The National Trading Standards Estate and Letting Agency Team has proposed that customers must be told about all third party referral fees when buying or selling property.

National Trading Standards conducted a review into referral fee practice at the request of the ministry for housing, communities and local government. It found that customer referral in exchange for a fee is “regularly concealed” and that sometimes the provider being referred to does not provide the best value to the customer.

Its recommendations include the government making fee transparency mandatory; launching a public awareness programme; and producing guidance to encourage industry compliance.

Separately, The Property Ombudsman found that 60 per cent of its members referred clients to external companies, 80 per cent of which received a fee for doing so.

National Trading Standards Estate and Letting Agency Team senior manager James Munro says: “We recognise that referral fees have a place in business if used ethically and transparently and with no pressure to use the referred service.

“It is important that customers are fully aware of the basis and value of a referral or recommendation so they are able to take an informed transactional decision.

“Mandatory disclosure of referral fees would ensure there is full transparency around this practice, helping to build consumer confidence in the estate agency industry and demonstrating the duty of care agents should have to both parties in a property sale.”

Housing minister Christopher Pincher adds: “It is unacceptable that unscrupulous practices are still taking place where consumers are not being made aware of referral fees when buying or selling a property.”

“I welcome the National Trading Standards’ work to raise consumer awareness of referral fees and will carefully consider the recommendations of their report. I have asked National Trading Standards to continue to monitor the situation to help inform if further steps need to be taken.”

Meanwhile, NAEA Propertymark chief executive Mark Hayward says: “New legislation which will require agents to display referral fees is a step forward, providing clarity to agents that they mustn’t fall foul of the law but importantly ensuring greater transparency for consumers to avoid any confusion about what agents are charging for.

“This is something we’ve been working closely with government and the National Trading Standards on, and given that agents were facing a complete ban of referral fees, we would strongly advise that anyone who isn’t currently displaying their fees should start now, regardless of when the new laws will come into force. ”