Warning over transparency of Estate Agency referral fees

22nd February 2019

A YouGov survey of people who bought a property in the last ten years, highlighted that the most popular reason for their choice of conveyancer, was a recommendation from their estate agent.

The report detailed that around 26% of respondents followed the agent’s recommendation, while 21% chose on price, 20% on previous use of the lawyer, 18% on recommendation from family or friends and 15% on the firm’s reputation.

Importantly, one key figure helping drive the call for reforms, is that 59% of those who took a recommendation did not know whether or not a referral fee had been paid to the estate agent.

Government to introduce new regulations

In response, the Minister for Housing and Homelessness, Heather Wheeler, recently outlined the government’s position on referral fees, expressing concern at the lack of transparency around their use.

The government has continued to explore how it can improve the buying and selling process for consumers, following last year’s Call for Evidence for the National Trading Standards Estate Agency Team (NTSEAT).

Whilst there is an expectation that the Government may aim to ban referral fees entirely, Wheeler emphasised that estate agents will need to be more transparent with clients regarding any referral arrangements, if new regulations are to be avoided.

All property buyers will need to be made aware of the panel of conveyancers used by the estate agent and the associated costs of following a recommendation. Guidance on this matter will be published and made available to estate agents in February.

Try before they ban

The government may still decide to introduce a ban on referral fees, but appears to be hoping that creating a more transparent process will deliver more choice for buyers and help them choose their own conveyancing provider.

It is hoped that providing buyers with more information will encourage a positive change in behaviour that will remove the need for a ban – the changes will be reviewed in due course.

The news will be welcomed by those firms like Ansons, who do not pay referral fees, who will be able to compete more evenly in this more transparent environment, which will ensure a firm’s reputation is more important than the size of the referral fees they pay.

In December 2018 the Solicitors Regulation Authority amended their handbook, advising firms they must ensure clients are informed of all fee sharing and referral arrangements, an approach now being adopted by the Government so all buyers, regardless of regulator, will be aware of referral fees.

Chapter 9: Fee Sharing and Referrals, version 21, states: (9.4) Clients are informed of any financial or other interest which an introducer has in referring the client to you. (9.5) Clients are informed of any fee sharing arrangement that is relevant to their matter.

Transparent and fair

If you or someone you know is in the housing market and looking for a reliable independent conveyancer, with the experience to make a difference, then please get in touch today and we’ll explain how Ansons make it happen. Talk to Julie Tomasik today on 01543 267988 or email