Property Bay Wales and imove Cornwall are making waves in the property market by charging substantially reduced fees

The estate agency establishment is up in arms over two unorthodox firms set up to encourage homeowners to sell their property, despite the long-term downturn in the market, by offering their services at bargain prices. The most controversial is Property Bay Wales (PBW), based in the Neath Port Talbot council offices and funded by council tax payers.

It aims to sell homes on the open market for a flat fee of £899 plus VAT – far less than fees, of between 1% and 2% of the sale price, typically charged by most local private agents. PBW’s fee covers advertising on its own website and on portals such as Rightmove, publicising homes for sale in local newspapers, and conducting viewings for potential purchasers. The firm also handles social housing and private sector rentals.

PBW, thought to be the only agency of its kind in the UK, uses “existing [council] staff to generate new income, with profits recycled to support local and regional services”, according to its managing director, Steve Kidwell.

The council describes the service as “affordable and customer-focused for [both] the community and further afield” but refuses to say how much it costs to run per year, and will not give information about PBW’s business since it opened in March.

Conventional rival agencies in the area are livid. Dorian Gonsalves, managing director of Belvoir Lettings, says: “Startup funds for this ‘small business’ appear to have come from public funding. To me, it’s a case of transparency being desperately needed. This simply isn’t a level playing field.”

Gonsalves says PBW was set up with none of the risks associated with private-sector bank loans, and insists the council should work with established sales and lettings agents instead of competing against them for clients and undercutting them on fees. He insists the company “potentially has access to unlimited public funds”.

PBW has joined the National Association of Estate Agents and the Property Ombudsman redress scheme, but appears to have failed to capture the public’s imagination. A search of its website this week produced only a handful of properties for sale. A spokeswoman for the agency was unable to say how many homes were on its books, or how many transactions had been handled.

Belvoir Lettings has written to Eric Pickles, the communities secretary, and Grant Shapps, housing minister, to ask them to investigate the company. Meanwhile, another new kind of estate agency has made waves in England. In the south-west, imove Cornwall is believed to be Britain’s first not-for-profit estate agent, paying its staff salaries but hoping to make up to £50,000 a year for local charities.

Set up by estate agent Mark Green, the firm has offices in Truro and Wadebridge, where homes have more than tripled in price since 2001, according to research by the Halifax. “Prices are so expensive here,” says Green, “and salaries so low, that many local people just won’t move if it means they have to spend £5,000 on estate agents’ fees.

“Our belief is that if we’re going to provide a service, let’s do it in a way that also makes some money for local good causes. It’s inspired by David Cameron’s Big Society idea.”

The firm charges a flat rate of £399 to clients. It then advertises the property on its website but leaves the seller to supervise viewings and negotiations with prospective buyers.

“We offer telephone and online support, and newspaper advertising for an extra fee,” Green says. He claims it is too early to calculate the likely success of the business, which has been open for only a week.

But he adds: “Who knows? We may be able to get £20,000 or £30,000 or even £50,000 for charities each year.”

A local children’s hospice has been identified as a likely recipient.

No local estate agent would go on the record with comments about imove’s initiative but a forum at www.estateagenttoday.co.uk, a trade website, is packed with opposition.

“Not for profit means that they have no profits to plough back into the business and grow the company, take on better staff, take out better advertising, move to a better location,” says one correspondent.

“Vendors want top service, top price for their property and great advertising. They want help booking in surveys, help with reduced offers, help with negative surveys, help with undervaluations by banks, help on moving day,” says another, who insists a conventional agents’ service cannot be provided for only £399.

The new agency is unrepentant, however. Simon Willis, in charge of social media at imove, says: “It’s not everyone’s cup of tea and we may only attract a small percentage of the market, but what we are doing is putting something back into the community.”