For over 40 years estate agents have been regulated by the Estate Agency Affairs Act 112 of 1976 (“Act”). But that is set to change with the new Property Practitioners Bill (“Bill”) which is likely to be passed into law in the near future and holds important changes for estate agents and other property specialists.
The first and most notable change is the definition of a “Property Practitioner” in the Bill. This definition is wide and includes estate agents, mortgage originators, rental agents, property inspectors, valuators, property managers and bond regulators. The aim of this broader definition is to regulate a wider spectrum of persons involved in the property industry and thereby protect consumers and provide for a more controlled structure in the property sector.
The Bill rebrands the Estate Agency Affairs Board (EAAB) as the Property Practitioners Regulatory Authority (“Property Practitioners Ombud”). Any complaints from the public against a Property Practitioner will be dealt with by the Property Practitioners Ombud to resolve the complaints. The Property Practitioners Ombud may also be approached to resolve a dispute between Property Practitioners, provided both parties agree to this method of resolution.
In terms of the current Act, estate agents that don’t have a Fidelity Fund Certificate are not allowed to earn commission from any estate agency services. The Bill takes this requirement further by requiring that a Property Practitioner will have to refund the person who paid them if demanded should they not possess a valid Fidelity Fund Certificate. Furthermore, the Bill provides for a broad list of disqualifications from obtaining a Fidelity Fund Certificate, two of the more restrictive disqualifications being where a Property Practitioner is not in possession of a valid BEE certificate or is not in possession of a valid tax clearance certificate.
The preamble of the Bill makes it clear that a focus of the new Bill is to assist in the transformation of the property sector and contribute to such becoming more reflective of the South African demography and assisting Black, Indian and Coloured Property Practitioners to be more active in the property sector. The Bill aims to assist this by establishing a Transformation Fund to be administered by the Department of Human Settlements and the launching of incubation programmes to assist previously disadvantaged Property Practitioners.
There are also further aspects that the Bill aims to regulate and which you as an estate agent will need to take note of and implement once the Bill is enacted, such as record-keeping requirements, mandatory disclosure forms, etc.
The Bill has beneficial but also important implications for any estate agency and you would be prudent to monitor developments in relation to the enactment of the Bill to make sure you are prepared for the new requirements the Bill will introduce.