The Council for Licensed Conveyancers annual conference was held on 28 January 2020 where it was revealed that a report on referral fees was to be published this month.
This report will be passed to ministers to allow them to decide whether this particular aspect of the market required greater regulation or not. There have been several notable bodies calling for greater openness on referral fees and the regulation of estate agents, including the Law Society, to which this report will be welcome news. Those in the industry have suggested that, should there not be a greater element of transparency, then there could potentially be a ban of referral fees.
At present, the guidance says that agents should disclose referral fees upfront to both the buyer and seller, along with the amount of the fee and who the arrangement is with. This disclosure ought to be made at the first possible opportunity.
It had been mooted at the CLC conference as to whether the new government would be minded to increase regulation to score some easy wins. Given that regulation is fairly low cost and typically popular with the public, it looks like a proposal that may come to fruition.
Ministers have also been asked to consider whether they wish to test reservation agreements, which could involve a field trial. There has been a mixed consumer response to reservation agreements and, as a result, a more rigorous solution has been designed. This will involve both buyers and sellers making declarations on matters such as the mortgage status and the property generally. Both parties will then pay a £1,000 sum at the time an offer is agreed upon. In the event the sale proceeds smoothly, that sum will become part of the deposit.
The guidance on the transparency of fees involving property sales that were released last year can be found below:-
If you have any concerns over your referral policy contact our Daniel Jenkins at Daniel.Jenkins@nexa.law to see how Nexa can help you.
Start earning your worthIncome Calculator