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Why Agents Shouldn't Charge Contractor Commission

Something that is becoming common practice amongst agents is that they are charging between 5% and 20% commission to their contractors, which in many cases is unknown by the landlord

Is this ethical? We feel it’s something that should be challenged, as in an industry such as our own, transparency is extremely important. A letting agent’s responsibility is to act in the best interests of their clients, so in what way is charging contractor commission a legitimate commission to charge?

We feel its important that agents are transparent with the payments that they take, especially in situations in which they are hiring an external firm – how can the contractor charge a price that is fair to the landlord if they have to account for the fact that up to 20% commission will be charged? Surely it would make sense to ensure the best price for the client is achieved, as at the end of the day, they form a part of your revenue stream, whereas contractors should not. 

This commission is something that we can be certain that contractors would not anticipate, and as mentioned earlier, in many cases, the contractors cannot ascertain whether or not they are being charged this commission. One thing that is for certain however, is that when firms find out that their contractors are being charged commission, they will simply move on. Word of mouth can have a huge impact on agents, and if this continues to happen, we can expect that contracting firms will no longer be willing to work with agents.  The contractor will, of course, add that amount to his final bill, therefore the landlord has to pay it. 

Not only this, but how can an agent be working in the best interest of the landlords they manage? Surely the landlord would (possibly correctly) that the agent has a vested interest in having maintenance and repairs carried out where they maybe are not required just to get more money from the contractors? 
If an agent is charging the contractor and the landlord then who's interests are best looked after? As the client, the landlord deserves to know that the agent is getting the best value and quality work carried out, not the one that will pay the agent the biggest commission. 
Some agents even incentivise their property management staff on the amount of revenue they bring in via contractor commission- if that isn't a conflict of interest I don't know what is? 
This industry has had a lot of bad practices and rogue elements to overcome to make the general public and the government appreciate that we do a good and valid job and deserve to earn a living by such means, and these double charges undermine that. 

Check now if your agent charges your contractor and if so, challenge them. ask them what the monthly fee covers? If you're still not satisfied, come and talk to us. 

 

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