The government also confirmed it will be trialling its homebuying reservation agreement this year and that it is examining how to streamline identification verification and use electronic signatures in the homebuying process.
Last April the government confirmed it would force estate agents to disclose any fees they receive for referring borrowers to other parties in the homebuying process, including brokers and conveyancers.
However, housing and homelessness minister Heather Wheeler issued the ultimatum to estate agents last week, noting that homebuyers should not be choosing their conveyancers “by default” through referrals.
Speaking at the Council for Licensed Conveyancers annual conference, Wheeler revealed National Trading Standards will next month produce new guidance for estate agents, setting out how and when they should disclose referral fees.
The ombudsman will be amending its guidance in the light of this advice as well.
“I have provided the National Trading Standards Team with extra funding to support their efforts to ensure transparency and I have asked them to report back to me in 12 months,” she said.
“I expect this to mean an end to excessive referral fees but if behaviour doesn’t change, then I will look again at the case for a ban.”
Reservation agreements trial
Wheeler also noted that the government was pushing on with its homebuying standard reservation agreement “to increase people’s commitment by ensuring that they’ve got some skin in the game”.
“We’re commissioning behavioural insight research to help us design an agreement that’s supported by consumers and industry alike, and we’ll be running a field trial later this year,” she said.
How to buy and How to sell guides to help consumers navigate every stage of the process will be published in the spring, alongside How to rent and How to lease guides published last year.
Wheeler praised local authorities as more than 80% of councils are now turning around property searches within 10 working days with the quickest doing so in under a day.
And she added that using technology in the homebuying process was also a key aim, “which is why we have been looking at whether we can streamline ID verification and make more use of electronic signatures in the homebuying process”.
