Referral fees and commissions: what a letting or estate agent must disclose, and what happens if they don't

In England, referral fees are lawful but must be treated as consumer-facing money, not as private back-office income. The sharpest risk for letting and estate agents is not the existence of the fee; it is failing to disclose who benefits, when, and from whom.

What is a referral fee?

A referral fee is money, a gift, hospitality or another benefit an estate or letting agent receives for recommending a third-party business such as a conveyancer, insurer, utility provider, referencing company or contractor. MHCLG’s home-selling guide gives the plain version: “They may refer you to a company because they recommend the service, and may also receive a payment (known as a referral fee) from the business they have referred you to.” National Trading Standards uses the broader enforcement wording: “A traditional referral fee exists where an agent recommends (refers) another business to a seller or prospective buyer, and that business rewards the agent for the referral by way of money, gifts or any other form of benefit.” The fee is not banned merely because it exists; the legal problem starts when the customer is steered toward the service without being told that the agent has a financial interest.

When does an agent have to disclose a referral fee?

In England, an agent should disclose a referral-fee arrangement in writing before promoting the referred service, but the Estate Agents Act 1979 itself has no referral-fee disclosure duty: National Trading Standards says, “There is, however, no provision in the Act requiring disclosure of the fact of referral fees or their amount.” The disclosure duty now comes through unfair-trading law, because the Digital Markets, Competition and Consumers Act 2024 revoked the 2008 Regulations — “The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277) are revoked” — and treats “material information” as information the average consumer needs for an informed transactional decision. National Trading Standards says disclosure “should be made in writing… before any ancillary services are promoted.” That covers rent guarantee insurance, tenant insurance, utilities, referencing, maintenance and conveyancing commissions. Scotland is weaker: contractor and third-party commission is disclosed to landlords only on request. Wales and Northern Ireland follow the older letting-code position, requiring written landlord disclosure once a tenant uses an associate’s service where commission could be earned.

Does a referral fee come out of the overall commission or the individual's?

No law says a referral fee must come out of the overall agency commission or the individual negotiator’s commission; in practice it is usually paid to the firm, which may then share a smaller amount with staff under its internal pay rules. National Trading Standards’ model wording treats it as a separate third-party payment to the agency: “The Referral fee is separate from your obligation to pay our own fees or commission.” That means whether the fee reduces the firm’s commission, or is shared with an individual negotiator, is mainly a payroll and contract question, not a statutory formula. Taylors’ 2026 disclosure illustrates the usual split, stating: “From the fee received by us, the member of staff who made the referral may receive up to £25.00 OR a £10.00 Love 2 Shop voucher.” One important caveat is price presentation: National Trading Standards says of conveyancing that “a proportion of what appears to be the fee for conveyancing is, in fact, a referral fee,” so one firm’s claim that its own fee is not added to a quote does not settle the general rule.

Can you add a mark-up to a contractor's invoice without telling the landlord?

An English or Welsh letting agent should not add an undisclosed margin to a contractor’s invoice, because there is no statutory percentage cap but the undisclosed profit can breach fiduciary duty and the unpublicised fee can trigger Consumer Rights Act 2015 fee-publicity penalties of up to £5,000. The Court of Appeal’s fiduciary-duty rule is blunt: if the profit arises from the agency transaction, “it belongs to his master, and the agent or servant has no right to take it, or keep it… unless his master knows it.” In England and Wales, an agent-kept works charge is also a relevant fee for property management work, and the penalty for breaching the fee-publicity duty “must not exceed £5,000.” Mark-ups themselves are common when disclosed: Connells reportedly charges 10% plus VAT on net works over £750, and Leaders 12% on major works over £500 plus VAT. Leigh Day’s allegation that Foxtons took hidden 25–33% contractor commissions remains an allegation, not a finding. Abodient's contractor sourcing puts the landlord directly in front of the contractor's own quote, with no agent mark-up layered on top, which is the exact opacity this dispute is about.

What happens if a staff member takes an undisclosed referral fee?

A staff member who takes an undisclosed referral fee can face dismissal, repayment of the secret profit, regulatory or redress consequences for the agency, and in serious cases a Bribery Act 2010 offence carrying up to 10 years’ imprisonment, a fine, or both. The Bribery Act covers an employee who “requests, agrees to receive or accepts a financial or other advantage” intending improper performance, and work done in employment is expressly included as “any activity performed in the course of a person's employment.” For the civil side, the Court of Appeal states that a person acting for another who receives a percentage or other sum from the other contracting party “is committing a breach of duty,” and that “A fiduciary is bound to account for any profit that he or she has received in breach of fiduciary duty.” The agency’s disciplinary exposure is therefore not just reputational: if management ignored or benefited from the practice, the same facts can become a consumer-law, code-of-practice and client-money trust problem.

Last reviewed August 2026.

Sources

• MHCLG, How to sell a home — “They may refer you to a company because they recommend the service, and may also receive a payment (known as a referral fee) from the business they have referred you to.” Source
• National Trading Standards Estate Agency Team, Guidance on Transparency of Fees Involving Property Sales — “A traditional referral fee exists where an agent recommends (refers) another business to a seller or prospective buyer, and that business rewards the agent for the referral by way of money, gifts or any other form of benefit.” Source
• National Trading Standards Estate Agency Team, Guidance on Transparency of Fees Involving Property Sales — “There is, however, no provision in the Act requiring disclosure of the fact of referral fees or their amount.” Source
• Digital Markets, Competition and Consumers Act 2024 s.251 — “The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277) are revoked.” Source
• Digital Markets, Competition and Consumers Act 2024 s.227 — “In subsection (1)(a), “material information” means information that the average consumer needs to take an informed transactional decision.” Source
• National Trading Standards Estate Agency Team, Guidance on Transparency of Fees Involving Property Sales — “Disclosure should be made in writing, to a seller as part of standard terms and conditions and to buyers by being incorporated into or annexed with the property particulars before any ancillary services are promoted.” Source
• The Property Ombudsman, Code of Practice for Residential Letting Agents — England, updated 1 May 2026 — “If you intend to offer or recommend to consumers referencing, insurance, utility, property maintenance, gas or electrical or other services, or those of an associate () or connected person (), where the service provider rewards you for the referral by way of money, gifts or any other form of benefit, you must disclose this arrangement.” Source
• The Letting Agent Code of Practice (Scotland) Regulations 2016, schedule paragraph 96 — “On request, you must disclose to landlords, in writing, whether you receive any commission, fee, rebate or other payment or benefit and any financial or other interest you receive from a contractor/third party you appoint.” Source
• TPO, Residential Letting Agents Code of Practice for Wales and Northern Ireland — “You must tell the landlord in writing as soon as reasonably possible after you find out that a tenant, who has made an offer, has applied to use any service provided by an associate () of you or connected person () in connection with the letting and/or management of a property (for example, but not only, in circumstances where a commission or referral fee could be earned).” Source
• National Trading Standards Estate Agency Team, Guidance on Transparency of Fees Involving Property Sales — “The Referral fee is separate from your obligation to pay our own fees or commission.” Source
• Taylors Estate Agents, Disclosure of Referral Fees, 10 March 2026 — “From the fee received by us, the member of staff who made the referral may receive up to £25.00 OR a £10.00 Love 2 Shop voucher.” Source
• National Trading Standards Estate Agency Team, Guidance on Transparency of Fees Involving Property Sales — “This is potentially a misleading omission on the part of the estate agent; a proportion of what appears to be the fee for conveyancing is, in fact, a referral fee.” Source
• Imageview Management Ltd v Jack [2009] EWCA Civ 63 — “He does the wrongful act whether such profit be given to him in return for services which he actually performs for the third party, or whether it be given to him for his supposed influence, or whether it be given to him on any other ground at all; if it is a profit which arises out of the transaction, it belongs to his master, and the agent or servant has no right to take it, or keep it, or bargain for it, or to receive it without bargain, unless his master knows it.” Source
• Consumer Rights Act 2015 s.87 — “(b)must not exceed £5,000.” Source
• The Independent Landlord, Letting agent contracts — “In the fee schedule dated 2 April 2026, Connells state they charge a fee of 10% + VAT on the net cost of works which exceeds £750, in return for: “Arranging access and assessing costs with contractor; Ensuring work has been carried out in accordance with the specification of works; Retaining any warranty or guarantee as a result of any works.”” Source
• The Independent Landlord, Letting agent contracts — “Leaders (2 June 2026) charge landlords a fee of 12% of the contractor’s invoice to “project manage” any “major works” exceeding £500 + VAT on behalf of the Landlord.” Source
• Property Industry Eye, Lawyers allege Foxtons charge up to 33% in hidden commissions — “In the document, Leigh Day alleges that Foxtons charges “hidden commissions of as much as 25-33% of a contractor’s fee for work done such as repairs, maintenance, electrical safety checks, inventory checks, and the like”.” Source
• Bribery Act 2010 s.2 — “Case 3 is where R requests, agrees to receive or accepts a financial or other advantage intending that, in consequence, a relevant function or activity should be performed improperly (whether by R or another person).” Source
• Bribery Act 2010 s.3 — “(c)any activity performed in the course of a person's employment,” Source
• Bribery Act 2010 s.11 — “(b)on conviction on indictment, to imprisonment for a term not exceeding 10 years, or to a fine, or to both.” Source
• Imageview Management Ltd v Jack [2009] EWCA Civ 63 — “If a servant, or a managing director, or any person who is authorized to act, and is acting, for another in the matter of any contract, receives, as regards the contract, any sum, whether by way of percentage or otherwise, from the person with whom he is dealing on behalf of his principal, he is committing a breach of duty.” Source
• Imageview Management Ltd v Jack [2009] EWCA Civ 63 — “A fiduciary is bound to account for any profit that he or she has received in breach of fiduciary duty.” Source