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.
The National Trading Standards Estate Agency Team has this afternoon revealed...
Estate agents have been warned that if new guidance over referral...
The National Trading Standards Estate Agency Team is warning agents not...
The Boomin portal, which incentivises agents to cross-sell and benefit from...
The predictions game can be tricky. Sometimes you just don’t know...
Leading UK property auctioneer Bond Wolfe has broken through the £100...
Uncertainty triggered by the new Labour Government and taxation concerns that...
In today's rapidly evolving property market, the focus on reducing transaction...
.png)
An exciting new collaboration between TVPN, EstateApps and Paul Long is...
By Mike Bilboe, Face For Business Buying or selling a home can...
LSL Estate Agency Franchising is home to one of the UK’s...
.jpg){kind=logo}
B-hive Block Management Partners Celebrates Major Milestone With Over 100 Businesses...
.jpg)
Tell us a little bit about National Home Move. We are a...
If you’re thinking about becoming an Estate Agency franchise or converting...
Estate agents and lettings agents have a legal obligation to protect...
You don’t have to simply accept things as they are when...
From the uptick in house sales in January to a house price...
Happy birthday to us….and all members of the The ValPal Network! We...
With a combined value surpassing £7.4 trillion, the UK’s 29 million...
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
The benefits for letting agents to outsource their client accounting is...
When almost all agents and developers use the tried and tested formula...
I think we can all agree that the National Trading Standards...
.png)
As domestic battery storage systems become increasingly prevalent in UK homes,...
.png)
A team from The ValPal Network joined industry Facebook ads expert...
.png)
In this interview, Riccardo Dawson, Chief Operating Officer at Alto and...
%20(002).png)
In today's fast-paced and ever-evolving property industry, it’s essential that forward-thinking...
A client account is essential to your lettings business, but the...
As electric vehicles increasingly populate our roads and the necessity for...
As estate agents, it is important to make sure that your...
Estate agency has changed. No longer is it required to sit in...
Changes to consumer behaviour usually arrive in waves. Most of the...
At iamproperty we are excited to share the announcement of our...
It’s no secret – 2023 is a difficult year for the...
In an exclusive interview with Estate Agent Today, Simon Coaker, Sales &...
2023 has been coined as ‘the year of AI adoption’, and...
%20(002).jpg)
There are a few common questions that arise when the issue...
As a signage company we know we have a serious responsibility...
The Government’s mini budget on September 23 was anything but ‘mini’...
Agent websites have become more crucial than ever in attracting new...
.png)
Who are you and what does it say on...
Who are you and what does it say on...
Who are you and what does it say on...
Join the conversation
Jump to latest comment and add your reply
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.
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.”
and
“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?
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?
Please login to comment