Government Update Home Buying And Selling Guides’ Referral Sections
Following the Government’s attempt to create a more transparent home buying and selling process through detailed ‘how to’ guides on buying and selling property in May, the Government has just updated the published documents to reflect the enforcement of referral fee transparency.
In particular, the guidance addressed making referral fees more transparent in order to comply with the Consumer Protection from Unfair Trading Regulations.
The new guidance laid out that complete transparency regarding: the parties involved, prices and retainer values should be disclosed to the buyer and seller.
Any property transaction in breach of this guidance could “render an estate agency liable for criminal prosecution.”
Now, the ‘How To’ documents’ ‘referral’ sections have been amended to inform buyers and sellers about their rights concerning referral fees.
The section highlights that stakeholders such as ‘estate agent, developer, mortgage broker/lender or online property sites’ can be useful sources for recommendations.
It also explains the referral system as an ‘established way of working’ but the buyer and seller are never obligated to use the recommendation and should always shop around.
The updated referral information in the ‘How To’ guides informs potential buyers and sellers:
“The estate agent, developer, mortgage broker/lender and online property sites can be useful sources of recommendations for property professionals such as legal representatives or surveyors. They may refer you to a company because they recommend the service, and may also receive a payment (known as a referral fee) from the business they have referred you to.
“This is an established way of working, but the estate agent is obliged to tell you about any referral fees up front, allowing you to make an informed decision about which firm to choose. Do not feel obliged to take up any referral the estate agent, developer or mortgage broker/ lender makes – it is entirely your choice. You should shop around for the best deal for you, although be aware that for mortgages multiple lender inquiries may have an impact on your credit score. If you’re in doubt, ask your mortgage provider for more detail about how they carry out credit checks.”
James Munro of The NTS Estate Agency Team, commented:
“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.
Mark Hayward, chief executive of NAEA Propertymark, said:
“It is 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.”
Have the transparency changes had an impact on conveyancers? Is the transparency guidance already creating a fairer market for buyers and seller?