Agents’ group recommends referral fee policy of transparency

The UK Association of Lettings Agents is recommending transparency in relation to the disclosure of referral fees to landlord clients.

Last month the head of the National Trading Standards Estate and Letting Agent Team, James Munro, told a Rightmove webinar that the industry probably had another year to get its house in order on referral fees before the government made a decision on whether to legislate.

Now UKALA has said on its website: “UKALA recommends transparency in relation to referral fees. One of the benefits of your membership with UKALA is access to the Training for Professionals’ suite of documents which can be accessed through an account set up for you on their website.

“The fees section of the Agency Agreement already contains a Referral Fee Disclosure section for you to use with a range of different third parties that might pay a referral fee, the amount or percentage and whether the landlord consents to you receiving the fee. 

“It is accompanied by a statement advising the landlord that they are under no obligation to use the services of any recommended suppliers. These documents are kept up to date and in the event that any new legislation is brought into force the relevant documents will be updated accordingly.”

In October the Housing Minister Chris Pincher responded to an NTSELAT report which recommended mandatory disclosure of referral fees to ensure consumers felt confident in the services they received. This recommendation applied to lettings agents as well as sales agents.

Other recommendations included a warning to be given to customers that they should consider shopping around, plus a public awareness programme and additional industry guidance with professional bodies and redress schemes to encourage compliance.

In a recent survey of The Property Ombudsman members, almost 60 per cent of agents said they had referred customers to external companies, and over 80 per cent of those members admitted receiving a fee for the referral.

The review by Trading Standards noted that the practice of referring customers to a preferred service provider in exchange for a fee was “regularly concealed.”