MAIN IMAGE: Piet le Roux, CEO of Sakeliga
Editor
Last year, we extensively reported the PPRA’s decision to insist on compliant, valid B-BBEE certificates for agencies making more than R2.5 million per annum.
The PPRA amended its stance on the matter in August 2024, announcing that “After careful consideration and consultation with our legal advisors, we have resolved that the term “valid” in the context of BEE certificates does not imply “compliant”. This decision aligns with the recent legal opinion received by our Board. In light of this decision, we will only now require industry participants to submit B-BBEE certificates that are valid”.
During the furore this caused, Sakeliga announced its decision to take the PPRA to court to ‘reverse harmful state overreach and BEE in the property sector’.
Sakeliga is proceeding with its court case.
Three key changes Sakeliga wants in the PP Act
In a press release shared on Friday, Sakeliga explains, “If successful, our case will remove the unjustified application of the Property Practitioners Act of 2022 from thousands of businesses and their clients, as well as restore their freedom to do business without B-BBEE certification”.
The non-profit seeks to do this by having certain sections in the Property Practitioners Act (2022) and its regulations declared unconstitutional and invalid.
Amend the overly broad definition of ‘property practitioner’
Sakeliga seeks to roll back the overly broad definition of “property practitioner” in section 1 of the Act to a much more circumscribed one, “When the new Act replaced the old Estate Agencies Affairs Act in 2022, it lumped the well-defined concept of an ‘estate agent’ together with eleven other business categories under the new term of “property practitioner.”
The issue with this definition is further compounded in sub-paragraph b, which “includes any person who sells, by auction or otherwise, or markets, promotes or advertises any part, unit or section of, or rights or shares, including timeshare and fractional ownership, in a property or development.”
Sakeliga contends that “this definition, when read together with section 47(1) of the Act, now provides that a private seller who does not involve an intermedia transaction is also subject to registration as a “Property Practitioner” and liable to trade only if issued with a Fidelity Fund Certificate. The use of the singular implies that this provision also applies to a single transaction by a single seller.
As such, any private homeowner who sells his or her home or apartment directly to any purchaser now falls under the definition of a “Property Practitioner” and is required to obtain a Fidelity Fund Certificate.
Likewise, property developers selling units from a development directly to the public (in order to save the purchaser the costs of an intermediary) will now also have to register as “Property Practitioners” and are required to obtain Fidelity Fund Certificates”.
You can read the definition and Sakeliga’s contention in full on page 17 of the Notice of Motion.
Remove the requirement to provide a BEE certificate
Secondly, Sakeliga contends that section 50 (a)(x), which establishes a link between B-BBEE certificates and Fidelity Fund certificates (i.e. you can’t obtain an FFC without a valid B-BBEE certificate), serves no legitimate government purpose and is unconstitutional and invalid.
“The conceivably legitimate purpose of a Fidelity Fund certificate is merely to ensure that property professionals like estate agents handle their clients’ funds diligently and ethically… Participation in BEE is not a requirement for handling client funds diligently and ethically”.
“The Property Practitioners Act was promulgated in 2022, and Sakeliga brought this case only after the PPRA stirred the pot with its incorrect interpretation of valid and compliant. Hence, one could ask if the Authority has brought this case upon itself”, asks Jan le Roux, CE of Rebosa.
“Rebosa is fully supportive of practical transformation measures and, to this end, launched the Rebosa Business Leader programme and participated in creating the NPPC’s transformation proposal. The emphasis, however, is on practical transformation, which the requirement of a compliant valid B-BBEE certificate most certainly was not ”, he concludes.
‘Incorrect’ exemption from trust accounts
Thirdly, Sakeliga contends that Regulation 2 of the Regulations promulgated by the first respondent in Proclamation 47 of 14 January 2022 be declared unconstitutional and invalid to the extent of such inconsistency.
Sakeliga asserts that section 4, which deals with exemptions from the Act, “is a function specifically allocated to the PPRA to be exercised on application by the person wanting to be exempted. The Minister only has the power to deal with appeals against the PPRA’s decision. The Minister does not have the power to exempt, by regulation, certain categories of Property Practitioners”.
“Regulation 2 deals with the exemption with respect to trust accounts. As an industry, we were relieved when then Minister of Human Settlements, Mmamoloko Kubayi, exempted all agents not handling trust monies from having to have trust accounts when the Regulations were promulgated in 2022”, explains le Roux, “Sakeliga’s application to have Regulation 2 declared unconstitutional and invalid could have unforeseen consequences in that agents who don’t handle trust monies, could once again be saddled with the red tape and costs of maintaining an account they don’t use. Should that happen we will have to apply anew in the hope that the PPRA will grant the same exemption”, warns le Roux.
The PPRA, the Minister of Human Settlements, Water and Sanitation, and the Minister of Trade, Industry and Competition have been given five days to file a notice of opposition to this Notice of Motion, should they choose to do so. This is a developing story and we will keep you posted.