Referral fees for estate agents: what the rules actually say

In 2019 the National Trading Standards Estate and Letting Agency Team looked hard at referral fees in the property chain and considered banning them outright. It didn't. It chose mandatory transparency instead, with an explicit warning that an outright ban stays on the table if disclosure fails. So the position today: an agent may receive a fee for referring a buyer or seller to a conveyancer, mortgage broker, surveyor or removals firm — and these fees are real money, commonly £150 to £450 per conveyancing referral, sometimes more under panel arrangements. The obligation is to disclose the fee to the consumer, including the actual amount or a realistic range where the sum varies, in writing, early enough for it to influence their decision. 'We may receive a fee' on a website footer does not meet that standard. Nowhere near.

The disclosure duty is not a polite suggestion. It hangs off the Consumer Protection from Unfair Trading Regulations 2008: withholding material information a consumer needs to make an informed choice is a misleading omission, and a referral fee that shapes which conveyancer gets recommended is plainly material. Breach can bring criminal prosecution, unlimited fines, and — under the Estate Agents Act 1979 — a prohibition order ending a career. The redress schemes bite too. The Property Ombudsman's code requires disclosure of referral fees and their amount, and TPO has upheld complaints where agents disclosed the existence of a fee but not the figure. Three layers, one message. If a consumer could reasonably ask 'why are you recommending them?', the answer — with numbers — should already be in their hands.

Property referrals are Trading Standards territory. Financial referrals belong to the FCA, and the line matters. An unauthorised estate agent can introduce a buyer to a mortgage broker or a vendor to a financial adviser and be paid for it — making introductions is fine. What the agent must not do is advise or arrange: no steering towards a particular lender, no commenting on whether a fixed rate beats a tracker, no filling in application forms. That is regulated activity, and doing it without authorisation is a criminal offence under the Financial Services and Markets Act 2000. The safe shape is boring. Pass the name across, disclose the fee, let the authorised firm do every ounce of the advising. Boring keeps the licence.

Disclosure fails in practice for dull reasons: nobody wrote it down, or the template said 'a fee may be payable' and stopped. Fix both. Put the referral fee — the number — in the terms of business and repeat it at the point of referral. Keep a per-transaction record: who was referred, to whom, on what date, for what fee, with the disclosure attached. Review the schedule of fees every twelve months, because a figure disclosed in 2023 does not cover an arrangement renegotiated since. One more habit worth stealing from regulated sectors: ask the firms you refer to whether they disclose your arrangement from their side as well. Symmetric disclosure means no consumer ever discovers the fee from the other party first — which is the only way these things ever become a complaint.