Two key regulators ask estate agents to give their thoughts as industry faces ‘last chance saloon’ on referral fees.
A ban on referral fees paid by third parties to estate agents for recommending services to landlords has taken a step closer towards reality following an update from the Trading Standards Estate and Letting Agency Team and the Property Ombudsman published late on Friday.
The two organisations have asked estate agents to consider whether they would prefer partial or total disclosure of fees to landlords when doing business, and whether a total ban would be appropriate.
The current Trading Standards guidance issued last year only warns agents that they must reveal referral fees or ‘risk prosecution’, but any government proposals on future legislation have yet to be revealed.
But tackling the shady world of referral fees has become a government priority as it bids to bring greater transparency and fairness to the housing market.
The government wants landlords to be able to shop around for services based on an unbiased recommendation or, at the very least, for the referral fees earned by the agent to be made clear.
This is alongside other measures being considered including whether to regulate sales and lettings agencies, how to reform the leasehold system and plans to force landlords to join a national register in England, as they are already required to do in Wales and Scotland.
Fees are earned by letting agencies in a variety of ways across both sales and lettings. This includes fees for referring landlords to conveyancers, inventory companies, referencing agencies, mortgage providers and maintenance and repairs firms.