"The most important thing is to ensure that the process is totally transparent, the wording used is clear, the information is upfront, and the consumer understands that they have a choice"
The guidance specifically addresses the application of fees advice under the Consumer Protection from Unfair Trading Regulations and the transparency of referral fees.
NAEA Propertymark argued that the Government should not ban referral fees as this would increase costs for consumers and could be detrimental to estate agency businesses at an important time for the housing market with smaller agents, in particular, affected the most.
The NTS Estate Agency team concluded that referral fees for connected services are permissible, but should be disclosed by agents to sellers and buyers.
The guidance states that an estate agent should disclose the price of its services, where a referral arrangement or retainer exists and with whom, the amount of these fees, and the annual value of any reward if a referral is rewarded other than by payment.
The guidance will be reviewed in 12 months' time with a view to understanding whether transparency is effective or whether further steps need to be taken.
Mark Hayward, chief executive of NAEA Propertymark, commented: “We are very pleased that Government have refrained from a complete ban of referral fees. It is vital that agents now absorb the guidance completely and take steps to ensure that they are complying.
"For property transactions, the most important thing is to ensure that the process is totally transparent, the wording used is clear, the information is upfront, and the consumer understands that they have a choice over the financial and legal services and other referred services they wish to use. Information must be explained clearly in the sales particulars and terms of business, when the sale is arranged and outlined on the agent’s website."
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."
