The Advertising Standards Authority has upheld a complaint against an estate agent which advertised its commission fee as "0.9% SELLING FEE" in large bold text and then smaller text stating "+VAT".
Instead, it should have advertised its commission fee including VAT and any other non-discretionary charge the firm levied, says the ASA.
The complaint was lodged at the ASA against IMS Residential Ltd.
The firm told the authority that all of their customers knew the fee was 0.9% + VAT of the selling price. The agency also claimed never to have received any complaints or misunderstandings about fees before.
The ASA's ruling said that the authority noted that in this case the selling fee was a percentage of the selling price, with VAT charged on the fee.
"The total fee, including VAT, therefore could have been expressed as a percentage of the selling price. Rather than 0.9% + VAT the total selling fee could have been given as 1.08% because that would be the total fee including VAT, regardless of the amount of the selling price" concludes the ASA.
Although IMS told the ASA it would be pleased to amend its advertisement, "we did not consider that their proposed changes were sufficient" says the ASA ruling.
"We concluded that the ad was likely to mislead" says the ASA, citing that the ad breaches CAP Code (Edition 12) rules 3.1 (Misleading advertising), and 3.17 and 3.18 (Prices).
The ASA's ruling says the ad must not appear again in its current form and that IMS Residential Ltd must ensure its price claims include all non-optional taxes, duties, fees and charges which could be calculated in advance.
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Comments
Under the Consumer Credit Act agents have been told for ages to include VAT where possible, especially on fixed charges, but few have followed the requirement so no, I'm not surprised with the ruling of the court. You don't expect VAT to be added when you go into a shop. Others such as accountants and solicitors please note the ruling as it applies to you also.
All our contracts state percentage rate + VAT at the prevailing rate.
The chargeable VAT doesn't change every week! This will affect two sectors, the online only agents who are advertising their fees as + VAT and the cheap agents who again market themselves on basis of fees..This is the ADVERTISING STANDARDS AUTHORITY so it deals with people advertising fees and quite right that the full price should be quoted in adverts. I am going to be writing to them about all of the cheap fee agents adverts in my area next week!
A spokesman for the ASA continued, "we have to treat the consumer as being totally and utterly stupid and that their reading skills are selective at best
An arrogant little jobsworth.
Sorry is it April already
Perhaps I am showing my age, but VAT used to change regularly, the ASA is obviously run by graduates who have no long term experience of such events. Common sense seems to be sadly lacking this cant be right!
Paula, please see para 5i of the TPO Code of Practice
'A spokesman for the ASA continued, "we have to treat the consumer as being totally and utterly stupid and that their reading skills are selective at best'
The ASA seem to have got this the wrong way round - it should apply to the ASA itself! Much ado about nothing to help justify their existence.
As stated VAT is not a set rate as it is set by a third party which the agent has no control over. Therefore to state a rate which could be wrong would indeed be misleading, as in our contracts should state VAT at current rate. They should challenge the ASA on this as their reasoning is fundamentally flawed. If however they say it is not then every price, catalogue etc which quotes excluding VAT is in breach, they seem to have forgotten that is we deal with a corporate client who is VAT registered then they will be able to reclaim. Yet another group who don't actually know what they are talking about.
They have left the plus vat there... http://www.imsproperty.com/
A spokesman for the ASA continued, "we have to treat the consumer as being totally and utterly stupid and that their reading skills are selective at best. We have also ruled that an agent must now provide a photograph of a pile of money showing exactly how the fee, including VAT, would look. It is also now a requirement for agents to show all airport duties and taxes, just in case a consumer is so taken aback with the fees, they decide to get the flock out of the country."
I feel that ASA have made mistake here. OK to quote a fee including VAT for an immediate service, say a Survey or Valuation, but for a house sale that could take 2 or 3 years to complete, what happens if the VAT rate increases to 25% or decreases to 15% by the time the property sells Who can predict what the VAT rate will be in the future
Shouldn't the practice also be changed with estate agent contracts - they generally quote fees as +VAT