Letting Agent increasing price as now registering for VAT?

by Readers Question

11:34 AM, 1st August 2016
About 2 years ago

Letting Agent increasing price as now registering for VAT?

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Letting Agent increasing price as now registering for VAT?

My letting agent has just informed me that they have grown and now registered for VAT, as such future bills will have VAT added.VAT

As an individual this will put up my cost by 20%. I know they aren’t making any more money from this but they have only provided me with 4 days notice of this, which mean I have little choice to change or look at other companies that now look more competitive.

The agent presumably knew about this change for some time and has chosen to tell me last minute. I was wondering if there were any rules on how much notice a letting agent should give for such a price rise and do I just have to accept this?

The agent advertised their fee as X% and said they currently don’t charge VAT when I started using them and look still to be advertising saying this even though is clearly now untrue.

Many thanks

Jake



Comments

Laurentino Quiroga

12:29 PM, 1st August 2016
About 2 years ago

We are pioneering £0 letting fees in London

Ian Narbeth

12:30 PM, 1st August 2016
About 2 years ago

Tell them in writing that either they absorb the VAT or you will move your business and that you do not agree to a change in the terms of business.

Michael Freer

12:37 PM, 1st August 2016
About 2 years ago

If there had been many months notice of the change would it have made that much of a difference?

There is nothing stopping you from having a conversation with them to negotiate a discount equivalent to (or at least the majority of) the increase for at least the duration of the current tenancy.

It is pleasing that they are growing as this change is showing, but not giving notice is poor on their part and should be part of your considerations when the tenancy is up and you have the opportunity to consider moving to a different letting agent.

If, overall, they have provided good service to date does this change mean you should jump ship to an unknown agent that may, despite their marketing literature and reassurances at the beginning, provide worse service and in the end cost you more, in time and effort, than the 20% uplift?

Graham Bowcock

12:38 PM, 1st August 2016
About 2 years ago

Jake

If the terms of business you have signed do not refer to VAT then you do not have to pay it. If they refer to, say 10% of rent, then that is all you pay and it is up to the agent to absorb the VAT. The should have considered the implications of their registration on those who cannot recover VAT.

The agent will gain some benefit from the registration as they will be able to recover VAT on their inputs.

Unless you have agreed to pay VAT I suggest you tell them you won't.

Graham

Lisa Notner

10:16 AM, 2nd August 2016
About 2 years ago

I read this question and waited with interest to the replies. I had a similar experience and only wish I had been a member of Property 118 at the time so I could have benefited from the advice.
I was using an agent to manage my first flat in Scotland. I had only recently moved to Scotland and was not happy with my knowledge of the letting legislation up here so decided to use an agent. I was told they charged 10%. Once the flat was on the market and a tenant found and we were a matter of a few days away from him moving in they sent me an email to say they were going VAT registered. When I looked at the date on the letter attached to the email it was dated the previous month. They had in fact already gone VAT registered when I was informed.
Although I was angry about it and suggested they absorbed part of the charge, they refused and because it was so close to my tenant moving in I felt I had little choice but to accept it. They followed this incident up with some very shoddy service and I eventually took my flat away from them. I paid a penalty as the tenant was still in situe, but it was worth it to be rid of them.

Richard Baker

9:01 AM, 6th August 2016
About 2 years ago

I've read this thread with interest. My concern would actually be that you've been using an agent that isn't VAT registered and therefore by definition isn't turning over much money. One thing I've learned over the years is is to watch agents that charge REALLY low fees because if they encounter financial difficulty it can often be the landlord that picks up the bill. See https://www.property118.com/landlords-guide-to-client-money-protection-schemes/29223/. I'd be wary of an agent whose prices are so low that you question how they trade profitably, and I'd be equally conscious of making sure my agent had CMP.


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