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A fine estate of affairs

One of the most glaring things wrong with the present regul-atory regime seems to be an almost total absence of any regulation of estate agents and recruitment agencies.

A client of mine is about to put his house on the market at £320,000, for which Halifax Property Services want 2 per cent if they find him a buyer. At £100 an hour, this equates to 64 hours work. Considering that a good deal of the work involved, perhaps half the total, is likely to be undertaken by a relatively junior member of staff, for whom an hourly rate of £50 an hour would probably be more appropriate, this means that a fee of £6,400 plus VAT of course equates to more like 100 hours.

Is the man who puts up the For Sale sign outside the seller’s house worth £100 an hour? Somehow I don’t think so. Does anyone out there believe it takes an estate agency 100 hours to sell a property? I for one do not.

I advised the client to try to negotiate a flat fee for putting the property on the market and advertising it, with itemised billing at an agreed hourly rate for all other work. While this would mean having to pay the agent a certain amount regardless of whether the property is sold, the total bill for a successful sale would surely be vastly less than £6,400 plus VAT. But, of course, that will never happen in the present climate because virtually all estate agents are members of an openly price-fixed cartel and will declare they operate only on the basis of a set percentage of the sale price.

Transparent, yes. Value for money? Hardly, yet the market seems to accept these charges as unavoidable and estate agents will continue to operate on this basis for as long as they are allowed to get away with it.

Recruitment agencies commonly charge 20 per cent plus VAT of a successful applicant’s past year’s earnings. For someone who earned £40,000 last year, that is £8,000. At £100 an hour, that equates to 80 hours, again probably a good deal more if you take into account the work undertaken by junior staff.

Does anyone out there believe that recruitment agencies put in upwards of 80 hours work on the vast majority of placements? From my own experience on both sides of the fence, I know I don’t.

So why are the powers that be encouraging the FSA to bleed and batter the life out of IFAs while at the same time allowing such open rip-offs to continue? Answers on a postcard, please.

Julian StevensWDS,Bristol


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