It has targeted referral fees as part of its plan to clean up the estate agent and house buying process and also questioned if transparency and regulation of the sector needed to be stepped up.
In a consultation released on Sunday, the Department for Communities and Local Government (DCLG) said it was aware “that some consumers are guided by their estate agent towards using a certain conveyancer or mortgage broker and that these agents may be in a commercial relationship with this party and receive a referral fee in exchange for making an introduction.
“This obviously increases the costs to consumers and may hamper competition. We would like to know whether consumers benefit from these arrangements and whether referral fees are always being disclosed to consumers.”
As a result, it asked: “Should the government take further action to enforce current transparency regulations regarding disclosure of referral fees? If so, what action should be taken?
It added: “What would the impact be of banning referral fees?”
The DCLG also used the consultation to ask whether regulation of estate agents should be strengthened and if awareness needed to be raised about how to submit a complaint about an agent.
It follows on from plans announced last week to require all letting agents to be regulated and meet minimum qualifications.
“Changes to consumer protection regulations have had an impact on the way in which estate agents operate and our research suggests that most people were satisfied with the service they received from their estate agents,” the DCLG said.
“However, we are keen to know whether the apparent reluctance to complain about poor service received from estate agents is because people are not aware of how to raise a complaint.”
NAEA Propertymark chief executive Mark Hayward welcomed the proposals: “NAEA Propertymark has long been calling for more regulation of the estate agents sector to ensure that consumers are protected when dealing with the biggest asset most people own, their home.
“We are delighted that government has chosen to include further estate agent regulation in the scope of their call for evidence into the house buying and selling process. This is a welcome review of the process, which is currently archaic and does not reflect the twenty first century.”