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Agents ‘taught not to quote VAT on fees’ claims insurance firm

An insurance firm claims estate agents are taught not to quote VAT in fees until the final bill.

A statement from Admiral Home Insurance, advising prospective sellers how to choose their agent, warns vendors they may be in for a shock unless they understand any price quoted early in a transaction excludes VAT.

Admiral says it has spoken with four estate agents before issuing the advice, with individual industry experience running from seven to 22 years.


On VAT the Admiral statement quotes an unnamed senior agency director from Essex as saying: “VAT also plays a massive part in the whole process. Estate agents are taught not to quote ’plus VAT’ until the final bill so always think – and ask - is there is going to be 20 per cent on top of whatever he or she is going to offer me? Otherwise you could be in for a shock with the final bill.”

The same advice to vendors quotes another agent - this time an unnamed agency owner from Suffolk - who says: “You should pick an agent that is clear, open and honest about their fee from the offset ... If you can, find an agent who offers a percentage-based fee rather than a fixed fee. This is because with a fixed fee, if your property price comes down, the agent would still get a higher amount - although you’re not getting as much for your home.

“When it comes to negotiation, avoid going into battle over the agency fees because you’ll be going up against someone who is a trained salesman and negotiator.”

And an Essex-based senior director is quoted: “Bigger corporate companies have a set table of fees that they charge so you’ll probably pay a lot higher than you would through a small independent agency where you’ll have a lot more flexibility. Smaller independents tend to give a better fee and a more personalised service.”

The same advice claims that agents put properties on the market for up to £20,000 more to give room for negotiating, while sellers investing £5,000 on home improvements could expect to add up to £30,000 to the property value. It also says spending £40 on paint could be the difference between getting the full asking price and getting less.

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    Where has the " unnamed senior agency director from Essex" been for the past 4 years?
    The TPO issued guidance on disclosing VAT on fees in September 2016. Perhaps in his agency staff are taught to misinform the public but the vast majority of the industry is complying with the regulations that govern the industry.
    Obviously the redress schemes need to address that their message to agents isn't getting through.

  • Murray Lee

    Our T&Cs were amended to follow the guidance and approved by TPO and clearly state plus VAT and the quoted payable sum includes VAT. We are advised to show a 1.5% fee as 1.8% a 2% fee as 2.4%. etc
    I do wish these surveys would be broader and provide a better picture of what a professional agency does

  • charlotte Jeffrey- campbell

    I run training courses and agents do understand the need to include vat! It’s very rare any agent I train is not aware of this.

  • Michael Day

    Rule 3.18 of the ASA/CAP Code states “Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable”.

    It is built into various codes of conduct that any agent should therefore quote fees to consumers as inclusive of VAT as, in the main, they are unable to reclaim it.

    Sadly, some agents do verbally quote a headline fee without mentioning VAT - for example, 1.5% which should be 1.8% inclusive of VAT. I also do still occasionally see written terms of business that mention VAT but exclusively not inclusively.

    In this respect for this survey to suggest people get a shock when they get the bill is a nonsense although, as material information (as defined under Consumer Protection Regs, an agent should be making consumers aware at the earliest opportunity and certainly before any transactional decision has been taken.

    Having said the above, I do not have any evidence or support the view that agents are "trained" not to mention VAT.

  • Paul Singleton

    What a load of rubbish! Agent contracts clearly state the final Gross figure that it will cost the vendor. If a vendor still doesn’t get it maybe he/she should find an appropriate adult that can explain it to them.

  • jeremy clarke

    We find in our town that all the agents quote ex VAT to get the appointment, having got their foot in the door, they then "fess up" but say that all agents will be adding VAT. Where we quote 1.5% INC VAT other agents will quote 1.5%, neglect the VAT which effectively means 1.8% INC VAT.

  • John Wathen

    It seems obvious that an independent Agent can and invariably will offer a far more competitive fee than any of the Corporates as they don’t have to pay layers of expensive senior Management and hundreds of Shareholders all taking a cut.


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