Practical guide to COVID-19 relief for estate agents

Practical guide to COVID-19 relief for estate agents

There is so much written about COVID-19 relief measures for businesses that it is an ‘information overload’ for small business owners (and estate agents) to discern what is relevant in these difficult times. Here’s what you should know at present.

Cash flow planning for the next few months will be crucial to survive. Estate agents are already battling to plan their commission income due to all deeds’ offices being closed during the lockdown and once they reopen, working through the backlog of property transfers already in the pipeline will take some time. The rental side of most estate agents’ businesses is also under pressure due to the rapidly increasing trend of tenants not paying rent due to lack of income because of COVID-19 restrictions such as the current lockdown.

Much has been written on the COVID-19 relief measures for businesses over the last 10 days. For small business, it is an “information overload” and owners are struggling to establish what is relevant in these difficult times.

This article aims to highlight the more important and practical relief measures relevant to the average estate agency business.

Here is a short summary of what might help plan cash flow:

  1. Claim some employee cost from the UIF

At this early stage, this claim (from UIF) only applies to those workers who receive a salary or wage and excludes those (i.e. agents) earning commission only as they don’t contribute towards UIF. Apply for the Covid-19 UIF aid by completing and submitting the Temporary Employer-Employee Relief Scheme (TERS) forms, which you can obtain by sending a blank email to covid19ters@labour.gov.za. Your payroll administrator can assist with populating the employee data on the application forms.

The concern in the market is that these benefits will not reach the employer in time to pay the employees. Some experts have indicated that government may eventually allow refunds to employers where they have paid the April salaries and then claim it back form UIF. However, the industry still await confirmation of this. Until then, it is suggested to claim for all salaries (not just the unpaid), even if a portion is paid or some leave pay is paid out.

  1. Reduce your monthly PAYE payment – use the deferral offered by SARS

Tax compliant small to medium sized businesses qualify for the deferral of the payment of 20% of the PAYE liability (excluding UIF and SDL liabilities). SARS will not be able to impose administrative penalties and interest for the late payment thereof. The deferred PAYE liability will have to be paid to SARS in equal instalments over the six-month period commencing on 1 August 2020, i.e. the first payment must be made on 7 September 2020. In order to quality for this deferral, your annual turnover must not exceed R50 million for the 2020/2021 year.

Where owners can afford to take smaller salaries for themselves and defer part or all of their normal salaries this will further reduce the PAYE payment.

  1. Reduce your monthly PAYE payment – claim ETI from SARS

The Employment Tax Incentive (ETI) was and still is aimed at encouraging employers to hire younger and less experienced work seekers in the age group of 18 to 29 and who earns below R6 500. Normally, the employer could only claim the incentive during the first 24 qualifying months of employment (not consecutive months).

This ETI benefit have now been expanded for the period of 1 April to 31 July 2020 to now include workers up to the age of 65 who earns below R6 500 and it now includes those workers whose first 24 qualifying months period have already been claimed for.

The maximum amount of ETI claimable during the four-month period for qualifying employees have been increased from R1 000 to R1 500 in the first year of employment and from R500 to R1 000 in the second year of employment.

The maximum amount of ETI claimable during this four-month period for those employees who have surpassed the first 24 qualifying months is R500.

SARS will further fast track the payment of the ETI reimbursements from twice a year to monthly to allow compliant employers to have cash on hand as soon as possible.

  1. Reduce your bi-annual provisional tax payments

Whilst profits for the 2021 financial year will certainly be lower in most businesses there is relief from SARS for income tax. Most businesses have a February year-end. SARS has also granted a deferral of provisional taxes in order to assist with cash flow. The first provisional tax payment due by 31/8/2020 will be based on 15 percent (not 50%) of the estimated total tax liability. The second provisional tax payment due by 28/2/2020 will be based on 65 percent of the estimated total tax liability. The deferred payments will be due only by 30/9/2021.

  1. EAAB Fees

Although nothing has been published by the Estate Agency Affairs Board (EAAB) there might be the possibility of deferring annual EAAB fees which might include the fees for the annual EAAB audit. This will have to be discussed between the EAAB and Independent Regulatory Board of Auditors (IRBA) after the lockdown. Tax practitioners say they expect an announcement in this regard towards the end of April or early May.

  1. Defer loan repayments to the banks

The four major retail banks have offered some form of relief by offering payment holidays to small businesses for the next three to four months. Tax practitioners urge all to contact their individual banks for information in this regard.

By using the above relief options estate agents might be able to overcome the cash crunch of the next 12 months. The measures seek to defer expenses and, hopefully, when the deferred payment must be paid, the monthly cash flow have recovered to such an extent that the deferred payments can be done.

It is also important to engage and negotiate with external parties (suppliers, landlords, etc) to agree to appropriate funding arrangements for the next three to six months.

At this early stage, there are probably more questions than answers from small business owners and you are advised to look out for regular updates regarding all these relief measures, which are published almost on a daily basis.

Further relief measures

The following relief measures may most likely not be applicable to all but may be applicable to certain estate agents in exceptional cases:

  1. Debt Relief Finance Scheme

The Debt Relief Finance Scheme is designed and tailored to provide financial relief on current debts and repayments of small, medium and micro enterprises (SMMEs). In order to qualify for assistance for funding, the SMME must demonstrate the direct relation/connection of the impact or the potential impact of the novel COVID-19 pandemic on its business operations.

Applicants must be registered on https://smmesa.gov.za; and priority will be given to businesses owned by women, youth and persons with disabilities. There are other qualifying criteria as well. Other relief offered can be found at www.dsbd.gov.za.

  1. Sukuma Relief Programme

The Rupert Family and Remgro Limited have donated R1 billion to alleviate the impact of the COVID-19 crisis. The donation is managed by Business Partners who have set up a platform called the Sukuma Relief Programme. At the time of writing, this program was temporarily closed, as more applications had been received than the funds allow. Announcements on future applications are expected soon.

  1. South Africa Future Trust

The Oppenheimer family have donated R1 Billion to alleviate the impact of the COVID-19 crisis on the employees of SMME’s. Eligible employers apply for the scheme via their bank and provide a list of names of employees at risk due to COVID-19.

Currently it still stands that the nationwide lockdown will end at midnight on Thursday 16 April. It may be extended, as has happened in many other countries – we all hope that doesn’t happen here as the economic cost in terms of businesses closed and jobs lost will be devastating. Whatever happens, COVID-19 will still be with us and the need to implement measures that keeps the spreading of the virus at bay. All businesses therefore has to adapt and find new ways of keeping the wheels turning, even beyond lockdown.

 

Showing 17 comments
  • Lynette Dewing
    Reply

    After trying all means to get a relief no one has come back to me… i have given up.. spent hours and hours daily to speak or to communicate with FNB and Absa banks but with no success.

  • Bheki
    Reply

    True.We commission earners must also be considered for relief funding.

  • Anthony
    Reply

    What financial relief is there to commission earners? Due to the lockdown, which has been extended and more than likely will be again, estate agents are doing rentals and hence no commission income at all. Can one apply to a bank for a loan with a letter from the estate agency?

    • Helene Meissenheimer
      Reply

      Hi Anthony, the four major banks have all indicated that their clients may approach them if in need of payment holidays.

  • Albé Gouws
    Reply

    Estate agents will most probably only start earning commissions on new sales after September 2020 if lockdown remains at the present date of 30th April 2020 (effectively 4th May 2020 due to public holiday on 1st May 2020 and the week-end just thereafter). Why can’t the EAAB, our regulating body, not come to our aid? Surely there must be loads of funds available in the Fidelity Fund which we contribute to? The EAAB know who the compliant agents/agencies are and they know our financial position as we have to submit our annual financial statements annually in order to obtain FFCs. What about CPD workshops for 2020 for which I have already paid R2,500?

    • Bevin
      Reply

      I think we as estate agents should do a petition to government to include us for financial relief

  • Desiree Bedhasie
    Reply

    All these options are for the agency’s we agents work for. What relief is available for us and individual agents. Everyone is talking about SMME’s and those who contribute to UIF. All the individual only commission-based agents are not talked about/ featured in any of the conversation (impact of Covid-19).

  • Lorraine
    Reply

    It is true, we estate agents will only expect an income by September 2020! Please let me know if there is any relief funding provided for commission-based agents!

  • Toegtisa Fakier
    Reply

    As a matter of urgency, we as estate agents would like to know how must we survive in this industry if we are commission earners only.
    We are a business in business and nobody has even given us a thought.
    We also need to buy food and pay bills.
    Also, there are some of us that also need to feed our families.
    We pay loads of money to the Estate Agency Affairs Board for CPD points and Fidelity Fund Certificates.
    We are professionals that have been neglected all these years by the EAAB.
    We have to wait so long to get our hard-earned money and now the Deeds Office and municipalities close.

  • Vicky Williams
    Reply

    I have worked extremely hard these years being an estate agent paying my tax on time regularly. Please assist us during this difficult time. I have deals waiting for the masters and deeds office to resume, whether they will still be relevant remains to be seen.

  • James
    Reply

    Hi it is really sad that almost every industry has been taken into consideration during this covid 19 period. But nothing has been said about real estate commission earners. What are we supposed to do? We have accounts and we need to support our families. The EAAB needs to come up with a plan to get a relief fund for estate agents. We are also tax payers and we should be considered by government as well.
    I pray someone can help in this regard.

  • Reply

    WHEN WILL THE DEEDS OFFICE OPEN AGAIN PLEASE!
    THIS WILL ASSIST US TO GET OUR TRANSACTIONS REGISTERED

    • Helene Meissenheimer
      Reply

      Hi Willemina, the reopening of the deeds office has been added to the Level 4 draft framework, government will confirm during this coming week what government departments and businesses are going to be allowed to reopen from 1 May.

  • Marlene Surender
    Reply

    As an intern estate agent, please let me know if there is any financial support that can be obtained from the government.

  • Joanne Attenborough
    Reply

    I believe sales agents should come together to bring a mass petition to the EAAB for relief funding. The industry brings billions in tax towards state coffers annually. The EAAB can lobby government on our behalf if they are unable to offer any financial assistance from the Fidelity Fund. It’s outrageous that the EAAB has completely neglected to reach out to its members during this unprecedented pandemic. There are many agents who have no sales in the pipeline due to sales being cancelled and delayed indefinitely, many bonds not being granted due to applicants losing jobs, having salary cuts etc. The simple fact is that we will remain in lockdown until level 2, with no way of knowing when that will be. Add to that the depressed economic market we as real estate practitioners will be entering once we are allowed to go back to work, it most likely will result in any potential income we are able to earn, taking possibly at least 6 months from now, to reach us. 99% of sales agents will NOT survive staying in this industry if faced with this scenario, which is definitely not an unrealistic estimation of how long it will take for any bucks to reach our bank accounts.
    The reality is that by the time we do get to close our first sale after lockdown, we will be so deep in debt due to NOT having been able to stay on top of our monthly expenses that it could take us years to recover if we don’t go after some kind of financial aid NOW.
    I suggest that we NOT wait any longer for the EAAB, Rebosa, our agencies or government to reach out to us with a plan, we may just end up waiting in vain. We are just as entitled to financial aid as any other tax paying worker in South Africa, but we have been completely overlooked – blocked – shut off from benefiting from any offerings of MEANINGFUL financial aid/relief. SPEAK OUT! TAKE ACTION! COLLABORATE! Estate agents need to UNITE to save ourselves, each other and our dependents, let’s be that VOICE that speaks out to protect our hard earned careers and incomes.
    Email me at attenborough.joanne@gmail.com Send me your suggestions as to how you think we can make this happen quickly and what skills you can contribute to petition the EAAB and/or government. Thank you.

    • Odette
      Reply

      We need to bring the EAAB under a lot of pressure, they collect huge sums of money and offer very little back in return for those fees. To add to my strife as a single parent how do I manage to keep my family afloat. The EAAB need to come to this party and give a little back. #justmyopinion

  • Llewellyn
    Reply

    I think we can all agree that the EAAB is a useless organisation that is not able to look out for any real estate agent in this country, pathetic work ethic, and communication from them even before Covid-19.

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