Page 10 - Lettings Revolution
P. 10
efit 3:
Significantly Improved Profitability
Compared like for like with conventional agency, by which we mean at identical
cost to the landlord, there is a significant improvement to the Primary Tenancy™
agent’s profitability. This improved profitability comes from the different way profit
rent is treated compared to a commission or fee from a VAT point of view. Put
simply, there is no VAT payable on profit rent, which means that whereas a fee
of 10% plus VAT at 20% would cost a landlord 12%, a Primary Tenancy™ agent
who charged a profit rent of 12% would not have any VAT to pay. The Primary
Tenancy™ agent would not benefit from the whole 20% in this example because
they would not be able to reclaim VAT on their expenses on the proportion of their
business done using the Primary Tenancy™. There is however a considerable
net advantage, which we have calculated at approximately 14%, more than many
agents total gross profit! In addition to the VAT difference, the Primary Tenancy™
agent also benefits from being able to charge for a rent guarantee as an additional
profit rent with the same inherent advantages.
Benefit 4:
Protect Yourself From the
Competition
With a conventional agency agreement, the tenant knows the landlord’s contact
details and can therefore pass them on to another agent if they want to. With a
Primary Tenancy™ you are their landlord, so you are protected from this type of
touting.
Benefit 5: Protection For Your Fees
There has already been a high profile court case challenging an agent’s
entitlement to renewal fees and there is always talk about the danger of future
regulation in this area. Using the Primary Tenancy™ future-proofs your business
from this threat because you are making a profit rent, not charging a fee.
.
Significantly Improved Profitability
Compared like for like with conventional agency, by which we mean at identical
cost to the landlord, there is a significant improvement to the Primary Tenancy™
agent’s profitability. This improved profitability comes from the different way profit
rent is treated compared to a commission or fee from a VAT point of view. Put
simply, there is no VAT payable on profit rent, which means that whereas a fee
of 10% plus VAT at 20% would cost a landlord 12%, a Primary Tenancy™ agent
who charged a profit rent of 12% would not have any VAT to pay. The Primary
Tenancy™ agent would not benefit from the whole 20% in this example because
they would not be able to reclaim VAT on their expenses on the proportion of their
business done using the Primary Tenancy™. There is however a considerable
net advantage, which we have calculated at approximately 14%, more than many
agents total gross profit! In addition to the VAT difference, the Primary Tenancy™
agent also benefits from being able to charge for a rent guarantee as an additional
profit rent with the same inherent advantages.
Benefit 4:
Protect Yourself From the
Competition
With a conventional agency agreement, the tenant knows the landlord’s contact
details and can therefore pass them on to another agent if they want to. With a
Primary Tenancy™ you are their landlord, so you are protected from this type of
touting.
Benefit 5: Protection For Your Fees
There has already been a high profile court case challenging an agent’s
entitlement to renewal fees and there is always talk about the danger of future
regulation in this area. Using the Primary Tenancy™ future-proofs your business
from this threat because you are making a profit rent, not charging a fee.
.
