As of 1 February, the Property Practitioners Act (PPA) came into effect after being signed into law by President Cyril Ramaphosa last year September.
The PPA brings some major changes to the real estate industry. The legislation is intended to provide increased protection for consumers, as well as to broaden the definition of property practitioner beyond estate agents to include all parties involved in the selling, purchasing, letting, renting, financing, and marketing of a property.
One of the most significant changes that the PPA introduces is the mandatory inclusion of a comprehensive report document that lists any defects in the property, and which is to be included as part of the property transfer. Without this document, no mandate may be accepted from a seller or landlord and ensures that buyers are making a fully informed decision on their purchase.
Another point of focus in the PPA is around the subject of Fidelity Fund Certificates (FFC). Under the new regulations, anybody who earns a commission or brokerage from the sale or leasing of a property needs to hold a valid FFC and be able to produce it on request from a seller or landlord.
The PPA also introduces new requirements in order to qualify for an FFC to include holding a valid tax clearance and BEE certificate. Also, it is required that not just the agents but rather the whole business or agency and all its property practitioners must be in full compliance
Transformation is further entrenched in the Act through the creation of the Property Sector Transformation Fund, which will pay grants to further transformation within the property industry including training programmes and the promotion of participation amongst the historically disadvantaged.
To regulate and monitor compliance, the PPA establishes a new regulatory body that will replace the existing Estate Agency Affairs Board (EAAB) to oversee the increased scope of property practitioners at large.
Nico de Villiers, Director at BBV Attorneys, reminds us that it is important to always bear the bigger picture in mind when it comes to new legislation.
“No legislation in South Africa should be seen in isolation. All of them including this piece of legislation has at its heart to give effect to constitutionally bestowed entrenched human and socio-economic rights. These rights include equality, rights to property, and housing. It therefore goes further than the regulation of the property practitioners’ profession but also intends to create avenues to secure for transformation not only in the property practitioners’ field but also in the actual property market.”
“This is given effect through black empowerment programmes, structured interventions, consumer education and much firmer regulation of the role of property practitioners (and other role players such as conveyancers) and their role in these important transactions,” says de Villiers.
Rubé Bradfield, Principal at Home & Hectare Real Estate said that the new legislation was being welcomed within the industry
“The PPA will bring about a renewed level of transparency between parties, which was always common practice, but a written defect disclosure form is now mandatory. This will assist Home & Hectare and our agents to easily facilitate the transaction and eliminate future possible disputes with the main objective being to protect the consumer.”
“As a property practitioner, each agent will have to verify the validity of their FFC on all documents, giving our clients total peace of mind, knowing that they are dealing with one of our registered, qualified, and trusted Property Specialists.”