MAKING REFERRAL FEES TRANSPARENT

The Ministry of Housing, Communities and Local Government has expressed the view that unless the sector ensures transparency of referral fees, a complete ban on referral fees will be considered.

What are referral fees?

Referral fees exist where an agent receives commission, payment, fee or reward (gift) or other benefits from another business or provider for recommending their service to a buyer or seller.

Trading Standards guidance

In February 2019, the National Trading Standards Estate and Letting Agency Team (NTSELAT) published guidance on referral fees received by estate agents across the UK, with the aim of making fees more open and transparent to consumers.

What are we doing?

The new guidance was produced by the NTSELAT with assistance from NAEA Propertymark, The Property Ombudsman and other industry bodies.

In December 2017, we responded to the UK Government’s call for evidence into how to improve the home buying and selling process and the issue of referral fees formed part of the inquiry.

Why is this important?

National Trading Standards will report to Ministers on compliance with its guidance after monitoring the market for 12 months.

What are we saying?

NTSELAT has given the industry an olive branch. Rather than an outright ban, we’ve been given the opportunity to improve the practice of charging referral fees by increasing transparency. But if the guidance isn’t taken seriously, referral fees could be banned when the guidance is reviewed next year.

Mark Hayward, Chief Executive

HOW TO COMPLY

What do agents across the UK need to do?

1

FAIR 

Information on Referral Fees must be provided to buyers and sellers in advance of them making any transactional decision.

2

TRANSPARENT

Make it clear on property particulars (online and offline) and be bold, compelling and specific including who you receive them from and the value of an individual referral.

3

ACT IN THE CONSUMER'S BEST INTEREST 

Make sure that both your buyers and sellers can make an informed decision.

How should agents be doing this?

1

STATUS

Outline where a referral arrangement exists, that it exists, and with whom.

2

TIMING

Inform the consumer well in advance of presenting them with a choice of whether to use the recommended business or service provider.

3

CLEAR

Provide the information in writing to consumers and outline to them that they can source and use different providers

Tools to help agents comply

Paper Stack

Guidance

NTSELAT guidance that seeks to consider the effect of the Estate Agents Act 1979 and the CPRs on opaque pricing generally – encompassing both referral fees and other practices.

View guidance

man at computer

Webinar

Mark Hayward discussed the key points of the recent NTSELAT guidance and to explain what you need to do make your referral fees clear to your customers.

Watch recording 

Consumer Protection Regulations

The Consumer Protection Regulations (CPRs) operate to ensure that consumers have appropriate information on which to make a “transactional decision”. Any practice by an estate agent which hides the real price of a service is capable of being found to be an unfair commercial practice under the CPRs.

More info...