Countrywide has written to all its contractors announcing a staggering 67% increase in their referral fees.
The company’s head of property management states in the letter that the fees hike is necessary due to a rise in its administration overheads.
From 1 October, the introduction fee will increase from 12% (or existing agreed fee) to 20% of the total gross invoiced costs by the contractor each month, plus VAT.
The introduction fee for Compliance Certificates (gas, electrical, PAT etc) shall remain at £25.00 plus VAT (or existing agreed fee).
A spokesperson for Connells Group, which owns Countrywide, told EYE: “Due to an increase in administration overheads, and in consideration of managing the contractor panel and being able to allocate work appropriately, it has proved necessary for Countrywide to reassess the fee we apply to our contractors.
“We are committed to ensuring that our service represents good value for both landlords and contractors and, not uncommon in our industry, this type of fee reflects the service we deliver to our contractor panel, providing them with a stable partnership and a steady flow of referred business.”
Ouch that sounds steep, not something that would be promoted to Landlords.
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Agents do have sizeable admin costs when it comes to contractors, we certainly do (although we work for agents not LL’s) with it being a dedicated role for us.
The crux is are those fees completely transparent to the customer? If so the LL can make a judgement whether the contractors sourced and managed are worth any increase on works.
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Leaders have charged contractors a 24% admin fee for a while and they tell Landlords the contractors absorb that fee and haven’t raised their prices to cover it – hahaha !
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CW’s lucky lucky customers – whoever pays the highest / a referral fee – not the qualtiy of their work?
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Referral fees are such a scourge on our industry, an area where transparency is the biggest threat to a largely unjustifiable income stream.
“Acting in the best interest of a client at all times” is a maxim that is difficult to uphold when staff are targeted with all these cross-selling opportunities.
Proper and effective transparency should mean consumers are fully informed about all the referral fees their chosen agent is engaged in, the amount and to whom such services will be offered, so they can more readily judge the manner in which this may affect the service level on offer.
Why has it taken so long for this to be recognised?
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Well said scruffy.
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Countrywide (Connells) using the highest-paying referral contractor rather than the best available? shocking… not as if they’ve been doing it for years with their conveyancing is it?
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I don’t charge any contractor referral fees as believe quality of workmanship and service is more important as well as value for money. All that will happen is that the contractor will raise their prices to cover the increase and the only ones to suffer will be the landlords with increased costs.
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Slightly disagree, proper and effective management of contractors does take more time these days IMO, but customers and landlords must be made aware of these fees upfront in a clear and obvious way in order to judge if they are getting value.
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if a job cost a £100 and we as agents want to take a referral fee, the contractor will simply add that cost so £100 becomes £120. Landlord pays more and as a result will increase rents, its all relative.
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And also charges the Landlord an administration fee of say 20% + VAT (oversee fee) so £100 job finally costs £120 + £24 + £4.80 so £100 = £148.80 so seems like a rip off to me.
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Still no idea how a letting agent can add a mark up to bills when they are already being paid to manage the property.
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That is exactly my thought, “we will manage your property for 14.4%, but we will also charge you again if we actually have to arrange any maintenance, gas service, EICR, etc.” so basically it is rent collection only!
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I find it hard to see how the complexities of the work should be reflected in the price Countrywide takes. A flat fee would be more responsible.
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Masters of Lemon Squeezing-welcome to the world of Connells Grouo Countrywide
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