We all love innovation, especially when it is not in our industry. It is amazing how we love entrepreneurialism and innovation whilst ever it affects others and provides us with a consumer benefit. It never ceases to amaze me however that, when it affects what we do, it suddenly becomes the big Satan.
Section 55 of the Property, Stock and Business Agents Act 2002 does not limit how a person can obtain their fees. All it states is that, an agent needs to set out what they are to be paid for, what are they entitled to be paid and how it is to be paid. There is total freedom to innovate how those fees are to be paid.
This week, we at Leverage stumbled across somebody who is charging a flat property management fee. Investigations have shown that this innovative person has been the victim of criticism from the industry and from its peak industry body.
Let’s get the elephant out of the bedroom first! It is totally lawful to charge a flat property management fee. There may be a good argument from a business perspective not to do such a thing but it is totally lawful and up to the organisation to be innovative. Nevertheless, because it is different, they are criticised. It is almost like discrimination against those who innovate.
Innovation is about creating choice for consumers and giving them the option to explore new possibilities. Such innovation should be applauded, examined and determined on its performance. In other words, has it provided a consumer benefit in terms of cost without affecting the customer service levels of the agent? If this is the case, it should be considered a good innovation.
The problem is that, the standard agency agreements within the industry promote only one model for charging clients. This means that, the standard agency agreements that exist within the industry do not assist either the consumer or the trader. The standard agency agreements need to provide for flexibility so that persons can charge a flat fee whether it is in property management or in sales. Lets have innovation, which assists consumers, and not stifle it by stereotypical agency agreements.
This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.
To get in touch with Bailey, please email email@example.com or call 1300 438 538