Restrictions On Conveyancing Referral Fees Will Bring Industry Giants to their Knees .
Referral fees are a perfectly legitimate aspect of the property selling process and are already regulated within the Estate Agents Act and via the Property Ombudsman to ensure nothing illegal transpires between agent and broker.
Adding further red tape to this aspect will only be detrimental to the overall process which should not be the aim of this exercise. The buyer or seller has the option to use whoever they please to provide financial and legal facilities during a sale, while this could be made clearer to the consumer, the recommendation itself is certainly not solving a problem that needs to be prioritised.
The implementation of such a ban would result in a monumental decline in revenues within corporate estate agency, as the likes of Countrywide, Connells, LSL and Foxtons base their business model around the commission made via these referrals.
While it may come as a surprise to many that I, of all people, would highlight the potential decline of the corporate industry as a bad thing, you must look at the bigger picture and the absolute carnage that would come of these industry giants failing rather than flourishing. Not only for sellers and buyers but for those they employ, thousands of whom would find themselves redundant as a result.
Countrywide has already seen a 90 percent drop in profits year on year, with much of their income deriving from mortgage and financial services and conveyancing. This further reduction in income will surely sink the ship.
The Government have already begun the process to ban introductory tenancy reference fees in their attack on the lettings industry and so they have a track record of implementing bold moves and pulling the rug from beneath the industry’s feet. But in this instance, they would be causing a big problem, not solving one.