New Property Practitioners Act needs clarity
Property developers will now be known as property practitioners and will have additional compliance requirements.
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Antonie Goosen, principal and founder of Meridian Realty, said the new Property Practitioners Act (PPA) that took effect at the beginning of February is an improvement on the previous legislation, but more clarity is needed on some important points during the interim phase.
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“The act provides more clarity on grey areas in the previous legislation and brings additional protection to consumers. It also addresses certain practical issues, for example, that a property practitioner will be deemed to have a Fidelity Fund Certificate (FFC) if the regulator does not issue the certificate within a specified timeframe, this being subject to everything being in place from the property practitioner’s side.
“This has been a point of contention in the past with the previous regulatory body being notorious for the delayed issue of FFCs, and the new legislation is favourable towards the property practitioner. It, however, remains to be seen how this will play out in practice,” said Goosen.
“Included in the new legislation is a much broader and clearer definition of who a property practitioner is, but there is currently debate on whether mortgage or bond originators will fall under the definition.
“The PPA defines a property practitioner to be any person including a ‘bond broker’, but excluding any person contemplated in the definition of ‘financial institution’ in section one of the Financial Services Board Act (FSBA).
The FSBA has since been repealed, and as such the reference to that repealed Act is understood to be a reference to its replacement Act, namely the Financial Sector Regulations Act (FSRA).
“As bond originators and bond brokers are regulated by the FSRA, the Mortgage Origination Council of South Africa (MORCSA) is of the opinion that originators are not property practitioners as defined in the PPA. More clarity from the Property Practitioners Regulatory Authority (PPRA) will be needed on this matter.”
Goosen also said clarity is needed on the training requirement needed for candidate estate agents.
“According to the new legislation, candidate estate agents must sit for the Professional Designation Exam (PDE) within six months of their FFC’s being issued.
“It is still rather unclear if the previous set of qualifications will need to be completed in that time or if it falls away. Regulations state that PPRA must provide course materials and set standards, but we do not yet know whether anything will change here and to what degree or when, so more clarity is needed.”
He said the new legislation now includes anyone employed by a property practitioner that does certain actions on their behalf and it includes anyone who sells any units, including fractional ownership in property development.
Such developers now seem to be restricted from selling their own stock unless they also register and qualify as property practitioners.
“Property developers will now be known as property practitioners and will have additional compliance and certification requirements. Previously, there was no legislative framework regulating the activities of property developers except that provided by the National Home Builders Registration Council,” said Goosen.
The Property Practitioners Regulatory Authority (PPRA) replaces the Estate Agency Affairs Board with an expanded mandate to govern the property profession and other previously excluded professions rather than only estate agents.
Other points he raised:
• The PPA is quite strict and clear about the fact that no person or entity may act as a property practitioner without a valid FFC
• The PPA requires that a property practitioner’s marketing material shows that the property practitioner is registered with the PPRA and has a valid FFC
• A major change from the previous legislation is that the PPA requires property practitioners to include a disclosure form, which details a comprehensive list of property defects from the seller or lessor before a mandate is concluded
• The PPA has a major focus on the transformation that did not form part of the previous legislation
“I see meaningful and quality transformation initiatives in the new PPA and if executed correctly, it will be a force for positive change in the industry,” concluded Goosen.
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