Letting agents should prepare to disclose the third-party referral fees they receive to landlords and tenants, according to PayProp.
Earlier this month, the National Trading Standards Estate and Letting Agency Team (NTSELAT) proposed to the government that estate agents disclose any fees they receive when referring clients to other service providers, such as conveyancers.
Although the referral fees recommendations focused on sales, guidance for the lettings sector is likely to follow.
Neil Cobbold, chief sales officer at PayProp, said: “The recent report from the NTSELAT covers the sales market, but it would not be surprising if any future guidance from the government also includes the rental sector.
“Recent legislation covering the sales market, such as the new anti-money laundering rules introduced this year, has often been extended to lettings as well.
“Agents should not assume they will be exempt from this change either and should instead start preparing for changes to the referral fees system. They can do this by disclosing the fees they receive to consumers if they are not doing so already.”
Cobbold suggests that if agents are quick to disclose referral fees to consumers voluntarily, Trading Standards and the government could be persuaded away from a future outright ban.
He added: “Full disclosure and transparency from agents can allow them to keep earning important additional income from referral fees, while at the same time offering more protection to consumers,” he says.
“The NTSELAT has acknowledged that referral fees have ‘a place in business’ if they are used ‘ethically and transparently’, so it’s up to agents to make sure they follow any disclosure guidelines set by the government to avoid a stricter clampdown further down the line.”
The report on referral fees was welcomed by Housing Minister Christopher Pincher, who said he will now ‘carefully consider’ Trading Standards’ recommendations.
This post has originally been featured in Property Wire.