Property Bill: Why you should be concerned

Dec 6, 2017 | Property News

“Industry insiders say planned legislation will stifle the industry and drown agencies in red tape”

The Property Practitioners Bill is set to heap new burdens on agents, making it tougher to operate, especially for newcomers. Industry watchers say the bill, which at the time of publication was still to be submitted to the Cabinet for approval, has squandered an opportunity to trim red tape. Agents will have to dedicate more time to compliance, they say.

The bill brings a host of other professionals under the same “property practitioners” net as agents, including bond originators and property assessors. Lew Geffen Sotheby’s International Realty southern suburbs co-principal Arnold Maritz says this will be confusing as the bill is “at best ambiguous and at worst extremely disquieting”.
It will stretch the resources of the Estate Agents Affairs Board (EAAB), meaning more delays in obtaining fidelity fund certificates, says Durban director of training for Wakefields Estate Agents Lindsay Gartrell. No reliable estimate is available on how many new practitioners will result, but the figure is expected to run into the many thousands. Gartrell has called on the board to “look seriously at whether it has the manpower” to cope. Jan le Roux, chief executive of the Real Estate Business Owners of South Africa (Rebosa), fears dealings with the board will become “infinitely worse”.

NEW PRACTITIONERS

Legal adviser to the board Jan Tladi cannot say how many new practitioners will be created. “However, the board is implementing structures and systems to cope with the potential increase.” Tladi says the bill sets out time frames for the issuing of certificates. Disqualified practitioners will be able to appeal to a property ombudsman for relief. The ombud will provide a procedure to appeal against decisions taken by the board, Tladi says. “This includes service-related complaints against the board, for example, and the issuing of fidelity fund certificates.” The high court can review decisions by the ombud.

Le Roux is concerned that the bill only mentions lodging a complaint with the ombud “against a property practitioner”. However, Tladi insists this is a “restrictive and narrow” interpretation and not the intention of the law.
The bill recommends that the board be replaced by a Property Practitioners Authority, a move chairman of Sotheby’s International Realty Lew Geffen says is “the equivalent of putting lipstick on a sow rather than making a real difference to efficiencies and playing the supportive role”. Geffen says the bill fails to roll back regulations, which “creates an industry entry barrier to 99% of the population, regardless of race or creed”.

UNCERTAINTY

There is no certainty when the bill, which replaces the 1976 Estate Agency Affairs Act, will be made law, nor of its final form. It was gazetted for comment on March 31, with public hearings held in the
nine provinces in June and July. Tladi says it has been referred to the Office of State Law Adviser for final certification. It will then be sent to the Cabinet for approval and thereafter to Parliament, possibly “around October”. The National Assembly and the National Council of Provinces will debate the bill before the President can sign it into law.

Department of Human Settlements spokesman Tuso Zibula has offered no comment on whether the Cabinet or Parliament will have time to deal with the bill this year. Le Roux and other agents have pinned their hopes on lawmakers sending it back to the department for a rethink, particularly provisions which give the new authority wide powers to disqualify agents and agencies from being issued fidelity fund certificates. Grounds for the denial of certificates include being found guilty of unfair discrimination, having no BEE or tax clearance certificates, and being on the national Treasury’s tender defaulter list. Le Roux says the bill requires each of South Africa’s about 35,000 agents to have a BEE certificate – not only the agencies that employ them. However, it fails to specify which certificate.

TAX CERTIFICATE

Nicole Mullins, a lawyer at the South African Real Estate Academy, says the tax certificate requirement will prejudice agents in legitimate disputes with SARS. The tender defaulter section, too, is problematic because it disqualifies not only the directors of a business, but shareholders, says Mullins.

Another area of concern is the sweeping powers granted to inspectors to search premises and seize a wide range of material. Agents are worried about a provision in the bill that allows search and seizure without a warrant, but Tladi confirmed that changes will be made to the bill. “Inspectors will be required to obtain warrants for search and seizure,” he says. However, “random inspections to determine compliance” will be allowed, provided “there are no criminal ramifications”. The bill also bars agents from encouraging clients to use a particular service provider, such as a mortgage originator or a firm of conveyancing attorneys. Commentators say the old act is more reasonable as it forbids agents from encouraging the use of a provider, but adds the rider “without just cause”.

FRANCHISOR LIABILITIES

A further change that has raised concerns is the inclusion of a clause that holds a franchisor liable for contraventions by a franchisee. Mullins said this is likely to change relationships and agreements between the parties. Geffen calls it “totally unacceptable” and completely unfair. “Our head office salary bill would double overnight if we had to play policeman to every franchise,” he says. “Consumer-affected contraventions are exactly why we have paid so much into the board’s fidelity fund for so many years.”

Record-keeping is also set to become more demanding as agents will be required to keep documents for 10 years. “SARS says five years. Why do they say 10? And (the bill) says every shred of paper. Every business card. Every mail drop,” says Le Roux. He says the requirement makes it “almost impossible” for new entrants to the industry to comply.

“It’s totally mad. This clause will make us all criminals, guaranteed”. Asked to put a rand value to it, Le Roux is at a loss for words. “It’s a cost. It will cost so much just to (answer the question). I don’t know where to start.”

Words: Matthew Hattingh