UNBUILT HOUSES

Evening Post, Volume CXL, Issue 118, 15 November 1945, Page 9

UNBUILT HOUSES

AGENTS' COMMISSION

VIEWS OF MINISTER

The opinion that a land agent should not claim commission on the cost of a house yet to be built if his only connection with the deal were merely the introduction of th* purchaser, was expressed by the Minister of Rehabilitation (Mr. Skinner) in the House of Representatives yesterday afternoon. He was replying to a question, notice of which had been given previously by Mr. Clyde Carr (Government, Timaru) and Mr. W. M. C. Denham (Government, Invercargill). They had drawn attention to a report alleging that if a soldier bought a section on which to build a house costing from £1500 to £1600 the land agent's commission in some cases would be between £40 and £50. In certain cases, they said, it had been demonstrated that commission was collected where the deal was not completed and the house never built.

"Commissions payable have not been fixed by Government regulations under the Land Agents Act, 1921-22, but a scale of charges has been fixed by the Real Estate Institute of New Zealand, and these are adhered to by land agents," said the Minister. "In the case quoted it would seem that the erection of the dwelling should have been a separate transaction, in which case the fees, stamp duty, and commission would be based on the cost of the section only. It is the usual practice for the vendor to pay the commission, and I understand that Land Sales Committees will not agree to such commission being added to the purchase price.

ANCILLARY CONTRACTS

"If ancillary contracts are made and not disclosed, this is an offence under the Servicemen's Settlement and Land Sales Act. Admittedly it is difficult to detect such breaches, but every precaution is taken to ensure that the terms of the Act are complied with. It is known that in some South Island towns sale is effected of a section and a house which has yet to be built for a total consideration. This does entail unnecessary fees, stamp duty, etc. As pointed out, there should be two transactions, and purchasers should protect themselves by arranging accordingly, tn either case, I do not think an agent should claim commission on the cost of a house yet to be built if his only connection with the deal is merely the introduction of the purchaser. "In only two cases has a practice of the nature referred to in the question come to the notice of the Rehabilitation Department, and in both instances steps were taken to ensure that the servicemen concerned would be protected from any financial imposition. Such steps will always be taken by the rehabilitation authorities should further instances become apparent."