Real Estate Broker Referral Agreement Template for England and Wales

It's a contract between two estate agency firms (or between a broker and another professional, such as a mortgage adviser) in which one party receives a fee for introducing a client who subsequently completes a property transaction with the other. The Estate Agents Act 1979 requires any such financial arrangement to be disclosed to the client whose transaction generates the fee.

The receiving broker must tell the client in writing: that a referral arrangement exists, who is paying and who is receiving the fee, and the amount or the basis on which it is calculated. This disclosure must happen before the client is committed to the transaction. The duty applies equally to referrals from mortgage advisers, surveyors, and conveyancers to brokers.

The agreement should specify the trigger event. Common triggers are: the client signing a listing agreement with the receiving broker, exchange of contracts, or completion of the sale. Completion-linked triggers reduce the risk of disputes if the client does not proceed. The agreement should also address what happens if the referred client changes broker before completing.

Yes. Volume arrangements (for example, a higher fee rate after a certain number of referrals per year) are commercially common. However, any volume incentive must still be disclosed to each individual client whose transaction contributes to the referral, and the arrangement must not create such a strong incentive that the referring party recommends the broker regardless of whether they are the best option for the client.

Yes. Under the Competition Act 1998, an agreement between competing brokers that has the effect of allocating clients, territories, or property types between them amounts to a market-sharing agreement, which is prohibited. Referral agreements should be structured to reflect genuine commercial cross-referrals and should not prevent the referring party from recommending competing brokers where appropriate.

A referral agreement does not need to be in writing to be legally binding under general contract law, but a written agreement is strongly advisable. It provides clear evidence of the agreed fee, the trigger event, and the disclosure obligation. Without a written record, fee disputes are harder to resolve and the parties may disagree about what was agreed.

Yes. Referral fees between estate agents and mortgage brokers are lawful in England and Wales provided they are disclosed to the client. The Financial Conduct Authority (FCA) also regulates mortgage advisers and requires them to disclose any referral fee received from an estate agency under the FCA's conduct rules on inducements. Both the estate agency and the mortgage broker have parallel disclosure obligations.

If both firms are VAT-registered, the receiving party must charge VAT at 20% on the referral fee. The paying firm can reclaim input VAT if the referral fee is a business expense. The agreement should state clearly whether the referral fee is quoted inclusive or exclusive of VAT to prevent disputes about the gross amount payable.