Inquiry soon into land agents’ fees

Press, 1 November 1977, Page 1

Inquiry soon into land agents’ fees

PA Wellington The Department of Trade and Industry expected to begin a survey of land agents’ fees within the next two weeks, the Minister of Trade and Industry (Mr Adams-Schneider) said yesterday. The department had agreed with the Real Estate Institute to use an independent firm of public accountants to make the survey. Information gathered from real estate agents would be of a detailed financial nature and would be confidential to the department.

He did not intend to hold a public inquiry on fees.

The Real Estate Institute agreed in August to withdraw its scale of increased fees—imposed immediately the wages and fees freeze was lifted—-until the department could decide what, if any, increases were justified. Mr Adams-Schneider confirmed the inquiry in a letter to the Opposition spokesman on consumer affairs (Mr R. O. Douglas, Manukau), who had called on him to confirm or deny speculation that a big increase in fees was about to be granted. Mr Douglas said that nothing had been heard since Mr Adams-Schneider

had promised a departmental inquiry into fees. He was concerned that the increases would be quietly allowed and that the inquiry was only a front. He had written to Mr Adams-Schneider giving figures which showed that when a 12-month period in 1971 was compared with a 12-month period in 1977. real estate commissions had increased by 179 percent.

In the nearest comparable periods, the average ordinary time wage had gone up by only 143 per cent.

Real estate fees had to be reduced, not increased, he said.

The president of the Real Estate Institute (Mr T. Molesworth) accused Mr Douglas of making an invalid comparison between wages and commissions.

Wages and commissions were not comparable. Wages were a worker’s remuneration while commissions were the gross income of a company. From a real estate company’s commission income had to come all overhead costs—wages, office expenses, vehicle running, advertising, telephone, and so on. All these had risen because of inflation and

had to be paid whether sales were made or not.

Other professional organisations paid on a similar basis and carrying the same overheads had been granted scale increases recently. The institute had no doubt that the' departmental inquiry would also justify a revision in the real estate scale.

However, the length of time the process was taking was causing considerable concern to the institute. A point had been reached where the viability of many established and efficient real estate firms was threatened.