Fees, charges, and terms of business
Fees, charges, and terms of business
What fees and charges information you must give your clients, and how you must define terms of business.
Your client’s liability to pay
You must give your client a detailed breakdown of any charges, even if they’re estimated. You can’t just show a total figure.
You must give your clients this information in writing before you enter into a contract with them:
- when you’ll charge an agency fee, including any fees, charges or commissions if the property is taken off the market without a sale
- what your fee will be (if you’re not sure what that will be you need to say how you’ll calculate it)
- details, including the amount, of any other charges, apart from your agency fee, due under the contract to you or any other party to the contract, for example a surveyor or photographer (if you’re not sure you need to say how you’ll calculate them)
- any circumstances in which your client may have to pay an extra fee and how much it might be (if you’re not sure you need to say how you’ll calculate it)
- your percentage agency fee (this should include VAT and an example based on the agreed marketing price, for example, 'if your house sells for £300,000 you’ll pay a fee of £4320, 1.2% inc VAT at 20%')
- your fixed agency fee, including VAT
- a flat rate agency fee, including VAT
If you’re trading with another trader, you don’t have to include the VAT.
If you and your client agree that any term in the contract relating to your fees and how they’re paid is changed or varied, you must give your client the agreed changes in writing.
Your estimate of charges
Your estimate must say what it’s for. It should give your client a rough idea of the maximum amount they’ll need to pay.
When you put your estimate in writing, you can say that it’s 'an estimate of £X, that will not be more than £Y, without client approval'.
If you have a special brochure for your client’s property, you must tell them how much it will cost to produce each copy. If you need extra copies, you must ask your client to approve the additional costs.
How you must define terms of business
As part of your terms of business, you might use any of these terms:
- sole selling rights
- sole agency
- ready, willing and able purchaser
If you do, you must:
- explain in writing what they mean, using the definitions given in the legislation
- make sure they’re clear, legible and as prominent as the other terms of your contract with the client
You must use these definitions in full, unless this would be misleading because of the other provisions in the contract. If that’s the case, you should amend the definition to give an accurate description of the client’s liability to pay.
If you use any different term that means the same thing as the three terms listed above, you should still use the relevant definition to explain your term, unless this would be misleading because of the other provisions in the contract.
If you’re not sure about the terms you use and the service you provide, you should speak to an independent legal adviser or get further advice from:
- your local authority Trading Standards Service
- the Department for the Economy, in Northern Ireland
- your professional body or trade association
When you agree contracts with your clients, you need to understand your duties under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
These regulations give consumers a 14-day cancellation period, if they agree a contract:
- off-premises, for example in a place that is not the trader’s business premises, such as the consumer’s own home, or
- at a distance, for example by phone or over the internet
The Business Companion website has more in-depth guidance on:
- the consumer’s right to cancel
- the information you must provide to your clients under these regulations