Auction guide prices and non-optional charges

Nov 3rd '22

The below principles relate to advertising of auction lots (including hard copy and online catalogues) that include a guide price and to which non-optional fees apply for some or all customers. It is not intended to cover non-auction sales of properties for which the term ‘guide price’ is sometimes used, although it would cover sale-by-tender.


  • What is a guide price?

In auctions, the guide price represents the seller’s minimum expectation and is not a valuation. The eventual sale price at auction may very well differ depending on the level of interest.


The Advertising Standards Authority (ASA) and Committee of Advertising Practice (CAP) consider that a guide price is an important piece of information for consumers because it indicates the price they may expect to pay and therefore allows them to estimate a budget for related costs, such as insurance.


  • Do guide prices need to include fees?

The ASA is likely to take the position that, although the final price paid at auction may be subject to non-optional fees, it may not be practical to include those fees in the guide price because it is subject to change.


However, the ASA is likely to consider that ads featuring guide prices would need to provide a clear reference to the existence of those fees and provide an explanation of how they are calculated. The ASA is likely to expect the existence of relevant fees to be indicated immediately next to the guide price.


  • How should non-optional fees be displayed?

It is understood that there are a range of models used to calculate premiums and other fees, including those where the percentage or value depends on the hammer price, and instances where fees (such as the Artist’s Resale Rights (ARR) or stamp duty) are only applicable in certain circumstances and above a certain value. In such situations, the fee value or percentage would not need to be stated by the guide price.


However, the ASA is likely to expect the potential existence and application of such fees to be stated and clear information to be provided on how they would be calculated. Such information could appear in a separate area of the site or catalogue.


  • Do fees need to be VAT inclusive?

If VAT applies to fees, unless all or most of those to whom the claim is addressed pay no VAT or can recover it, it should be included in the fee.


If a premium is £100 + VAT, it should be referred to as £120. Where fees are expressed in percentages, these should incorporate VAT so a fee of 25% + VAT should be stated as 30%. If all those to whom the price claim is clearly addressed pay no VAT or can recover VAT then it can be separated from the fee base price, but the existence and rate of VAT should be prominently stated. In this case, £100 + 20% VAT.


  • What about fees which are calculable in advance?

Where fees can be calculated in advance, either because the organisation operates a fixed fee or (more likely) a fixed percentage structure, this should be stated next to the guide price range:


Guide price £1000 – 2000 + 20% buyer’s premium.


  • What about fees which are not calculable in advance?

Where no fees are calculable in advance (usually because the percentage rate or set fee is dependent on the hammer price, such as Stamp Duty), the existence of fees should be stated next to the guide price range. If a fee may be applicable but only over/under a certain hammer price, the potential for this fee should still be made clear:


  1. Guide price £150 – 200 + fees
  2. Guide price £50,000 – 60,000 + fees on hammer price over £55,000


There should be clear and prominent information about how these fees are calculated (see below for further guidance on this).


The ASA upheld a complaint about prices in an auction house catalogue because they did not make clear that non-optional fees applied on top of the hammer price. In this case, a non-optional buyer’s premium and VAT were applied, and the amount was dependent on the circumstances of the successful bidder. Because the ad did not make clear that there fees applied, provide detailed information about the calculations of those fees, or include VAT in the buyer’s premium that was quoted at the back of the catalogue, the prices were considered misleading (Christie’s, 10 October 2018).


  • What if some fees are calculable in advance but others not?

In some instances, there may be a mixture of fee models with some able to be calculated in advance and others not. This would be the case where a fixed fee (such as an admin fee) applied but other charges were based on the hammer price (such as ARR costs). In these circumstances, the fixed fees should be stated and the existence of others flagged.


Guide price £70,000 – 80,000 + 10% buyer’s premium and other fees


  • What if a minimum fee amount applies?

When a fee is on a sliding scale or other flexible basis, but a fixed minimum will always apply, this should be stated:


Guide price £1000 – 2000 + 20% buyer’s premium and other fees (minimum £150).


  • What if fees are compulsory only for some buyers?

When fees will apply to some purchasers but not to others, the potential for a fee to apply should be noted:


  1. Guide price £250-300 + fees for some buyers
  2. Guide price £1000 – £2000 + fees (+ additional fees for some buyers).


  • What about VAT on lots?

If VAT applies on top of the hammer price of a lot (i.e. VAT applies and will not be accounted for by a margin scheme), this should be made clear to prospective buyers and the rate of VAT given next to the guide price. If VAT is included in the guide price, the rate should be made clear so that consumers are able to calculate the base valuation of the lot:


  1. Guide price £700 + 20% VAT + fees
  2. Guide price £1200 – £1800 (inc. 20% VAT) + fees


Where the VAT status of a lot is contested or not known, this should be noted in the listing. If it is dependent on the circumstances of the buyer, then it would fall under the previous model.


  • How should information be provided about calculating fees?

The ASA is unlikely to expect specific information about how fees are calculated to accompany every guide price, because in complex areas this would not be practical. However, such information (and how to access it) should be clear to consumers. It is unlikely to be acceptable to only include the information in the terms and conditions. The following suggestions are likely to be considered acceptable.


  1. On websites, the ‘+ fees’ statement could be clearly marked as a hyperlink, which would take visitors to a page clearly explaining applicable fees
  2. Websites could also include a prominent statement at the top of the listing page directing consumers to a page clearly explaining applicable fees (underneath is unlikely to be suitable, unless no scrolling would be required to reach it for any visitor)
  3. In catalogues, the top/bottom/side of every listings page could have a clearly-visible statement such as “for details of what fees may apply to your listing, please look at pg 94”


This information should set out clearly what fees apply in what circumstances – for instance, it should be clear to whom the fee applies, and if the fee amount/percentage depends on the hammer price it should be clear how it will be calculated.


The information provided should be sufficient for customers to calculate the fees they will be required to pay on an assumed hammer price.


  • What about fees subsequently levied by vendors?

The ASA and CAP are aware that in some instances, particularly in relation to property auctions, the vendors and their solicitors may disclose details of additional fees (such as the requirement for the seller to pay the vendor’s legal fees) at very short notice before an auction. It is understood that such changes are outside the control of the advertiser. The ASA is likely to consider it acceptable for auction houses dealing with lots where this is more common to include a statement in a suitably-prominent location about the potential for such additions and to direct prospective customers to check the special conditions for individual lots before bidding. For online catalogues, the ASA is likely to expect advertisers to take all reasonable steps to amend their advertising to include any additional fees.


Source: CAP


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