Referral fees update
Many agents refer business to mortgage advisors, conveyancers, survey businesses and even removal men. With the impending tenant fee ban agents are looking ways to generate more income. One of the obvious ways is, by referring more business to these suppliers and gaining referral fees.
The new announcement means that not declaring these fees could result in criminal prosecution under the Consumer Protection Regulations and/or action by NTSEAT for warning or prohibition under the Act.
In reality making sure your staff are confident in selling the benefits of your referral business – whether it be mortgage or solictors, should mean that they are not concerned by these new laws. It is generally understood that agents get a fee or these services, so that won’t be a surprise to your sellers – however the amount might be!
We have a series of films throughout our course to help build confidence in offering advice and seeing this as a service rather than a sell. The more your team believe in the service they are selling and can justify the relationship you have with the referral business, the less concerned you should be about declaring them
If your business does not benefit from any reciprocal arrangements, and many we deal with don’t, believing that their service should be unbiased, then your team need to be confident in explaining why your business takes this viewpoint.
In summary, we have attached the key points from the National Trading Standards Estate Agency Team (NTSEAT) …You need to declare the following:
- Where a referral arrangement exists, that it exists, and with whom.
- Where a transaction-specific referral fee is to be paid, its amount; and
- Where a referral retainer exists, an estimate of the annual value of that retainer to the estate agent or its value per transaction; and
- Where the referral is rewarded other than by payment, an assessment of the annual value
- This means that the payment amount and when it occurs, should be disclosed whether in terms of business or at point of offer acceptance.
Disclosure should be made in writing to a seller as part of standard terms and conditions and to buyers by being included in the property particulars, before any ancillary services are promoted.