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Online agency accuses traditional agents of 'hiding' VAT on fees

Online agent House Network has accused unspecified numbers of traditional estate agents of hiding their VAT fees. 

A statement from the agency claims: “It’s also interesting to note that many traditional high street estate agents add a hidden VAT charge on top of the sale price, whereas we cover VAT charges in the price of the fee so there are no surprises at the end.” 

The statement also includes the claim that sellers could ‘save’ as much as £3.5 billion a year if they deserted traditional estate agents.


Using data from HMRC and from its own survey of 2,000 adults earlier this year, House Network claims that 68 per cent of consumers think that estate agents should charge a flat fee and just 12 per cent believe that traditional high street agents charge a fair price.

It claims that, based on HMRC figures from 2015, sellers could have saved an average of £2,844 per home sold had they used an online agent. It says that even larger savings would be possible this year, as house prices in most areas have risen. 

It claims that the economy as a whole would benefit, saying in a statement that “many hybrid online agents offer the same service but at a fraction of the price, and the savings could provide consumers with additional money in their pockets that could help bolster consumer spending, and the economy.”

A spokesman for the agency says: “Most people don’t realise that many estate agents haven’t changed their fee rates for years. Charging 1.5 per cent of the sale price now amounts to a lot more than it did 20 years ago, particularly in the capital and south east.”

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    Does anyone seriously use Online. As a Conveyancer we see all agents and I would always recommend high street to friends and family, certainly the public.

    It is not about saving the agent's fee, but ensuring their skill and location secures a tip top house price, as fighting for that extra £5k, £10, £50k etc is what fee savers overlook. That's what costs the public £Ms in clever promotion by onliners.

    My experience is that I witness low sale price, no involvement in the legal chain once a buyer has been found, shoddy communication (if any) and such low skill.

    Personally, if I were buying I would fear the seller has been cheap elsewhere in their house maintenance, if they are selling on the cheap too. Such a valuable asset after all.

    It is like conveyancers. Go cheap and you get stung - slow, errors and no communication

    But hey, its just my opinion. A low initial fee will tempt people, sadly.

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    Yet another in a string of ''press releases'' for so-called ''research'' by yet another ''online agent'' banging the drum of how much sellers could save.

    how can anyone ''HIDE'' VAT?

    I totally agree with the above comments - I always wonder how many ''self-sales'' fall through as opposed to a sale with a highly motivated agent. In my experience most of the agents job is to stop buyer and seller tearing each others hair out during the transaction!

    I have personal experience with a buyer and seller falling out on a £1m property for a pair of scraggy curtains! - in the end ''i bought them'' as the sales agent, and then promptly stuck them in the bin after the sale.

  • John Evans

    FACT 1: Call centre agents get paid whether it sells or not
    FACT 2: The fixed fee gives no incentive to get the best price
    FACT 3: They get lower selling prices which leaves sellers worse off.
    FACT 4: Their service is poor.

    Peanuts / monkeys.

  • Terence Dicks

    Has Russell Quirk moved to House Network?? This certainly sounds like the sort of drivel that pours from him.

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    • T Y
    • 14 April 2016 09:47 AM

    Fact 1: Many Online Agents offer a NSNF option for clients, exactly as your highstreet agent would, but can offer a lower fixed fee, due to lower overheads.
    Fact 2: All agents work for the vendor. If no online agent was getting the price that the vendor was happy with, they wouldn't be being recommended.
    Fact 3: As with fact 2, it's all about achieving the price that the vendor is happy with. Combined with the lower fee, they often gain more.
    Fact 4: With any industry, any business that offers poor service quite quickly goes under. Many Highstreet AND online agents have gone the way of the dodo. There are 1000s of reviews available online that support the good work of both style of agencies.

  • John Evans

    1. They trade on their low fees
    2. Vendors will take the best an agent can do 90-95% of asking
    3. Often gain more? Not in all my investigations
    4. You get what you pay for - the public know the difference between a dinner at their local cafe and a dinner at a good restaurant - they also think call centre agent can do the same job as a full service agent.

  • John Evans

    I know when I check chains with call centre agents their work is shoddy

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    • T Y
    • 14 April 2016 11:23 AM

    1) The public now well aware of technology lowering costs throughout the lives, why is this not true of EA? If two agents can sell your property to your price (be they both online/highstreet/mix), vendors will tend to go for the cheaper option.
    2) Vendors take the price that they are happy with, as mentioned if online agents couldn't get this, word would go out and no one would use them.
    3) Not sure what you've seen, but having worked on both sides of the fence, there will always be properties that do well on the market and those that don't. Taking out the bigger highstreet fee, often leads to an increase of money in the vendors back pocket or at least the same.
    4) I would agree that call centres, in what ever industry is frustrating. It's why most online agents don't use them, although some do. It's always down to the prospective vendor who they use and none of them are interested in hearing agents trying to put down competitors. What they want is the best value for money and results, which is why the online sector is growing.

    I won't be outlandish and say there is no place for highstreet agents, as for some they will always be needed, I just feel that they need to grow with the times and become more competitive in what they are doing.

  • John Evans

    Buyers don't only come from websites, some aren't actively looking when they spot a property. If you want to choose the best buyer you need the biggest net. Cheap fees will make agents cut corners.
    If rightmove offered it's own agency what would happen to call centre agents?

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    • T Y
    • 14 April 2016 12:27 PM

    You are correct that not 100% of buyers come from the portals alone, but a very very high percentage do. Your typical online agent costs between £500 to £900 upfront or I've seen nsnf deals for around the £1200 mark (inclusive of VAT). I would have to question the value to a vendor when they are paying an average 1% fee to help ensure they were in the local paper and in the EA's window (if it fits). Certainly in the SE region of the country that extra amount that the vendor pays is just not justified. Also for those not actively looking, online portals are perfect. As many are likely to be home, bored in the evening and play on the iPad, than be out and just happen across their perfect property in a window display.

    As mentioned not all Online agents use call centres, but I would be intrigued how someone could cut corners, in an industry which is regulated and word of mouth recommendations can be key.

    If RM offered it's own agency, I think it would be a huge level of competition for everyone and likely the growth of at least Zoopla.

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    If estate agents choose to display their fees, either as an amount or a percentage, are they not also legally obliged to make them inclusive of VAT, as per the Consumer Act of last year?!

    Thus, if the agents in question are actually displaying/advertising their fees, but not making them inclusive of VAT, then they are in breach of the law. Funny that there has been no mention of this so far.

    • T Y
    • 14 April 2016 12:44 PM

    It's the usual battle between online v highstreet at this point Nick. In my experience it's the agent saying 'our cost is x amount', which although true, does not indicate the VAT. It may well say it on the contract, but I'm sure we've all dealt with many vendors who've not been through the contract at all and thus would be unaware of it.

    John Evans

    All businesses advertising to the public should inc vat in their fees

  • Terence Dicks

    I find myself wondering what planet some of you lot are living on, because it is certainly not the one I live on.

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    Unless I'm miles off (and I don't think I am) technology hasn't lowered costs because regardless of whether your online or traditional, the technology is the same. There's nothing an online agent does in terms of technology that a traditional agent doesn't do (rightmove, zoopla, OTM, back office software etc etc) and therefore those costs are largely the same (and i'm not including corporate agencies in this conversation as the vast majority of agents are small privately owned concerns)

    Most online agents tout the line of "we don't have an expensive high street office so we can pass these cost savings on" but really? I would say that if the average provincial high street agent were to apportion the total cost of their high street office across a years sales it'd most likely be around 150-200 quid "office cost" per sale.

    So if technology is comparable and premises costs are relatively small on a percentage-of-sale basis where do these apparently massive cost savings actually come from?

  • Terence Dicks

    According to the online agents, they come from the Which?? 2011 report on average Estate Agency fees which were utter tripe.


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