As of 1 February 2022, the new Property Practitioners Act (PPA) will officially commence. According to Tony Clarke, Chairman of the Real Estate Business Owners of South Africa (REBOSA), this is a welcome step in the right direction for an industry previously plagued by unclear and often poorly implemented legislation.
Disclosure
One of the most important new consumer protections is the now-compulsory inclusion of a comprehensive property defects disclosure document for both property sales and rentals. “At REBOSA, we’ve been encouraging this for several years now,” says Clarke, “but under the PPA it will be officially illegal to accept a mandate from a seller or a landlord without receiving a comprehensive disclosure document first. This document must be signed by all parties and attached to the sale or lease agreement. It’s a valuable reinforcement of our ethical responsibility to ensure open and honest property transactions.”
Certification
The PPA also requires any business earning a commission or brokerage from the sale or lease of a property to hold a valid Fidelity Fund Certificate (FFC), and tax clearance and BBE certificates as well.
To reduce the administrative burden, however, new FFCs will be valid for a period of three years instead of one. Fees have also been standardised across all professional levels. Only Candidate Property Practitioners will pay a different, reduced fee for the first two years of their candidacy, after which the standard fees will apply.
“We’re particularly pleased with the fact that FFCs are also no longer linked to a specific employment position,” says Clarke. “Certificates will now remain valid if an agent progresses to principal, for example, or changes employers.”
Trust Accounts
Clarke says the changes to trust account requirements will provide welcome administrative and financial relief to many property practitioners. “Previously, all property practitioners needed to have a trust account, regardless of whether or not they handled trust monies,” he says. “Those accounts, idle or not, accrued bank fees and forced businesses to undergo a full – and expensive – annual audit.
“Now, property practitioners only need a trust account if they actually handle trust monies,” he continues. “If you use a dedicated third-party payment processing agent or intermediary with their own compliant trust account, there is no need for you to have a trust account of your own. That means your business accounts can go through a far simpler and more affordable annual review. Clarke adds that it is very important to note that an exemption application is a prerequisite to not having your own trust account.”
Training
The new regulations also promise smoother and more affordable property practitioner training. “Under the PP Act, prospective agents can study and sit their Professional Designation Examination (PDE) before joining an agency,” says Clarke. “No more year-long internships or expensive NQF4 exams. If you’ve passed your PDE, you can literally start selling property in less than six months –
under supervision – provided you complete a further six practical course modules.”
Businesses are now also allowed to develop and run their own CPD training for a dramatically reduced CPD fee. “Course content must be approved by the Authority, but this approval can’t be unreasonably withheld,” says Clarke. This should make issues like delayed course content a thing of the past, supporting agents in honing their skills rather than acting as a professional roadblock.”
Transformation
Better support for agents is at the heart of changes to the Transformation Fund, too. It will be run by an independent body appointed by the PPRA. Clarke is hopeful that this will finally see the fund fulfil its potential as a force for positive industry change.
Equal Opportunity
The practice of charging real estate agents “Accreditation Fees” in return for exclusive rights to property transactions within a development has been abolished. “Sellers and landlords within estates will no longer be limited to their development’s approved agents,” says Clarke. “This gives all businesses – large and small – a fair chance to win mandates based on the quality of their service instead of the size of their bank account.”
Developers will also no longer be able to sell their own properties without registering as a property practitioner, providing more opportunity for real estate agencies to provide this service.
Industry Consultation
“Overall, we’re very pleased with the direction the PPA is taking our industry’s regulations,” says Clarke. “It’s also good to know that the PPRA has been formally mandated to consult with the property practitioners it governs and I formally invite the new PPRA’s board, to regularly do so, especially during the transitional phase, which will see some challenges and interpretational issues arising and that the way the PPRA is going to apply these new regulations is going to be critical to achieving the results that the PP Act wishes to achieve.
For more information, www.rebosa.co.za
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