We need a new deal

We need a new deal

MAIN IMAGE: Joseph Sakoneka, CEO of the National Property Practitioners Council (NPPC)

Danie Keet

The real estate industry in South Africa is one of the sectors in the economy that has not transformed since the dawn of democracy. Only about 24% of all the ±40 000 estate agents registered today, are black property practitioners.

This is the view of Joseph Sakoneka, recently appointed CEO of the National Property Practitioners Council (NPPC), South Africa’s largest property sector trade association.

Sakoneka said the objectives of transformation are to ensure that the real estate industry’s member profile is reflective of the demographics of the Republic of South African wherein 80% of the population comprises of black people but less than a quarter of black people, about 24%  or 9 893 of the 40 949 registered estate agents, are active participants in the industry.

“Even worse, the majority of the 24% that are in the space do not own their own property firms but rather work for established big brands as either interns or full status agents.

“The second objective of transformation in the real estate sector, closely linked to the first one, is to move black people from the peripheries of the sector where they are involved in the lower end of the property market into the higher end of the market through enterprise development. This encompasses amongst other interventions the provision of funding for existing enterprises to aid access to markets and for training programmes to ensure that competent and qualified black property practitioners are in the space.

“To reach these goals, both the industry and the EAAB need to work together towards a common goal as opposed to operating in silos. The industry practitioners will bring expertise and insights to the table and the regulator, based on those expertise and insights, can then formulate transformation programmes that are backed by insight and responsive to industry needs. This approach will inevitably lead to meaningful transformation,” Sakoneka said.

He argues that the other important factor is for the transformation initiatives to focus on capacitating the existing black practitioners as opposed to focusing on recruiting a huge number of new interns to join the existing and well-established big brands. In the future, capacitated black practitioners can then be used to anchor transformation programmes. This approach envisages that the focus should be on adequately training the trainers (T-T-T).

Sakoneka said the main drivers to achieve transformation will be funding and the will of the existing practitioners to train others, focus on training and education both for existing practitioners and new entrants.

“There is no company structure per se that will aid transformation. Black property practitioners should take transformation seriously and transform the sector as no one will do it for them or on their behalf. Government programmes such as the EAAB’s One-Learner One Estate Agency is one intervention that is currently underway but has not really been successful. Other than that, there is not much that is being done.

“Efforts from EAAB have not yet yielded tangible results that gained traction. Of the new intern estate agents that were recruited when the One-Learner, One-Agency programme was introduced, there is no report as to how many are still in the space. There is no indication as to what the retention rate in this regard is. What is a known fact is that most of the interns that joined the programme left the industry to others where there is better management, coordination and benefits.

Sakoneka said other agencies involved in the process to transform the estate agency profession include the National Property Practitioners Council (NNPC), which represents industry member bodies such as IEASA, REBOSA, SAPOA, SAIBPP,  NAMA, SAIA, NPF and SABBA and many others that will soon join the NPPC.

“Existing successful black firms must be identified and provided with funding from the property sector transformation fund (PSTF) on the submission of acceptable business plans to facilitate growth. Such firms have a huge growth and employment potential. The funding of marketing costs for existing and successful black property practitioners would level the playing fields and enable Black practitioners to scale” Sakoneka said.

He says it is important that extensive communication regarding the new educational requirements should be undertaken and that agents who want to complete their NQF4 studies should do so but equally, those that do not need to do so based on their current competence should also be allowed to write their PDE exams in order for them to start operating as estate agents sooner.

“Property practitioners should be allowed to sit for PDE without having to acquire both NQF 4 and 5 before they could sit for PDE 4 and 5 respectively. The Minister should thus discontinue prescribing both NQF 4 and 5 as prerequisites for PDE 4 and 5. Registered interns must be given the opportunity to write the PDE exam which should be funded by the Property Sector Transformation Fund (PSTF).

Prospective property practitioners should be permitted to enrol for the qualifications without having to be employed as a property practitioner at the time of pursuing the qualification and only upon completion of the qualifications be allowed to join a property firm as a practitioner.  This is a model followed by other professions such law and accountancy for example.”

Sakoneka argued that stringent selection and recruitment criteria will ensure that few, but high-quality new entrants join the industry and with fewer entrants, higher stipends can be paid to ensure sustainability of practitioners and a higher retention rate. The main objective should be transformation and not creation of youth employment as the two cannot be solved in one equation, thus aptitude should be the key selection and recruitment factor.

He also suggested that amnesty should be granted to unregistered agents for a period of 3 months to register and a further 6 to 9 months to pass the set exam requirements. A practical training course depending on required status, must also be implemented. Strict steps should be taken against illegal operators in the sector. The amnesty cannot be successfully implemented if conveyancers do not apply the provisions of the new PP Act.

According to Sakoneka a clean start with the advent of the new Act will be the most appropriate way forward. Under such a policy all outstanding penalties and fees accumulated until the effective date of the Act must be waived. The current PDI resolution process is cumbersome and the EAAB cannot address all applications in time.

To further support black estate agents, the regulator should disallow the exorbitant accreditation fees required by HOAs for property practitioners to sell in certain estates and to prohibit them from entering exclusive marketing agreements, excluding black practitioners in the process.

Government entities should be engaged and motivate them to manage their many properties through competent and qualified black property practitioners.

Showing 2 comments
  • Trevor Harris

    Good article, but the only true way to transfer the property sector and make it easier for new black entrant agents is to reform the remuneration structure which is commission based only and no basic pay with a reduced overall commission sharing ratio to offset the risk carried by the real estate company that employees the agent. It also goes without saying that the financial flow from a property sale as far as agent fees are concerned is stretched beyond normal fee billing cycles by the additional regulator process of SPLUMA, Deeds Office original title deed requirements, and other compliances. For a new entrant agent the time scale from first sale to commission pay out is now exceeding 3 months and from date of entry into the property industry could be more than 6 months. No one can work fulltime for 6 months without a salary, nor do most have sufficient savings / funds to support themselves fully for this period. This is the biggest barrier to entry in the property industry and no amount skills upliftment and training [ which have a agent personal cost element] can alter this factor. There are too many wanna be agents taking up “space” in real estate companies that fall out within the first 1 or 2 months of entry. My comments are just the tip of the iceberg.

  • charles haigh

    and that’s as far as it will go, we have been on this transformation crusade since inception, all it is, is political lip-service. The crux of the matter is as follows
    it’s expensive to take on, train and manage interns – no assistance from industry,
    no easing of entry barriers by the EAAB extended to agencies or interns,
    in some provinces like the WC the municipalities fleece agents with signage by laws, the EAAB is only interested in filling its coffers – lets count the cost of FFC’s, CPD, peripheral charges for a plethora of “things” related to FFC’s, qualifications, exemptions, examinations etc. and then there’s the “Kangaroo court” for dishing out fines if you are found “guilty” for transgressing the ACT in any manner.
    so, alas the only way the industry will transform is by entrepreneurs, on the ground, whose vision and mission is to grow their business – usually alone without assistance from the powers that be.

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