Big Changes for Real Estate!

By now I’m sure that most of our readers will have heard of the new “Property Practitioners Act” which has replaced the Estate Agency Affairs Act. We recently sat down with one of our local Yzerfontein “Property Practitioners” Piet van der Merwe from Cliffrock Property Group to find out a little bit more about the new legislation and what impact it would have on the property industry.

What exactly is the Property Practitioners bill? And how does this affect Estate Agents?

The long-awaited Property Practitioner Act 22 of 2019 that came into operation on the 1^st of February 2022 brought some significant changes to the property sector.

“In terms of the Act, estate agents are now known as ‘Property Practitioners’. The definition of a ‘Property Practitioner’ does not only refer to estate agents, but also includes other role players such as mortgage originators, property developers and property managers and persons involved with the sale and leasing of properties, the administration of properties and general dealing in property from funding through to the transfer of properties.  This will however exclude a natural person (a private seller or landlord) who owns the property that in the ordinary course of their business sells/leases their property belonging to him or her in their personal capacity.” says Piet.

The Act also establishes a new body, the Property Practitioner’s Regulatory Authority (PPRA) which replaces the old Estate Agency Affairs Board (EAAB) as the new regulating body for the industry.

What impact does the new legislation have on the consumer (both sellers/buyers and landlords/tenants)?

The Act brings about better protection for consumers, including the need to disclose defects.

It also imposes an obligation on Property Practitioners to request sellers or lessors to produce a duly completed and signed mandatory disclosure form. This is a form that discloses all defects on the property that are known to the seller or the lessor. In terms of Section 67 of the Act, a Property Practitioner may NOT accept a mandate if this form is not produced.

If this form is not produced, the Act provides that it will be interpreted as if no defects or deficiencies on the property were disclosed to a potential purchaser or lessee and further that a Property Practitioner who accepted a mandate without this form being attached to the agreement of sale or lease agreement may be held liable by the affected consumer.

Sellers and landlords should therefore note that a signed disclosure declaration will need to be attached to all sales and rental agreements including the mandate document, even in the case of open mandates.

Previously estate agents had to apply and pay for their Fidelity Fund Certificates in order to trade as estate agents and earn commission. Do property practitioners still require a Fidelity Fund Certificate?

Yes, The Act requires a Property Practitioner to be in possession of not only a Fidelity Fund Certificate, but also a Tax Clearance Certificate and BEE Certificate. The Act also provides that a Property Practitioner shall not be entitled to commission, remuneration or payment, unless at the time of performance of their duties, such Property Practitioner was in possession of a valid Fidelity Fund Certificate (FFC). Conveyancers are now prohibited from paying any remuneration or other money to a property practitioner unless that individual and/or firm has provided the conveyancer with a copy of his/her/it’s FFC. So hopefully the days of unregistered and illegal operators and ‘shady’ brokers will be coming to an end.

It is also a requirement that the FFC must be prominently displayed in every place of business where the estate agent or agency conducts property transactions and that their letterheads and marketing material (i.e. boards & brochures) reflect the prescribed sentence, namely “registered with the PPRA”.

A property practitioner must also, on request from a consumer, provide him/her with a copy of the Code of Conduct and consumers will still have the right to file a complaint with the PPRA or lodge a claim from the Fidelity Fund in serious cases involving criminal misconduct by the property practitioner.

Are there any other interesting points that may be of interest to our readers?

Security estates and other developments may no longer charge “Accreditation Fees” in return for exclusive rights to property transactions within a development. Sellers and landlords within estates will no longer be limited to their development’s approved agents. Developers will also no longer be able to sell their own properties without registering as a property practitioner, providing more opportunities for real estate agencies to provide this service.

“It is clear, that this new legislation will have a significant impact on the property industry. However, as it has only just recently been implemented, we are yet to see its practical application within the sector in the coming months and years.” says Piet.