‘Big areas’ with new property bill

Sep 6, 2018 | Features

“The EAAB can’t even manage the around 50 000 estate agents, how are they going to manage a bigger body of professionals?”

South Africa’s formal property industry must open up for black property practitioners and the new Property Practitioners Bill is how government hope to do just that, but this week’s shareholder engagement session in parliament showed the Portfolio Committee on Human Settlements there are big areas in the bill that they have to look at.

MP Nocawe Mafu chaired the shareholder engagement session on the bill on Tuesday 4 September. She concluded by saying the session had highlighted big areas that the committee will have to look at while reviewing the bill. More shareholder engagement sessions are to follow around the country in September before the committee will get down to working through the bill “clause by clause” she promised.

The committee heard from several speakers that there are currently thousands of unregistered black estate agents and many had concerns that the new bill does not do enough to open pathways for them to enter the formal property market. The first to do so was Alison Tshangana, head: research and market intelligence with the non-profit Centre for Affordable Housing Finance in Africa who said: “The bill focuses too much on changing profile instead of extending to the dearth (‘lack’) of registered estate agents currently operating in informal settlements. Currently unregistered estate agents are filling a gap in informal settlements. We need to clear a pathway for informal agents to become formal agents. We need to determine where informals are operating and need methods of monitoring this,” she told the committee.

Next was Mandisa Sinuka from the Black Property Practitioner Association. “It is a reality that most agents in townships are not registered,” she said. According to her this is due in part to many lacking the required educational qualifications, as set by the Estate Agency Affairs Board (EAAB). “We feel it (transformation) would be meaningless if the issue of education isn’t addressed,” Sinuka said.

Alongside this issue was the widening of the definition for property practitioners in the new bill on which Sinuka expressed concerns that the regulatory authority would not be able to cope with this. “The EAAB can’t even manage the around 50 000 estate agents, how are they going to manage a bigger body of professionals?” asked Sinuka.

Jan le Roux, CE of Rebosa, also said the new scope of the bill is too wide with many included as property practitioners who don’t belong there. He said this will be a step backwards as the regulating authority will have difficulty in coping with all that. In light of the current issues the industry has with the EAAB such as. allowing thousands of candidate estate agents to operate illegally without the required supervision, Le Roux felt it inappropriate to burden the board with more responsibility.

Le Roux said transformation is imperative and transformation without growth will not be enough. He expressed concern that there is not much in the bill that will enhance the opportunities of current and future estate agents/property practitioners and very much that will actually hinder that. Then he listed various ways in which the bill presented steps backward and forward.

Mafu commented that the property industry is worth R7.4 trillion with only an estimated 4% of black people participating in this sector. She said change had to happen to which Le Roux replied that he is not about protecting the status quo or big business and that he is very positive about changing the act.

“One part of transformation is making sure big business adhere to BEE, another is making sure small businesses can be started,” says Le Roux reminding the committee that some of the current big agencies like Pam Golding started from homes. He expressed concern that the bill will be driving small agencies into the ground and into the arms of big agencies. “That’s why we are against all having to have a trust account. Why must a principal black agent pay the same as an agent for Pam Golding for CPD?”

Tshangana and Sinuka also expressed concerns that the bill placed too many regulatory requirements on agents. Sinuka said when the EAAB brought in the requirement to have a trust account many black agents couldn’t afford this and had to close shop.

“About 99% of black agents don’t use trust accounts,” said Leo Mlambo of the National Property Forum, a section 21 company representing a 1000 agents across the country he said. He proposed that businesses that make less than R1.5 million per year should be exempted from the requirement for a trust account to be a registered agency and that another way for auditing be found.

“We realise B-BBEE is very important, however it should not be our main aim. What about the young unemployed? We want to ensure when we bring our children in to train, it is not (for others) to make money so that they are doing it for one year and then they are on the street,” Mlambo said.

Mafu asked Mlambo for his opinion on the success of training initiatives such as the EAAB’s One Learner One Agent program. Mlambo said he felt it had failed to bring about substantial transformation and needed to be structured differently. He says out of the 50 interns he took in through the program most dropped out with only 4 who are today still working for him as agents. He afterwards explained to Property Professional that most left when they found other employment as they battled to pay their transport and support their families with the stipend of R1 500 per month. He is also not impressed that the EAAB hasn’t issued certificates for the students that completed the programme with him.

Mlambo proposed structured training with monthly financial support and leads on government property developments. He said government shouldn’t be the only source for the financial support, a percentage could also come from the fees paid to the regulatory body he suggested. In response to Mafu’s question if he thought the big agencies have done enough to further transformation, Mlambo said the big companies has resources that can’t be shied away from.

Wiseman Masilo, chairman of the Black Property Practitioner Association proposed that the bill allows for an amnesty period for unregistered agents. Mlambo said that’s fine but reminded all that there had previously also been amnesty periods. There eventually must be policing of the bill otherwise it will be useless he says.

The government authority for training and disbursements of grants to the real estate sector, the Services Seta also made a presentation through a legal firm they contracted, but Mafu expressed discomfort with this and told Pam Snyman, Services Seta board member and chairman of the real estate chamber to convey to the board that they need to come again as Services Seta and talk with the committee.

The South African Council for the Property Valuers Profession asked that property valuers be excluded from the bill and the Banking Association of South Africa asked that a distinction be made between property mortgage valuers who are working directly with the consumer and mortgage property valuers. The latter they want to be excluded from the bill. The South African Institute of Chartered Accountants proposed that managing agents should also be included in the bill.

Mafu at the end of the session thanked all the stakeholders for their contributions. “South Africans must talk to each other, even if it makes us uncomfortable, it’s the only way we are going to move forward,” she concluded.

The proposed dates for further shareholder engagement sessions in September are: East London (18 September), Durban (20 September), Johannesburg (21 September), Pulekwane (26 September) and Mangaung (27 September) – take note these are proposed dates. The programme has not been finalised. Direct enquiries to committee secretary Koliswa Pasiya-Mndende on 021 403 3725 or 083 709 8495 or email kpasiya-mndende@parliament.gov.za.

Related reading: Full statement by Rebosa

Tough challenges await new Property Bill

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