With the National Trading Standards Estate Agency Team’s (NTSEAT) new referral fee guidance having been implemented from 28th February 2019 for all estate agency type businesses (Excluding Letting Agents) it is very important that you understand what the guidance means for you and your sourcing business and that you adapt your processes accordingly.
The new guidelines are designed to make the area of referral fees much more open and transparent for consumers and that includes both sellers and buyers, this being part of the government’s overall plan to improve the home buying and selling process.
The new guidelines, if breached, will be dealt with under the existing Consumer Protection Regulations (CPR’s). These regulations cover anything that ‘…would affect transactional decisions….’ including referral fees and carries penalties ranging from unlimited fines to in serious breaches a prison sentence.
What is expected of you?
- Must disclose which services you get a referral fee from, from whom and how much – Specific amount or annual average.
- Must be in writing.
- Must include in: Terms of Business & Website and should be ‘Fair, compelling, specific, transparent and in consumers best interest’.
- Must NOT be buried in small print.
- Must be given to client in advance of consumer making the decision to work with you/use your services – Buyers and Sellers.
The referral fee received does not have to be cash; it could be a reduction in the fees that you pay, for example, insurance or a gift such as wine or champagne.
The NTSEAT are now policing this and have warned that if we do not clean up our act within the next 12 months the Housing Minister may well ban referral fees completely from the estate agency sector.
Link to the downloadable guide from NTSEAT:
Below is the live NAEA Webinar on Referral Fees
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