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Referral Fees clampdown welcomed as “a triumph for consumers”

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

Poll: Are more transparent referral fees a good thing?


  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    Just a thought, but ...

    Under the new guidelines - when a local property expert - (who is a self-employed individual) goes and list a property for Purplebricks, will he or she have to say to the vendor, as soon as you sign this agreement I get £200 plus as a referral fee, and if you have accompanied viewings I get £X, etc.
    And each time Mr Vendor I sign a new listing up, I annually receive a referral fee of £40,000 (well in the good old days) from Purplebricks.

    Might this be the death knell of online agents? It is one thing for a traditional agent to say we get £120 as a referral fee for using our solicitor should you want to Mr Vendor.

    And quite another to say, I get £200 plus as a referral fee from Purplebricks the moment you sign up, sale or no sale.

    If the Local Property Experts were employees the fee, would not be a referral fee, it would just be a fee, but as the LPE's are outside of the company framework, this fee, or commission, I know PB do not like the word - will need to be disclosed to vendors every single time before a vendor signs on the line that is dotted.

    So the NTSEA transparency drive may be the start of Purplebricks hidden commissary coming out into the open.

    Maybe that share price is about to get hit again.

  • Rob Hailstone

    Whilst there doesn’t appear to be a start date the Guidance does say:

    “Compliance should be seen as an immediate priority.”

    In addition:

    “Disclosure should be made in writing, to a seller as part of standard terms and conditions and to buyers by being incorporated into or annexed with the property particulars before any ancillary services are promoted.”


    “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.”

    It will be interesting to see how this plays out. Will the public baulk at agents receiving part of the conveyancers (and others) fee, will the majority of agents comply, or will there be a complete ban on referral fees imposed this time next year?

  • James Robinson

    Thank you Mr Haywood for continuing the belief at Westminster that our industry is under regulated. Why is it that we are being singled out for this "clampdown". Why shouldn't this wonderful piece of legislation be rolled out across all industries? For instance I would very much like to know exactly how much my doctor is getting paid to prescribe me my medicines, after all they trouser an average £340 million a year from pharmaceutical companies to peddle us their drugs and that's on top of what we pay them via the NHS.
    We should be extremely proud that the government, who seem to be incapable of doing anything other than ballsing up Brexit, are dedicating so much time to taxing and regulating every aspect of our industry. Lucky us eh?


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