Trading standards proposals made earlier this month that say customers must be told about all third party referral fees when buying or selling property may be extended to letting agents, warns PayProp.

PayProp says that while the original proposal, which was made following a request from the ministry for housing, communities and local government, covers the sales market, it would be of little surprise if it was later extended to the rental sector.

PayProp chief sales officer Neil Cobbold points out that, “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.”

He adds: “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 also says that the proposals commented upon are less rigid than many had feared they would be in asking for mandatory disclosure – many had thought that agents would be stopped from receiving referral fees entirely.

“The National Trading Standards Estate and Letting Agency Team 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,” Cobbold says.

“However, there is a clear trend towards greater regulation of the industry, as evidenced by the Tenant Fees Act and the upcoming Regulation of Property Agents legislation. It would be prudent for letting agencies to take the necessary steps to start disclosing referral fees now so they are ready if and when the government takes action.”