New guidance has been published on referral fees received by estate agents across the UK, which will make previously hidden fees open and transparent to consumers.
The new guidance was produced by the National Trading Standards Estate Agency Team with assistance from the National Association of Estate Agents (NAEA), the Property Ombudsman, the Property Redress Scheme, the Guild of Property Professionals and the Royal Institution of Chartered Surveyors.
It will work to improve transparency in the estate agency sector as part of the government’s aim to improve the home buying and selling process.
The NTS Estate Agency team was asked to examine the legal controls around the transparency of such fees in the sector by government officials last year. The team concluded that referral fees for connected services are permissible, but should be disclosed by agents to sellers and buyers alike.
Housing Minister Heather Wheeler said that the Government wanted referral fees to be transparent and would consider banning the fees if this could not be achieved by the industry.
National Trading Standards will report to Ministers on compliance with its guidance after monitoring the market for the coming 12 months.
‘It is important for customers to be aware of any referral fees that an estate agent is receiving for recommending a service such as conveyancing, legal services or other connected service, so that they can make an informed decision about whether to take up the offer or shop around for a better deal,’ said James Munro from the National Trading Standards Estate Agency Team.
‘I would like to thank the professional bodies and redress schemes for their support in developing this guidance and would urge estate agents to comply with the guidance as soon as possible,’ he explained.
‘Agents who need further advice should contact their professional body or trade association. Members of the public should raise any concerns about referral fees not being disclosed to Citizen’s Advice on 03454 04 05 06,’ he added.
The step was welcomed by the Council for Licensed Conveyancers (CLC). ‘Transparency across the whole market is essential and this is a very positive step. We want consumers to be able to make an informed choice based on all the available information and our recent research found that most home buyers did not know whether their conveyancer paid a fee to an estate agent in return for a recommendation,’ said Stephen Ward, CLC director of strategy.
‘Further, with estate agent recommendation one of the primary factors in influencing a consumers’ choice of conveyancer, it’s crucial that consumers are aware that such relationships exist before they make a decision,’ he pointed out.
‘The publication of this guidance, along with transparency requirements introduced by the CLC and other regulators from December last year requiring all property lawyers to publish certain price, service and quality information on their websites means consumers will be more empowered than ever before,’ he added.
‘The Minister has made it clear that if estate agents do not respond positively to this initiative she has not ruled out legislating against such fees. So the onus is now very much on estate agents to make consumers aware when fees are being paid,’ he concluded.
