Following the Government’s attempt to create a more transparent home buying and selling process through publishing property buying and selling guides the the documents were updated in September to reflect the enforcement of referral fee transparency. In particular, the guidance addressed making referral fees clearer in order to comply with Consumer Protection from Unfair Trading Regulations. The new guidance lays 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.”
The guide’s ‘referral’ section has been amended to advise buyers and sellers about their rights regarding 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 ‘’is an established way of working’’ but the buyer and seller do not have to use the recommendation and should always shop around.
The updated referral section in the guide 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.”
Mark Hayward, chief executive of NAEA Propertymark, stated that “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.”
James Munro of The NTS 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.
The buying and selling guides provide an overview of the buying and selling process and the latest case management software does much to control, automate, and drive efficiency into the conveyancing process. Redbrick Solutions Case Management can save time by automating much of the process, from producing quotes, to completing ID checks, Land Registry submissions and ordering searches to producing completion statements. The online portal allows the law firm to upload documents for the client to complete and sign electronically, providing a better service for the client and a more efficient transaction for all concerned.