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Survey: Home-buyers “in the dark” over referral fees

Wheeler: Important that estate agents are transparent about referral fees

Most home-buyers do not know if their conveyancer paid a fee for a recommendation from their estate agent, according to new research from the Council for Licensed Conveyancers (CLC).

Though recommendation by an estate agent was the biggest primary factor behind consumers’ choice of conveyancer, the survey found that 59% did not know whether or not a referral fee was paid.

The YouGov survey of almost 500 consumers in England and Wales who have bought a property in the last decade, said 29% were aware a fee had been paid, while only 12% knew one had not.

Asked about the primary reason they chose a particular conveyancer, 26% of those surveyed said an estate agent recommendation, 21% price, 20% previous use of that lawyer, 18% recommendation from family/friends, and 15% the firm’s general reputation.

The CLC commissioned the survey to support the new transparency rules that it and other legal regulators are introducing.

CLC-regulated lawyers currently have to set out if they have paid a referral fees when they confirm their instructions from their client, but under the new regime they will be expected to provide this information earlier in the process, when consumers are shopping around for a lawyer.

The move is in line with government proposals to ensure that estate agents’ customers are aware of the extent of any commercial arrangements before deciding to follow their recommendations on other suppliers.

CLC chief executive Sheila Kumar said: “We are not saying that it is wrong for conveyancers to pay referral fees, but transparency is key and that is why CLC lawyers have always had to inform clients about them.

“However, it is important that the client is aware of the payment of referral fees before deciding who to appoint. So, we welcome the government’s proposals that estate agents should be required to be transparent about referral fees they will receive if their client follows their recommendation.”

Housing minister Heather Wheeler MP said: “Making the housing market work is about more than just building homes. It is about helping hard-working families buy and sell with confidence.

“The findings from this valuable survey demonstrate why it is so important that estate agents are transparent about referral fees.

“That’s why we are working with the industry to ensure estate agent referral fees are clear, so consumers can make an informed decision before they decide to purchase.”