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It is a contract between two or more estate agents setting out how commission earned on a property transaction will be divided. Commission sharing arises in co-agency arrangements, where two agents jointly market a property, and in introducer agreements, where one agent refers a client to another. The agreement records the split percentage, the payment trigger, and how disputes about entitlement will be resolved.

Yes. The Estate Agents Act 1979 and the Consumer Protection from Unfair Trading Regulations 2008 require agents to disclose referral fees and any financial arrangements with other agents to their clients. Failure to disclose a commission-sharing arrangement is a criminal offence and could lead to the commission being unenforceable. The disclosure should be in writing before the client is committed to the marketing arrangement.

There is no legal formula. The split is commercially negotiated and commonly ranges from 25 to 50 percent for the introducing agent and 50 to 75 percent for the transacting agent who manages the sale to completion. The agreement should specify the percentages, confirm they are of the net commission received after VAT, and address what happens if either agent does not complete their agreed obligations.

The commission-sharing agreement should address abortive work. If commission is contingent on completion and the sale falls through, neither agent is entitled to a fee from the client. However, the parties can agree internally that marketing costs or referral fees are payable regardless of outcome. Any such payment should be documented to avoid disputes, particularly if one agent invested substantially in marketing.

Each agent carrying out estate agency work as defined by the Estate Agents Act 1979 must comply with that Act independently, including joining an approved redress scheme under the 2007 Act. If any agent is also conducting regulated activities (such as mortgage advice), Financial Conduct Authority authorisation is required separately. The commission-sharing agreement cannot transfer regulatory obligations from one agent to another.

Under the Money Laundering Regulations 2017, each agent involved in the transaction who is a supervised entity must carry out their own client identification and due diligence. The commission-sharing agreement should clarify which agent is lead-compliant and whether identity-check results can be shared between agents, and should include a provision requiring each party to comply with anti-money laundering obligations independently.

An unregulated introducer can receive a referral fee in principle, but the agent paying it must disclose the payment to their client under the Estate Agents Act 1979. If the introducer is carrying out estate agency work (such as negotiating on a client's behalf), they may require authorisation as an estate agent themselves. Taking referral payments without proper disclosure is a criminal offence.

The agreement should be clear whether the commission split is calculated on the gross commission (inclusive of VAT) or on the net commission after the lead agent has accounted for VAT to HMRC. Where both agents are VAT-registered, the payer should raise an appropriate invoice or credit note so that the receiving agent can account for the payment correctly in their own VAT returns.