The National Association of Estate Agents has led the support for stricter new guidelines on transparency for referral fees.
The clampdown means agents are expected to disclose referral fees upfront to both buyers and sellers at the earliest opportunity in a transaction.
The disclosure should include the amount of the fee and the identity of the recipient.
Estate Agent Today outlined the new rules yesterday afternoon, moments after they were issued by the National Trading Standards Estate Agency Team.
We repeat a summary of them below.
They have now been welcomed by the NAEA chief executive Mark Hayward who says: “We have long called for greater clarity and transparency on referral fees. It’s essential that if you are referred for financial or legal services by your estate agent, you understand that they are receiving a commission, and how much this is.
“The guidance … is a triumph for consumers and an important move in improving the house buying and selling process.”
The executive summary of the NTSEAT guidelines is as follows:
Failure to disclose referral arrangements may render an estate agent liable for criminal prosecution under the CPRs and/or action by NTSEAT for warning or prohibition under the Act.
Ultimately, only a court may decide whether any particular set of circumstances amounts to a breach of the CPRs.
However, NTSEAT offers the following recommendations as a statement of desirable practice:
An estate agent should disclose in plain terms
1 (a) The price of its services, including any “compulsory” extras; and
2 (b) Where a referral arrangement exists, that it exists, and with whom; and
3 (c) Where a transaction-specific referral fee is to be paid, its amount; and
4 (d) Where a referral retainer exists, an estimate of the annual value of that retainer to the estate agent or its value per transaction; and
5 (e) Where the referral is rewarded other than by payment, an assessment of the annual value of the reward or the value of the reward per transaction.
Meanwhile the complete new guidance, 14 pages, is available to download from the National Trading Standards website.