Will the PPA give black estate agents a bigger slice of the cake?

Will the PPA give black estate agents a bigger slice of the cake?

MAIN IMAGE: Mashilo Pitjeng, managing director of TseboREAL Asset Management; Xoliswa Tini, CEO Xoliswa Tini Properties

To succeed an estate agent needs three things, the right attitude, access to stock and to know the right people in the real estate industry. The first is a person’s own responsibility, but how can the regulations of the new Property Practitioners Act address the other requirements?

Much has been said about the need for more rapid and visible transformation of South Africa’s lucrative real estate industry. The often-quoted statistics speak for themselves – in contrast to the country’s demographics most estate agents and it’s top leadership are still majority white. This despite millions of rands spent, on training and recruiting programmes.

Now all hopes are pinned on the new Property Practitioners Act as the vehicle towards effecting transformation in the real estate sector. The PPA will replace the Estate Agency Affairs Act, 112 of 1976.

At a recent virtual town hall meeting hosted by the National Property Practitioners Forum (NPPC), this was the question posed. It is a matter that worries veteran real estate doyen Xoliswa Tini, founder and CEO of Xoliswa Tini Properties, the first local real estate franchise owned by a black woman. As one of the speakers, Tini said while she welcomes the changes that the new legislation will bring in terms of exemptions on having trust accounts etc, however, added she is worried that real transformation will not be addressed properly. She said the legislation provides the bones, in other words the structure within which to operate and that is good but black agents also want the “flesh” with reference to the stock and the profitable relationships.

Sharing the cake

The concept of owning real estate as a financial investment is relatively new for black people in South Africa. Prior to 1994 they were not able to own let alone practice in property. Since 2006 that picture has changed dramatically. TPN statistics indicate that for the last couple of years most residential property are to young black women. According to Mashilo Pitjeng, managing director of TseboREAL Asset Management, since 2006 black property buyers account for up to 90% of activity in the property market up to date.

However, as black estate agents claim they don’t have equal access to property stock, Tini says this is one of the reasons why black estate agencies fail. She referred to the oft complained about practice of developers to be exclusive about the estate agencies they allow to operate in their housing schemes. “Transformation is about how we restructure the industry in such a way that we can all share the cake,” says Pitjeng. As board member of the Property Sector Charter Council, Pitjeng was also actively involved in the drafting of the new Act. He is also chairperson of the policy and advocacy committee of the South African Institute of Black Property Practitioners (SAIBPP).

Property Professional asked Pitjeng how the Act’s regulations could be structured to open the way for more black property practitioners to gain access to a greater slice of the available stock on the property market?

Access to the market is key

“All we need is stock and to form that relationships,” said Tini. According to Pitjeng access to market is about the capability of any company to efficiently enter a marketplace and being enabled to sell their goods or services with minimal barriers. Accordingly, he says the Act should be designed in such a way that it minimizes the barriers of entry into the property sector for entrepreneurs and aspirant business owners. This is done by making sure the regulations and licencing rules, that are needed to be followed to trade or practice as a property practitioner, are process efficient and less financially burdensome.

Incentives. Pitjeng makes the suggestion that some form of tax or monetary rebate can be used as an incentive to encourage consumers to choose practitioners or businesses that are black-owned. For example, through the regulations a certain percentage of monies or taxes payable on property transactions can have a rebate if a transaction was concluded through a black practitioner or conducted by a black-owned business.

Transformation Fund: The Act provides for the establishment of a Transformation Fund within six months after a new regulatory body, the Property Practitioners Regulating Authority (PPRA) is established to replace the old Estate Agency Affairs Board (EAAB). The Fund will be funded by the Fidelity Fund, government grants, fees and fines paid by property practitioners as well as monies and investments donated or bequeathed to the PPRA. The Fund will be used for the advancement of property practitioners from disadvantaged backgrounds by way of training, development and education of the general public.

Pitjeng says in his opinion the Fund should not be used for skills training, particularly candidacy training, as there is already a learning and skills development environment in existence for this purpose. “The Fund should focus on supporting practitioners to become business owners (principals) and help emerging business to scale up (grow).

“We know that becoming a property business owner require business skills, human and financial resources, and development support (particularly in managing licencing, compliance and other forms of regulatory and legal requirements) AND emerging businesses require primarily access to markets and injection of funding to gear up to access larger markets and to grow the business.”

The Fund should, thus, primarily focus on supporting the development of business owners in the value chain and making access to market feasible, says Pitjeng.

The draft regulations to the Act was published in March 2020 but, due to the Covid-19 restrictions imposed, the commentary period was extended till 20 November. It is expected that the PPA may come into effect early in 2021.

Showing 11 comments
  • Peta-Lee Smith
    Reply

    The minority group is really a threat to the majority.
    My opinion, there should be equal opportunity for all, not just one race.
    Racism and apartheid reversed.
    BEE is a failed policy.

  • Sunet Scheepers
    Reply

    Some of the most important skills a successful estate agent needs is to be able to work hard, long hours if necessary, to build trust and relationships. Nothing can be given to you. If you struggle to get stock, its definitely NOT because you’re black. Some of the best and most successful estate agents I know are black. Because they work hard and smart, are constantly building relationships & trust. How can you give one buyer discount and not the next?

  • Ray
    Reply

    Will a conveyancer also be allowed to act as an estate agent and are the requirements also the same?

  • Louis
    Reply

    This article is written by the wrong people … people who still stare into the past. All estate agents are equal. Everyone should go through the same qualification process as it has been for years. I work with black agents and they are professional and I never heard that people don’t want to give them stock because of their color. This article is race-based and should not even be published. I have never met racist sellers and they are all happy to deal with any agent, irrespective of color.
    Why can’t people like Pitjeng not rather encourage leadership for all and accept everyone is equal instead of trying to force people through taxes to rather buy from black property practitioners.
    We are all South Africans and all deserve to be successful, so what you put into your workload every day is what you will get out, not by sitting back and expecting everything on a silver platter.
    Most estate agents are not racist, it is again people that think they are in power, that want to create division in a system that works.
    This is written as my personal opinion.
    Remember: You don’t get results by focusing on results. You get results by focusing on the actions that produce results.

  • Francois
    Reply

    The fund should support all estate agents. New job opportunities linked to the real estate industry should be created to offer more job opportunities for all South Africans due to the high rate of unemployment amongst all without excluding certain groups.
    Regulations should also be enforced to protect the business of the real estate agent from private sales and rentals which is currently taking away a lot of the cake.
    Regulations should also be put into place to force potential buyers and tenants to reimburse property practitioners for the time and cost to show properties due to the fact that there is no obligation on viewers to purchase or rent properties showed to them. An obligation should also be put onto sellers and landlords not to opt out of open mandates without penalties paid to the appointed agents for their time, labour and cost invested into marketing and showing properties.

  • Victor
    Reply

    Disgusting and racist!
    Work hard like all agents and stop playing the race card!

  • Wilna
    Reply

    I agree it is racist! Work hard like everybody else and stop expecting everything falling into your lap!

  • Russel Mathebula
    Reply

    Long overdue there’s too much monopoly by one race assisted by the toothless and useless African National Crooks government…

  • Dave
    Reply

    As a property practitioner I can unequivocally say racism is a huge factor followed by incompetence AND general laziness of my colleagues. If you go and queue at your local municipality you will see a lot of adult white people disappointed by poor administration of their electricity/water accounts. These are the people who own the lion’s share of real estate. It’s impossible for them to hire us black agents due to the frustration from poor service from a black controlled government. This same thing happens if you go to the Sandton EAAB offices too.

  • Malcolm
    Reply

    The use of the Fidelity Fund to bolster the Transformation Fund is a bad option. The Fidelity Fund is there to protect the property owners from malpractice and not to offer a leg up for underprivileged estate agencies. Training? I can understand but used for setting up business premises etc is highly dangerous. I foresee luxurious offices with fancy motor cars in Santon office park – all of which goes down the drain when the business fails. Who then repays the Fidelity Fund? The industry has long tried to find a way of accessing the money within the Fidelity Fund and it should be resisted again.
    Possibly a loan at normal interest rates for the emerging agencies might be a possibility, funded by the government department and not the Fidelity Fund.
    The industry is transforming and there are now many agents from the underprivileged group that are making a name for themselves as respected agents. To force this issue is to create chaos and further distrust in the industry.
    In the main property owners like to work with someone they personally know, perhaps went to school with. This is their life’s work and future that are on the line they are not going to trust just anybody.

  • Sharon Mckeown
    Reply

    Whether you are black, white or pink it doesnt matter. Finding stick is hard for everyone. It about what you put in, you get out. I’m also a new intern and white and definitely don’t benefit on the basis of my skin colour. You need to put in the hours of canvassing, cold calling making new contacts and building relationships. Good luck to ALL

Leave a Comment

Start typing and press Enter to search

X