Feb

Should letting agents be paid to refer services to landlords?

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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.

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