The National Trading Standards Estate Agency Team has this afternoon revealed new industry guidance to make referral fees more transparent to consumers. The executive summary of the new guidelines reads 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
(a) The price of its services, including any “compulsory” extras; and
(b) Where a referral arrangement exists, that it exists, and with whom; and
(c) Where a transaction-specific referral fee is to be paid, its amount; and
(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
(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.
The NTSEAT this afternoon issued a statement to accompany the new guidelines. Here's the statement in full:
National Trading Standards has today published new guidance 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 NTS Estate Agency Team with assistance from NAEA Propertymark, the Property Ombudsman, 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.
Heather Wheeler, Parliamentary Under-Secretary of State at the Ministry of Housing, Communities and Local Government, 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.
James Munro from the National Trading Standards Estate Agency Team said: “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.
“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.
“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 03456 040506.”