Banks also ask that real estate sector reopens
MAIN IMAGE: Bongiwe Kunene, managing director Banking Association of South Africa (BASA)
The Banking Association South Africa (BASA) has also added their voice to the rising crescendo asking government to reclassify the real estate sector as a low risk sector and allowed to operate, subject to the necessary health and safety measures, during level 4 of the lockdown.
Highlights from the submission
- The real estate market contributes approximately 5% to South Africa’s GDP
- The interdependent real estate eco-system employs approximately 150 000 to 200 000 people, most of whom are earning no income at present during the COVID-19 lockdown
- Covid-19 restrictions could be in place for up to two years – this together with adverse economic conditions will have a marked negative impact on the recovery of the real estate industry
- The real estate industry is technologically advanced and able to operate fully while adhering to strict health and safety requirements
- The real estate industry can only operate effectively if viewed as a holistic eco-system
The submission by the banks follows shortly on previous submissions asking for either a reopening of the Deeds Office (which was granted in Level 4) and/or the reopening of the property sector made to government by major industry representative bodies which include the newly-launched National Property Practitioners Council (NPPC), the Law Society of South Africa (LSSA), the Black Conveyancers Association (BCA) and the Mortgage Origination Regulatory Council of SA (MORCSA).
Related reading: Property sector speaks with one voice
In their submission made to the National Command Council last Thursday 7 May BASA’s managing director Bongiwe Kunene says the association fully supports the council’s risk adjusted strategy to reopening the country’s economy. However, given the economic importance of the interlinked real estate eco-system and the high possibility for this sector to operate while adhering to strict hygienic and safety regulations, it is strongly recommended that the council review their decision to classify the real estate sector as medium risk and therefore only able to reopen fully in level 2.
One of the points made in the submission was that a partial reopening of the Deeds Office only, still leaves new home-owners ‘trapped’ as they can’t move to their new home after the property transfers have been completed. They need the services provided by the interlinked real estate eco-system which includes intermediaries such as estate agents and mortgage originators, service providers (construction, tradesmen, compliance certificate issuers), municipalities (clearance certificates, plans), valuers, conveyancers and furniture removal companies. Most of these sectors are currently still classified as only able to operate fully during lockdown level 2 – which could be weeks away, or even months for areas with a higher rate of COVID-19 infections.
The Banking Association believes there is a need to unlock the real estate sector now, together with the reopening of the Deeds Office. The reasons for this include the economic and social implications of an extended lockdown of this sector. In a recent survey among more than 150 000 estate agents more than 80% of them indicated that their business would have to close if they remained unable to operate for another month. In addition to the loss of jobs in the residential real estate sector, where most agencies are small family businesses, thousands may also lose their jobs in property-related industries such as the construction sector and other property service providers.
According to the submission the various representative bodies have made ‘a plethora of proposed restrictions’ which will ensure minimal direct human contact, social distancing, use of personal protective equipment, sanitising etc. Estate agency offices can remain closed. There will be no need for show houses as most estate agencies are technologically advanced with virtual viewing of homes well established and most agents working remotely from home.
The Banking Association makes the argument that should the real estate sector and related sectors such as construction, be able to adhere to a definitive set of restrictions to limit COVID-19 infection, then they should be able to trade.
In conclusion, mention is made that in other countries such as New Zealand and Australia, it has proved effective to allow estate agencies to operate during their lockdown period while subject to a strict restrictive regime.
The full submission can be read here.