The real impact of the Property Practitioners Bill
Richard Stevens paints a bleak picture about the potential impact of the Property Practitioner’s Bill on his small real estate agency
We are a small, black real estate agency and have been operating our business, sheridaproperties, since October 2011. My wife, Sherida, has been an estate agent since 2003, and has obtained a Fidelity Fund Certificate every year since. I am a full status estate agent (Professional Practitioner in Real Estate) and my wife is the Principal Estate Agent (Master Practitioner in Real Estate).
We have consistently aimed to comply with legislative and continuing professional development requirements in our industry, such as the Estate Agency Affairs Act, the National Credit Act, Financial Intelligence Centre Act, SARS and other business and professional industry compliance requirements. We wholeheartedly support the professionalisation of the industry and reasonable compliance measures by a regulatory authority, such as the Estate Agency Affairs Board, to regulate the conduct of property practitioners for the benefit of consumers in the property sector.
The EAAB is not, however, as responsive to property practitioners’ queries. In February 2017, we were randomly selected to complete an EAAB self-assessment and submitted all relevant documentation requested. In reality, this was an audit. I sent the requested documents twice to the relevant EAAB email address. After obtaining two reference numbers from the EAAB call centre, I am still trying to get the EAAB Audit Department to acknowledge receipt of the self-assessment and supporting documents it requested.
In June 2017, through our auditor, we successfully submitted 2017 year-end unqualified audit reports and audited financial statements to the EAAB which were due by 30 June 2017. We strive to comply with real estate industry training, CPD requirements, and all other legislative requirements diligently. We pay VAT, PAYE, and provisional taxes when required. We maintain detailed trust account records, FICA records, and financial records. At significant cost, we source the most professional legal, accounting and auditing firms to ensure we comply and operate professionally.
Sherida and I attended the Department of Human Settlements’ public participation hearings in Boksburg in July 2017. We left the forum dejected and demotivated about the viability of our small business in the real estate sector. We did not get the sense that the public participation process would yield concessions from the Department of Human Settlements on the proposals or that the moderators were listening, as the moderator was merely defending and rationalising the implementation of the proposals and the proposed legislation. But the fact remains that some of the proposed additional compliance requirements will place an onerous financial and administrative burden on our company, should it be enacted, specifically:
- BEE Certificate requirement (which will require reporting, management of BEE ownership, management, skills development metrics and the cost of obtaining it and possible exclusion from obtaining a future FFC if we don’t comply);
- 10-year financial records retention;
- Tax clearance certificates – if for any reason we cannot obtain a tax clearance certificate (for example due to a dispute with SARS or SARS error in a given year, Fidelity Fund Certificates will likely not be issued for our company or ourselves. This would impact our ability to practice and ultimately affect our livelihood.)
As it is, the economy has made trading conditions difficult in our industry. And, some of these additional proposed compliance requirements in the Property Practitioners Bill do represent a threat to the viability and growth of our company. After the forum, it was the first time we analysed our business with all this in mind. We realised that our small black real estate business may not be sustainable or profitable should these additional compliance requirements come into effect. Although poised to grow, we are not going to hire real estate agents and administrative staff until we fully understand the impact of this legislation.
If the intention of the government is to grow small businesses and employment in the real estate sector, then the impact of some of the compliance proposals in the Property Practitioners’ Bill seem to run against the government’s policy.
By Richard Stevens, sheridaproperties
Do you agree with Richard? Tell us what you think over on our Facebook page.