowland White complies with this legislation by using an online AML risk assessment company, approved by the UK Government. Please note that all buyers are charged a fee of £36.00 (inc. VAT), for each buyer, to cover this process. These fees are payable before we can progress an agreed sale.

MyRealNameToo

https://www.gov.uk/government/publications/money-laundering-regulations-2007-supervision-of-estate-agency-businesses

Estate Agents do have to perform AML checks, the above links to a governmental guide on the matters. 

How they perform the requirements and who and how they are paid for is at their discretion. There are no laws that prevent them charging nor that prevent them charging more than cost. 

eddddy

As above, estate agents are required to do AML checks.

The business model for many (most?) estate agents is to cover all their costs from successful sale completions.

e.g. If they successfully sell a £350k property, they might get a £3500 fee.

And that fee covers all their costs of selling that property (including AML costs), plus a contribution towards costs from other unsold properties - plus their profit.


But strangely, some estate agents have decided to charge buyers separately for AML checks - to generate a small amount of income (through referral fees). Judging by previous posts here, it seems to irritate many potential buyers,

Personally, I'm surprised that some estate agents risk irritating potential buyers, for the sake of a few pounds.

And it happens right at the start of the purchase process - which could cause friction between the estate agent and buyer, right from the outset - which seems like a bad way of doing business. But I guess they have their reasons.

House_owner

I wonder if the buyer ends up pulling out of the purchase for some reason ( e. g I have pulled out of a purchase in the past because of what the survey said) then will they get this AML fee refunded from the estate agent?

poseidon1

House_owner said:

I wonder if the buyer ends up pulling out of the purchase for some reason ( e. g I have pulled out of a purchase in the past because of what the survey said) then will they get this AML fee refunded from the estate agent?

No, they have performed the compliance check irrespective of whether you proceed with the acquisition or not.

With so may purchases abandoned for one reason or other, this could be a reason some agents are charging up front for this compliance work to cover a small part of their admin costs.

kingstreet

As a mortgage broker we are required to do this too. We carry the cost of checks by CreditSafe.

House_owner

I can understand the requirement to do this - it's just the first time I have seen an estate agent requiring a buyer to pay for it!

MyRealNameToo

eddddy said:

But strangely, some estate agents have decided to charge buyers separately for AML checks - to generate a small amount of income (through referral fees). Judging by previous posts here, it seems to irritate many potential buyers,

Personally, I'm surprised that some estate agents risk irritating potential buyers, for the sake of a few pounds.

And it happens right at the start of the purchase process - which could cause friction between the estate agent and buyer, right from the outset - which seems like a bad way of doing business. But I guess they have their reasons.

If someone is going to pull out of buying a £350,000 property for the sake of a £30 fee it may be a bullet dodged and these buyers are going to get irritated and be a pain for lots of other reasons down the line. 

House_owner said:

I wonder if the buyer ends up pulling out of the purchase for some reason ( e. g I have pulled out of a purchase in the past because of what the survey said) then will they get this AML fee refunded from the estate agent?

No, its services rendered... same as they are likely to have to pay their conveyancer for the work done to date etc. 

House_owner said:

I can understand the requirement to do this - it's just the first time I have seen an estate agent requiring a buyer to pay for it!

There are lots of different ways of doing business. According to a pole last year 17% of estate agents that responded stated they charged for AML checks so it's currently the minority. £30 is also a fairly low fee, most seem to be higher with one seen at £75

I have a reasonable analogy but I can't quite remember it properly but was a similar type of setup but the middleman gave the seller two options, they pay a higher fee and the prospective buyers pay nothing or the seller pays a lower fee but the buyers have to pay a fee to the middleman. Wasnt house buying but similar and at with that one its the sellers choice if they want to deal with fees or not. Can't remember if it was a contingent fee though. 

eddddy

MyRealNameToo said:

If someone is going to pull out of buying a £350,000 property for the sake of a £30 fee it may be a bullet dodged and these buyers are going to get irritated and be a pain for lots of other reasons down the line. 

I don't think it's about the buyer pulling out over £30. As I mentioned, it's about establishing a good relationship between buyer and estate agent.

Making a buyer pay a £30 fee, so that the estate agent can get a £10 or £15 kick back, might irritate some buyers.

And if a buyer loses respect for an estate agent on day 1, it's not going to help the transaction go smoothly. 

martindow

Does the client have the right to know how much of the fee is the kick-back that the agent receives?  

MyRealNameToo

eddddy said:

MyRealNameToo said:

If someone is going to pull out of buying a £350,000 property for the sake of a £30 fee it may be a bullet dodged and these buyers are going to get irritated and be a pain for lots of other reasons down the line. 

I don't think it's about the buyer pulling out over £30. As I mentioned, it's about establishing a good relationship between buyer and estate agent.

Making a buyer pay a £30 fee, so that the estate agent can get a £10 or £15 kick back, might irritate some buyers.

And if a buyer loses respect for an estate agent on day 1, it's not going to help the transaction go smoothly. 

It's not day 1 though is it? Estate agents do their AML after an offer has been accepted and so presumably the buyer has already had multiple interactions with the agency before that point. 

martindow said:

Does the client have the right to know how much of the fee is the kick-back that the agent receives?  

Firstly who are you deeming the client? Seller or Buyer?

Irrespective no, just as they won't say how much they get if the buyer uses the estate agents preferred mortgage broker, insurance broker, conveyancer etc.