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The Property Practitioners Bill - Good or Bad for estate agents?

Estate Agents operations becoming more difficult

It is going to become a lot harder for agents to operate, especially for those who have recently started operating, thanks to the Property Practitioners Bill. 

Property Practitioners Bill

The opportunity to reduce these obstacles had been squandered as a result of the bill being published before being submitted to the Cabinet for approval. 

Now agents have to set aside a lot of time in order to ensure compliance with the bill. 

Various different professionals, such as bond originators and property assessors, will be clumped together with agents under the title of “property practitioners”. 

And because the bill is open to more than one interpretation, this is extremely disquieting and we can foresee confusion being widespread across the industry. 

Fidelity fund certificates

There will most likely be delays in obtaining fidelity fund certificates as a result of the Estate Agents Affairs Board having its resources stretched in order to accommodate the changes enforced by the bill. 

And because there are no reliable estimates available for how many new practitioners will result from the changes means that the EAAB need to consider whether or not it has the ability to cope with the influx of practitioners. Unfortunately, dealing with the board may only change for the worse. 

New Estate Agents

While the board cannot give an estimate for the amount of new practitioners that will be created, they are however putting in place structures and systems to help them cope with the possible growth. 

The time frames for issuing out certificates will be set-out by the bill. Also, previously disqualified practitioners will be given the opportunity to make an appeal to a property ombudsman for relief. 

They will then be advised on the procedures that need to be taken in order to appeal against the decisions that were made by the board. 

Complaints against the board relating to service are also included, as well as, the issuing of fidelity fund certificates.

The recommendation made in the bill to replace the board with a Property Practitioners Authority will only serve as a cosmetic change rather than something that will have a real effect on efficiency and serving as a support. 

It is also worth noting that the bill fails to reduce the regulations in place. 

Barriers to Entry

This will most likely create a hurdle for 99% of the population, from all different backgrounds, who may wish to enter into the industry.

The Property Practitioners Bill is intended to replace the Estate Agency Affairs Act 1976. However, it is uncertain as to when it will be made law or be revised to its final form. 

It was gazetted for comment on March 31, 2017 and then, public hearings took place in the nine provinces in June and July of the same year. 

The bill was then referred to the Office of State Law Adviser for its final certification, after which to the Cabinet and Parliament for approval. 

Then, before the President is allowed to sign the bill into law it will debated by the National Assembly and the National Council of Provinces.

Many professionals are hoping that the department will adjust their decisions relating to the bill. 

Property Practitioners Authority

This is especially so in the case of the Property Practitioners Authority being granted the power to disqualify agents and agencies from being issued fidelity fund certificates. 

If you are found guilty of unfair discrimination, if you don’t have BEE or tax clearance certificates, or if you are listed on the tender defaulter list of the national treasury then you will likely be disqualified from receiving certificates. 

Another cause for uncertainty is the fact that now not only do all the agencies need to have a BEE certificate, but also some 35 000 agents will be required to have a BEE certificate as well. The certificate they need, however,  is not specified.

Tax Certificate Requirement and Other Areas For Concern

Because of the tax certificate requirement, agents who have legitimate disputes with SARS will face prejudice. Also, directors and shareholders of a business all run the risk of disqualifying as a result of the tender defaulter section.

Agents are now entirely forbidden from advising their clients to use any particular service provider, whereas in the past they were only forbidden to do this without a good reason.

Inspectors being granted power to search a company’s premises and seize a wide range of material is another cause for concern. And with the provision that allows for seizure without warrant, it is no wonder why agents are worried.

On a positive note, changes will be made to the bill over time in such that warrants will need to be obtained before inspectors can search a business premises and seize material. 

Although, in order to ensure compliance with the bill, inspectors will be allowed to do random inspections, so long as there are no legal consequences. 

Liabilities To Franchisors

Unfortunately, things only get worse in the case of a newly included clause which will result in franchisors being held liable for any infringements which a franchisee. 

This means that the agreements and relationships which exist between the parties will likely change. Also the head office salary bill will increase because they have to invest more resources in regulating franchisees. 

Agents will have to keep every document relating to the business including business cards, mail drops etc. for 10 years which means that the process of keeping records will only become harder. 

In fact it will be nearly impossible for any new entrants into the industry to be compliant with the bill. This coupled with that fact that the costs associated with the changes that need to be made can only spell disaster for most. 

Let us hope that this is only speculation and doesn’t in fact become as much of a problem as many professionals think it will be. 

Van Deventers & Van Deventers Incorporated - Conveyancers Johannesburg

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