Tough challenges await new property bill

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In 2017 only 5% of property practitioners were black, Indian or coloured, down from 8% in 2013 – the lucrative property sector, despite efforts made so far, is still far from being more reflective of the South Africa demography, the question is whether the new Property Practitioners Bill, once passed into law in its current form, will succeed where other strategies to transform the sector have failed.

That is arguably the main issue facing the Portfolio Committee on Human Settlements who have to report to Parliament on the bill. Parliament referred the bill to the committee on 15 June.

The committee was briefed on the bill by the Department of Human Settlements (DHS) on Tuesday 26 June. Committee chairman Nocawe Mafu said the briefing was called during the recess period of Parliament because this is such an important piece of legislation. She hopes to have approval from Parliament to run advertisements inviting public submissions this weekend, so the committee would have all the submissions when they come back in August.

The main objective of the new bill is to transform the property market to be reflective of the South African demography explained Khwezi Ngwenya, DHS Chief Director: Legal Services. He said the new bill will replace the Estate Agency Affairs Act of 1976 which is “very old” and don’t make provision for the regulation of all the new role players that have since entered the property sector.

The new ‘long’ definition of a property practitioner therefore try to address this issue by including estate agents, rental agents, mortgage originators, property inspectors, valuators (in certain instances), property managers, bond regulators and more. Ngwenya said it is critical to include everyone in the property industry whether selling, purchasing, lending, renting etc as this is in the first place in the best interest to protect the consumer, but also to enhance corporate proficiency and make the industry more professional.

A transformation fund, administered by DHS, as well as incubation programmes will be launched to assist struggling property practitioners from the former disadvantaged groups to establish themselves in the property sector. Ngwenya said the fund will aim to promote economic transformation by providing finance for property ownership especially to young people and women from the mentioned groups. There will be qualifying criteria to protect against possible abuse by for example established agencies.

An independent ombudsman office in the department to deal with consumer complaints. Ngwenya said complaints about the EAAB could be referred to this ombudsman. Inspectors will have extended powers to be able to inspect properties and seize documents should there be irregularities. Mafu questioned whether it is necessary for the property sector to have a separate ombudsman as there are already others within the DHS. “Why so many?” she asked and added this is an issue the committee will have to consider.

The Estate Agency Affairs Board (EAAB), rebranded as the Property Practitioners Regulatory Authority, will be the regulatory authority once the bill is passed.

The committee heard at the briefing that the majority of previously disadvantaged South Africans are not really participating in the property sector, valued at approximately R6 trillion. Mafu said the average age of the few non-white property practitioners is 57 and most are male, youth and women are mostly excluded. She said the aim of the new bill is to level the playing field for those who want to be part of it and ensure there are no impediments hindering them.

The committee raised the point that an “alternative property market” came into being because of “structural barriers” under the current legislation such as the requirement to pay to write exams.

DHS Director Neville Chainee said the proliferation of unregulated operators is a direct consequence of the lack of transformation in the sector. That is why they want to make the sector more inclusive and better regulated he said.

The committee raised concerns whether measures were being put in place to involve the “alternative sector”. They were told that the EAAB already has an amnesty programme ready to be implemented to ensure those that are operating “outside the net” are brought inside. The low-income rental sector will also be brought under regulation.

The EAAB further intends launching a research programme in July to determine the reasons why so many people feel compelled to operate illegally.

The new bill will force property practitioners to participate in the trust fund, but emerging or struggling estate agents will be able to request the DHS minister for exemption from this costly provision.

Mafu suggested that an academy, funded by the transformation fund, for the training of property practitioners from previously disadvantaged communities also be considered as a means to advance transformation in the sector.

In conclusion Mafu said the advert to invite public submissions could be out by this weekend or mid-July, depending on when approval is received. The period for submissions will be one month. She said a public summit is also needed possibly at the end of August or in September.

“We must tell everybody to participate,” she said adding that this bill is one of the most important pieces of legislation currently before Parliament.

Find out more about the Property Practitioners Bill

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