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Latest ‘call for evidence’ hints of a ban on referral fees paid to agents

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The latest ‘call for evidence’ into the industry, unexpectedly released in the early hours of Sunday morning before any of the documentation was available online, is asking some leading questions about referral fees.

The survey suggests that referral fees “benefit agents at the expense of consumers” and goes on to ask whether there should be more disclosure of referral fees, and what would be the impact of a ban on referral fees.

The documentation states that some consumers are guided by their estate agent towards using a certain conveyancer or mortgage broker. It says: “This obviously increases the costs to consumers and may hamper competition.”

The survey also focuses on whether there should be greater regulation of estate agents, including a requirement for compulsory training. The Government has already announced that it will become mandatory for letting agents to belong to a professional organisation.

The survey is also asking for opinions about:

  • Gazumping and how this can be tackled
  • Preventing fall-throughs, including by schemes such as lock-in agreements, registered deposits, and reservation contracts
  • Marketing homes that are ‘sale or move ready’ – although the Government has denied that this would be a return to Home Information Packs
  • Innovative online solutions that make more data available online and which will make the buying process faster and cheaper

The new call for evidence focuses on sales agents, and is applicable in England and Wales. It follows hot on the heels of last week’s call for evidence which focuses on letting agents and on leasehold management, while earlier this month another inquiry, this time from the Communities and Local Government Committee on the private rented sector, was launched, specifically looking at enforcement.

Both of the latest calls for evidence are running for eight weeks.

The latest call references property buying and selling in the US and Denmark – where estate agency fees are typically 6% and more.


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