Fees - get your house in order and set the standard

Thursday 18 June 2015

The Consumer Rights Act 2015 has made it a legal requirement for all lettings agents in England to display details of all fees and charges on websites and in offices from 27 May 2015. As many of our NAEA members also deal in lettings we thought you should know too as we don’t want anyone slipping through the net.

As part of the Act, agents also need to display whether or not they are a member of a client money protection scheme along with details of the redress scheme that they belong to.

All letting agents must display a comprehensive list of fees, penalties and charges at each office at which the agent deals face-to-face with clients as well as on their website. Consumer Rights Act guidance states that “Ill-defined terms such as administration cost must not be used. All costs must include tax.”

We also encourage you to join ARLA so you can reap all the additional benefits being a member brings, including access to a range of templates that make it easy to produce a table of fees that comply with the new legal requirement.

Not just for lettings!

But being transparent and honest, particularly when it comes to fees is just as important when it comes to sales. It’s crucial for building a good reputation for your business and gaining the trust of your current and future clients.  Doing so will also ensure that you comply with the various laws and regulations governing the sector and are trusted by current and future clients.

At NAEA we go one step further and insist that our members adhere to industry leading codes of practice. By doing so we ensure that our members are some of the best in the business.

As can be seen by various recent high-profile cases, if you fail to establish good procedures and practices, Trading Standards may catch up with you. And even if they don’t, the media may well, potentially leaving your reputation in tatters!

Get familiar, stay informed and share

We’ve given you some key pointers below that cover just a few of the topics around fees and money, along with some useful links and sources of information. So make sure you get familiar, stay informed and share information and best practice with your colleagues.

TPO

As a member of NAEA you are obliged to conduct your business in line with The Property Ombudsman Code of Practice for Residential Estate Agents.

Section 5, the main section relating to fees and charges set’s out your duties:

(5h) All fees and additional costs must be included in your Terms of Business. They must be fully explained, clearly and unambiguously stated in writing before the seller is committed to the contract.

(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. The example amount should be based on the asking price. However, you must make it clear that, should the selling price be higher or lower than the asking price, your commission fee will be correspondingly higher or lower.

(5j) 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.

(5k) Except for any previously agreed additional costs, commission fees will become due on exchange of contracts (in Scotland, conclusion of missives).

NFoPP Professional Standards

An important section of the NFoPP’s Professional Standards is the section that refers to accountants’ reports. An NFoPP Accountant’s Report must be submitted annually by PPD Members’ firms of NAEA, ARLA, ICBA and NAVA whose business does not use a third party client accounting service provider to handle and/or hold client money, as specified by clauses 1.47 and 1.48 of the Accounting Rule. (Members’ firms that do use a third party client accounting service provider should use the outline report in Appendix B.) The latest version of the NFoPP Accountant’s Report can be obtained from the following link: www.nfopp-regulation.co.uk/acreport

Anti-Money Laundering Regulations

Did you know you have an obligation to report any suspicious activity and log it with the National Crime Agency? Make sure you click to read on our article ‘Money Laundering - Agents against crime’ in this newsletter to find details of how to do this, along with other useful information such as how to spot suspicious activity.

Outstanding NAEA courses

Remember, we also offer fantastic affordable courses to help you and your colleagues stay abreast of laws and regulations, such as Financial Crime Update, Consumer Protection Regulations and Essential Law for Residential Estate Agents (which covers the Estate Agency Act 1979).