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Trading Standards Advice to be Issued on Referral Fees

Thursday 24 January 2019

Housing Minister Heather Wheeler MP, has announced that the National Trading Standards Estate Agency Team (NTSEAT) will publish new guidelines for agents on the topic of referral fees next month with a review of the revised fees system expected to take place next year.

There will also be an updated code on the issue from The Property Ombudsman.

The Minister said Government are taking action in order to end excessive referral fees and to discourage home buyers from choosing their conveyancers by default. Last year NTSEAT and The Property Ombudsman surveyed agents to assess the scale of referral fees among agents.

This announcement comes as Government's ongoing review of the house buying and selling process continues.

In December 2017, NAEA Propertymark responded to the Government’s consultation on Improving the Home Buying and Selling Process.

In our response, NAEA Propertymark said that referral fees must be fully disclosed to the buyer and the vendor to ensure that any fee and commission the agent will earn is quantified. The information should be explained clearly in the, when the sale is arranged and outlined on the agent’s website.

Specific examples
We have long called for the guidance to help agents comply with the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008 to be presented in a way that consumers will find easier to understand.

We also believe that the guidance should go further in including specific examples which will help agents to understand what they should and should not say when dealing with consumers. A standard form could also be produced for the industry which must be signed at instruction and evidenced throughout the buying and selling process.

Consumers
A ban on referral fees would risk increasing costs for consumers. Purchasing or selling property involves lots of time, effort and expense. Finding the right solicitor, mortgage lender or conveyancer to coordinate the property transfer can remove a lot of the burden. It can also save consumers money and reduce the risk that the selling or buying process is delayed.

Transparency
For property transactions, the most important thing is to ensure that the process is transparent, the wording used is clear, the information is upfront, and the consumer understands that they have choice over the financial and legal services they wish to use.

NAEA Propertymark will keep members up to date as soon as guidance becomes available via their monthly newsletter, web news and social media.

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