Graeme Jay (managing director of the College of People Management and Development) shares his insight into the proposed Property Practitioners Bill.
Since 1976, estate agents and the estate agency industry have been regulated by the Estate Agency Affairs Act 112 of 1976 (EAAA). The EAAA governed, amongst other things:
- The definition of an estate agent;
- The requirements to practice as an estate agent; and
- The establishment, powers and functions of the Estate Agency Affairs Board.
Broadly speaking, the definition of an estate agent, in simple terms, is as follows:
- Anyone who, for gain,
- Performs an estate agency service,
- On someone’s behalf.
The estate agency services that spring to mind would be the buying, selling and letting of immovable property, as well as the negotiation thereof. If someone performs these services on someone’s behalf, for some kind of gain, which we know is usually in the form of commission, then that person would be acting as an estate agent. It should be clear that a person calling themselves a broker also falls within this definition. Anyone acting as a broker or agent is required to be registered as an estate agent with the Estate Agency Affairs Board.
The Property Practitioners Bill, whose implementation was anticipated still this year, proposes some significant changes to the regulatory environment. These changes include the following:
- The replacement of the Estate Agency Affairs Board with a new body called Property Practitioners Regulatory Authority. It is envisaged that the CEO of the Property Practitioners Regulatory Authority will have to appoint inspectors. These inspectors will have various powers, including the power to enter the premises of a property practitioner, the power to request the production of certain documents and the power to retain such documents;
- The creation of the Property Practitioner’s Ombuds Office. The introduction of an Ombuds Office, brings the real estate industry and profession in line with others, such as insurance and is an important aspect of the proposed new legislation relating to the protection of consumers. Members of the public will submit complaints to the Ombud. The Ombud will have the power to consider and dispose of complaints relating to the financing, marketing, letting, hiring, sale and purchase of property. The Ombud will also have a dispute resolution mechanism in place to handle such complaints;
- Estate agents will be referred to as property practitioners. This new term demonstrates the widening of our understanding of what an estate agent is and what services they perform. Of note, is that a property practitioner will also include the following people:
- Property managers;
- Property developers;
- Someone who inspects a property, such as an inspector looking for defects in a property on behalf of the potential buyer of that property;
- Anyone who acts as an intermediary in order to facilitate the sale of letting of a property;
- Anyone involved in arranging or facilitating finance relating to the management, sale or letting of a property or business undertaking. Also included in this definition would be anyone providing bridging finance relating to a property transaction as well as a mortgage or bond broker;
- Anyone who sells, markets or promotes any part, unit or section or right or shares in a property or property development. This also includes the sale, marketing and promotion of time and fractional ownership;
- People who are excluded from the definition of property practitioner include:
- A person who does not perform any of the prescribed activities in the ordinary course of business;
- A natural person who sells his or her own property;
- An attorney or candidate attorney; and
- The Sheriff of the Court;
- Property practitioners need to hold a licence to practice, called a Fidelity Fund Certificate (FFC). No one may act as a property practitioner without holding a valid FFC. Importantly, if a property practitioner receives commission and does not hold a valid FFC, then they will have to repay any monies received immediately upon receipt of such a request. Furthermore, a conveyancer may not pay a property practitioner any monies unless that property practitioner provides a copy of their valid FFC to the conveyancer;
- The Property Practitioners Regulatory Authority may not issue a FFC to a property practitioner if they do have a BEE certificate;
- Property practitioners need to be aware that the Property Sector Transformation Charter applies to all property practitioners. The Property Practitioners Regulatory Authority must, from time-to-time, implement measures to assess the state of transformation within the property sector.
Overall, the provisions of the Property Practitioners Bill achieves the following:
- The widening of the definition of the term property practitioner to include many more participants in the property industry as a property practitioner;
- The loss of remuneration for a property practitioner if they are acting illegally by not holding a FFC;
- Ensuring that all property practitioners in the property industry adhere to the provisions of the Property Transformation Charter; and
- The creation of the Property Practitioner’s Ombuds Office allows consumers access to similar sorts of redress and protection that consumers have in other industries, such as insurance.
We await the outcome of the public participation process in this proposed piece of legislation and its eventual promulgation and implementation.
- Graeme Jay has had 30 years of experience in education, training and consulting. He has taught at both school and university level and he currently holds a part-time post at the University of the Witwatersrand in the School of Construction Economics and Management.
Graeme specialises in consulting and training in property law, property valuations, property development and finance related topics.Graeme holds a BCom, BCom Hons (Finance and Investment Management), LLB, Postgraduate Diploma in Property Development and Management and a MSc (Building).