The introduction of the new Property Practitioners Act and its effect on the property sector.
The 1st of February 2022 saw the commencement of the new Property Practitioners Act 1 of 2022 (PPA), which has brought about significant changes to the property sector as a whole. This Act repeals the Estate Agency Affairs Act 112 of 1976 (Estate Agency Act) which previously governed the regulatory framework dealing with estate agency affairs. The PPA focuses on the protection of the consumer by providing dispute resolution mechanisms and legal frameworks for the managing and letting of property, with the purpose of keeping up with the transformative nature of the property sector.
One of the most significant changes brought about by the Act is the introduction of the definition of a “property practitioner” which is broader than the old definition of an “agent” under the previous Estate Agency Act. The new definition under the PPA includes commercial property brokers, bond originators, home inspectors, homeowners’ associations, companies selling timeshare and fractional title, property developers and property managers.
Another new and important aspect of the property sector that the PPA now addresses is “ethical conduct”, especially when it comes to disclosure of defects. It is now compulsory that a comprehensive document which discloses property defects is included in the mandate for both property sales and rentals. The disclosure document must be signed by all parties and attached to the sale or lease agreement. This practice serves as a reinforcement of the ethical responsibility placed on Property Practitioners to maintain honest property transactions.
The PPA has also introduced stricter regulations when it comes to certification. It has always been a requirement for any business earning a commission or brokerage from the sale or lease of a property to hold a valid Fidelity Fund Certificate (FFC), however tax clearance and BBE certificates are now required as well. Property agencies and businesses must be fully compliant with this regulation. Fidelity Fund Certificates were originally only valid for one year, but with the introduction of the PPA, the validity period has been extended to three years so as to lessen the administrative burden placed on Property Practitioners.
The commencement of the PPA has also introduced changes to trust account requirements which intend to bring about welcome administrative and financial relief to many Property Practitioners. Before the commencement of the Act, all practitioners were required to open trust accounts, regardless of whether they actually handled trust monies or not. These trust accounts, in use or not, would accrue bank fees and forced businesses to undergo full annual audits which proved to be expensive. Under the new Act, it is no longer a requirement for all practitioners to have trust accounts and now, only Property Practitioners who are involved in handling of trust monies are required to have trust accounts. This also applies when using intermediaries with their own compliant trust accounts. The amendment of trust account requirements enables simpler and more affordable annual reviews for businesses.
The PPA has also introduced new and simpler training regulations for those Property Practitioner’s that fall into the category of Estate Agents. These new regulations are aimed at providing smoother and more affordable Estate Agen training. It is now only necessary to sit and pass a Professional Designation Examination (PDE) and complete a further six practical course modules in order to qualify as an Estate Agent.
The PPA has brought about welcome and positive changes for the property sector going forward. If you would like further clarity on the PPA, please do not hesitate to contact us on info@hjw.co.za
Written by Georgina Cross
This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact us directly for advice applicable to your specific matter.