Title deeds backlog; One Learner-One Estate Agent programme by Estate Agency Affairs Board; NHBRC transformation strategy

Meeting report

Opening remarks
The Chairperson noted that the Financial and Fiscal Commission was supposed to do a follow up presentation but this had been postponed in light of its other commitment to meet with the Department of Human Settlements (DHS or the Department).

One Learner, One Estate Agency Programme: Estate Agency Affairs Board (EAAB) briefing 
Mr Kwandiwe Kondlo, Chairperson, Estate Agency Affairs Board, introduced members of the Board (or EAAB), who included Executive Manager Business Operations Mr Anton Arendse and Chief Executive Officer Mr Bryan Chaplog.

Mr Bryan Chaplog, Chief Executive Officer, EAAB, noted that the One learner-One Estate Agency Youth Empowerment Brigade Programme was aimed at youths and disadvantaged persons, and was aiming to put about 1 000 youths through the programme over a three year period. This programme is available to matriculants, college graduates, university and university of technology graduates. It places the intern in the service of a registered estate agency, under the supervision and control of a suitably qualified mentor for a period of twelve months, being the component of an employment process. This period is used to equip the interns with the required property market experience while they get the necessary real estate qualifications.

Upon completion of the training period, they are required to enroll for the and pass the Professional Designation Examination (PDE 4) after being certified against the NQF Level 4 Real Estate qualification. After passing the PDE and meeting all other requirements, they can then apply for an upgrade in status and will have acquired the Professional Practitioner in Real Estate (PPRE).

The programme currently has an unfunded and funded Mandate. The unfunded mandate is currently made up of 61 67 interns recruited over a period of three years starting from January 2013, when the first interns were recruited, to May 2015. He noted that the whole‘One Learner One Estate Agent' initiative was first introduced at an EAAB summit in October 2012.

For the funded mandate, the EAAB had signed contracts with the relevant Services Sector Education and Training Authority (SSETA) with the intention of placing 906 learners and interns with a host employer and SSETA had agreed to fund the project at R36 000 per learner over a period of twelvemonths.

Currently, 798 interns were in training and their official commencement date was 18 June 2015. 88% of the learners have signed all the contractual documents in line with the SSETA requirements. The interns are a mixture of Indians, Coloureds and Africans with a 60% spread of black women.

The regional spread of the 798 Interns and learners was set out as follows:
-Gauteng: 548 (66%)
-KwaZulu Natal (KZN): 125 (18%)
-Free State:19 (3%)
-Limpopo: 12 (2%)
-Eastern Cape: 30 (4%)
-Western Cape: 16 (2%)
Mpumalanga: 38 (5%)

A total of 142 firms participated as host employers.

The project was currently facing some challenges.  Payment of stipends to the interns/learners had been delayed, usually because of the late submission of attendance registers from the host employers and incorrect or invalid banking details received from the learners/interns.

The issue of insufficient funds to manage the project had also affected the performance of the project. Host employers thought the mentorship fee of R1 000 per learner/intern was inadequate. The administrative fee was also pegged at R1 200 per annum. The EAAB had paid R1.5 million in administrative fees compared to its budget of R1.2 million and the EAAB was still also expected to pay for the learners' Fidelity Fund Certificates.

Some proposals had been made to tackle the funding problems. These included suggestions for an allocation of transformation funding to the One Learner One Estate Agent Empowerment Fund and an allocation of the CPD surplus to the One Learner One Estate Agent Empowerment Fund

A lack of proper communication between the host employer, the lead employer and the learners/interns have led to situations where the lead employer or host employer may not be aware of the resignations of the interns, or the replacement of interns by the host employer without the necessary approval by SSETA and EAAB. The learners also did not respond to phone calls or emails.  A possible solution to this might be to carry out an audit to establish the current state of the interns on the programme. Also, a rigorous communication with the host employers and learners should be encouraged to ensure that they are aware of the programme commencement and timetable.

He detailed the future plans for the programme. A Memorandum of Understanding (MOU) was signed with the South African Council for Graduate Cooperatives (SACGC). The SACGC will raise funds to finance 3 000 unemployed youth and graduates in 2015/16 as part of the One Intern One Estate Agent programme.  A second application to fund 1 700 placements had been sent through to SSETA. Awareness campaigns had been planned to obtain more pledges for the 2015/16 placements batch of 4 700 candidates and these campaigns would start in October/November 2015 in the Eastern and Western Cape as a top priority. Awareness through Community Radio Stations was also planned and engagements with disability groups were ongoing to see which of the disabilities can fit into the sector.

The Chairperson thanked Mr Chaplog and asked the Department of Human Settlement to make supporting contributions to the presentation already made by the EAAB.

Mr Mbulelo Tshangana, Acting Deputy Director General, Department of Human Settlements, stated that the One Estate One Agent project was a programme treated as an economic transformation initiative; and therefore the management had to create a proper structure within the EAAB. This particular sector was s still largely untransformed, with a lot of challenges. He suggested that the programme be profiled and proper exit interviews be conducted for interns who leave or intend to leave, so as to ascertain the real reasons they exited the programme. He also said a request had been made for a comprehensive list of all host firms.

The performance of the Western Cape was not very impressive and he was not happy with that. He stated that the programme was not well funded. The current legislation dated back to 1976 and was not supportive of change. An Amendment Bill was to be proposed to try to speed things up.

Mr Neville Chainee, Deputy Director General: Strategy and Planning, DHS, agreed that in addition to doing the training, it was very important that an exit strategy be developed. Ways had to be created to ensure that black owned estate agents were nurtured and incubated. He further stated that the estate agents had to be given opportunities and empowerment. Mr Chainee was of the opinion that rental issues had to be looked into also because the estate agents were also major players in determining rents and had to find a way to manage that particular transformation.

Discussion
Mr N Capa (ANC) asked if the firms involved in the transformation project were willing firms and if they had willing learners. He also wanted to know the specific areas of transformation that needed to be attended to. With regard to mentorship, Mr Capa asked if the Committee was comfortable with the amount of money that was put to the mentors and the interns. He wanted to know if there were complaints and finally needed to ascertain if the mentors were doing this as a full time job.

Mr S Gana (ANC) asked if there was a standard module of training for the learners/interns because he was concerned from other experiences that some host employers agreed in principle to accept these interns but the interns never really learned anything .He wanted answers regarding the number of successful graduates from the programme.

He spoke about the established firms and asked about the commitment level of these firms to the funding aspect of the programme, since the stipends provided for the interns were practically impossible to live on. He asked if there were any discussions to complement the stipends, and commented that he was sure that the low stipend was probably one of the reasons that some of the interns did drop out from the programme. Commenting on houses for sale in the black market, he was of the opinion that the market could be a good training ground for the interns and he asked if some of these interns and their host employers were involved.

Mr H Memezi (ANC) acknowledged that this was being presented at the right time. He was not happy that so many years after independence, 95% of the property market in South Africa was still dominated by the whites, and recommended that radical transformation be proposed to deal with this imbalance. He felt that the stipends also reflected legacies of apartheid and were not acceptable. He felt the low stipend was actually discouraging people from being registered with the project.

He proposed that forms be given to the interns on a regular basis to deal with the issue of exit interviews. These forms would give an honest feedback and show the true picture around the welfare of the interns. He believed the issue of exit interviews would not arise if things were done properly.

Speaking to the low numbers of interns from Western Cape, Mr Memezi proposed the possibility of transferring interns interested in Western Cape. He believed they should be encouraged. He believed also that the big companies had to be told to live up to expectations

Ms T Gqade (DA) applauded the programme initiative but stressed the importance of monitoring the economic transformation by the Portfolio Committee. She asked the EAAB what was being done to ensure that the transformation is linked to other areas and she also proposed that the program be extended to other age groups other than the youths. Speaking about the target groups, she was happy with the female representation and number of people with disability.

She asked about the staffing capacity of the programme and made a proposal that progress reports on the project be submitted to the Committee every 3 months.

Ms L Mnganga-Gcabashe (ANC) remarked that training by universities was largely funded from the government coffers with the private sector being the biggest beneficiary though there is no contribution from that sector. She made a call that the EAAB should be asked contribute to training of students. She wanted the figures of students, blacks in particular, who are being funded at the moment, especially in the first year of study and the number of students who had successfully passed through the internship programme.

She claimed that there were allegations that the exams were being made difficult for Africans who intend to be registered with the relevant professional bodies. She also requested the number of students who have successfully written and passed the professional exams, especially the black students.

She too was disappointed in the participation in the Western Cape, expressed disappointment and said the environment remained hostile though there is a booming market. She asked for a breakdown of the number of participants from each town, and from the big cities. She also agreed with Mr Memezi on the need for a quarterly feedback. Finally, she spoke against the idea of placing the Africans last on every list. She claimed it was an apartheid practice that must be discouraged.

The Chairperson of the Committee asked how the programme could be made more attractive to the young people. She believed if the programme was well managed, it would release the pressure on government and the communities, in terms of unemployment of the young people and the universities would be able to find some breathing space. She asked that the issue of willing estate agents should be unpacked, and in particular, whether it was suggested that there should perhaps be penalties if these firms refused to train and accept interns. She wondered why the transformation was being allowed to be dependent on a few, but at the same time stressed that there was a need to find a way not to alienate them. She agreed the programme was a noble cause but thought it had not achieved the results she expected to see.

Mr Chaplog firstly responded to questions about willingness of firms and interns to engage. He stated that the new legislation would enforce compliance with the Property Charter. In that Property Charter the thresholds for transformations would be clearly stated and there were powerful tools for this. It would bring to the forefront compliance issues, for example that if an agent was not transforming then he would not get a trade licence.

He noted that, in terms of the amount paid, the mentor would be a current estate agent who would have been in business for at least three years, who had a lot of experience and there would be investment in finding these people. The interns would have to keep a log book which showed a daily record of the learning process. This actually helped to track what was being learned.

He noted that at the moment there were only eleven registered firms accredited by SSETA, and out of them, questions would be asked, to determine which of the firms could actually be actively involved in the training programme. The hands of the EAAB were largely tied by the legislation and the EAAB was waiting for the new Bill to be passed so it would actually address the fundamental issues of poverty amongst the young people.

He noted that in relation to funding, many of the large firms had made commitments and pledges to the programme and some of them had actually followed up on their pledges. Again, the issue of legislative change came up.

He noted that there were ongoing discussions with the Department of Public Works to integrate the list, to get more young black people into their service provider list so that more young black people can be involved in rental agreements. In relation to the figures, he noted the request but asked that the EAAB be given some time to analyse this figures and promised that a formal presentation would be made in the next quarterly meeting. This would also be applicable to the breakdown of statistics regarding the big cities and towns.

Professor Kondlo agreed on the need for a tracker system to determine how satisfied he interns in the programme were. He believed a monitoring and evaluation system should be created to cater for this. In relation to the legislative mandate of the EAAB, he wanted the process to go more quickly, and said that the present law was outdated. In relation to funding, he stated that there was a lot of resistance being put up, and only a legislative amendment could solve that.

Title Restoration Project Progress Report: Department of Human Settlements briefing
Mr Chainee, Deputy Director General: Strategy and Planning, DHS, started the presentation on the title restoration project. He noted that since this had been announced by the Minister of Human Settlements, the DHS had ensured that there would be an alignment of all resources attached to the project, taking into consideration the funding, project management and the Secretariat. It had been confirmed with the National Treasury that the Human Settlements Development Grant (HSDG) would fund all registration backlogs.

It had also been agreed that the overall accountability resided with the Minister and National Department of Human Settlement. In support of this, the EAAB would be making available project management and secretariat support and official reporting lines through the Office of the DDG: Strategy and Planning, DHS.
The institutional arrangement would be that the Minister would lead the team with a National Steering Committee and Project Team. The Steering Committee was comprised of the nine Provincial Steering Committees while the Project Team would be subdivided into the logistics support team and the Institutional support team.

Mr Anton Arendse, Business Development Manager, DHS continuing the presentation and stated that there are specific rules which determine how the funds from the Human Settlement Development Grant (HSDG) are being used. The Department of Human Settlement would be reporting on target and progress as it moved forward, in respect of the registration backlogs and title deeds. He noted that he was now building on the previous presentation which had highlighted certain issues.

In 2010, many houses were built but only few were registered. However over the last five years this had changed significantly. The figures available showed an increase in registrations, from 49% in 2009 to 60.5% in 2014. In 2014/15 140 000 units were delivered out of which 71 000 were registered. There was room for improvement here. Since the inception of the project, there had been a delivery of 27 000.

He noted that in the current financial year provinces set a target of 58 000, and over 32 500 had already been delivered. There was confidence that in the current financial year, the targets set by the provinces would be met and exceeded. To deal with the issue of backlogs and their eradication, it was important to understand the issue of funding and where that funding was coming from. It had already been stated that the HSDG would be responsible for this.

Mr Chainee produced the statistics of title deeds from the various Provinces. He stated that it had been requested that the numbers of title deeds issued should in future be presented on a monthly basis.

Mr Arendse noted that there were 776 000 backlog cases, in all the provinces, as at 14 July 2014. These backlogs were both pre and post 1994. Recently the latest deeds records were received, and in conjunction with the Provinces there was now a reconciliation of figures n the deeds registers being carried out, so that a final number could be assessed.

He noted that the registrations had increased, but that there was still a significant backlog. These registrations backlogs remained unconfirmed and the DHS remained mindful of these recurring backlogs. A lot of inroads had actually been made into correcting them. In relation to the funding, it was assessed that it would cost approximately R1.4 billion to clear the backlogs of titles and deeds. These funds would come from the HSDG and would be ring-fenced.

He described the implementation strategy for clearing the backlogs. Each Provincial Steering Committee had brought on board its expertise to give traction to the project. The provinces were in the process of creating detailed implementation plans to deal with the respective backlogs. A time frame had been set _ as 30 November, by when the provincial implementation plans should be submitted to the National Department. By the end of October, there should be a confirmation of the backlog numbers.

A few policy amendments had been made to address the unintended consequences of past policy decisions. Firstly the final National Home Builders Registration Council (NHBRC) sign off must be done only after proper lodgement of papers. Secondly, the final tranche amount must be increased to a minimum of R2 000 per subsidy, and this should be paid over once the title deeds had been registered. This precluded the recurrence of backlogs.

He noted that regulatory and institutional reforms were also proposed. It was important that state and finance institutions must be supportive of the lower end of the residential market. Failure to do this would result in a return to informality.

He noted that the recent experience from Peru had shown that there was a huge title restoration drive, De Soto and revival of dead capital. However, the process and cost of transacting proved too complex and costly and as a consequence, many returned to informal trading of property.

Transactional costs and processes were seen as too complex and costly, therefore it was proposed that bulk registration of properties be made more streamlined, and so the DHS would investigate and make proposals for less complex methods of land surveying and finally understanding and establishing alternative forms of secure tenure.

Discussion
Mr Memezi stated the presentation left him with a lot of unanswered questions. He wanted a breakdown of the backlogs from all the provinces and municipalities because he felt there was no tally between the townships. He said that he feared that money that was intended to provide houses was being taken up in administration. The presentation did not deal with the problem at hand since it did not show the number of people who had applied for houses and those already approved and registered. He was not impressed by the numbers quoted as although the financing arrangement seemed promising too much money was being put into matters that could take up less.

Ms Gqada wanted the pre-1994 figures to be broken down to show the progress being made. She also recommended a capacity building to address those points. She also commented that not enough information had been presented on the post-1994 issues either. In relation to the R1.4 billion being ring-fenced by HSDG, she charged the Portfolio Committee not to lose focus. She wanted to know the impact of ring-fencing this money, since it was supposed to be used in creating new opportunities.

Mr Gana asked if the R1.4 billion was in place already; he did not recall seeing that amount mentioned in the plans for the DHS. In regard to the proposal to withhold a part of the final tranche of payment for the contractor, he wanted to know the effectiveness. He wondered if the figures showing the numbers of those who received their title deeds were in fact correct. In relation to the establishment of townships, he asked if this establishment was in a technical context. He saw no reasons for spending money on establishing townships which were already established. In relation to the figures for ownership contestation, he remarked that they seemed too conservative.

Ms Mnguaga-Gcabashe proposed that at the end of February all information about title deeds must be presented to the Committee. She said the local government elections were fast approaching and the people would be asking questions about title deeds, since there had been promises made to the people during the campaigns for the previous elections.

Referring to the Provincial plans and arrangement, she also asked that all information regarding this be presented to the Committee at the February meeting. On the issue of appointment of Provincial implementing agents, she asked for a specific time frame and remarked that the issues of backlogs will be a thing of the past if a proper implementation of the Provincial plans is carried out.

The Chairperson remarked that since there were attempts being made to clear backlogs, it would be important to manage the situation so that further backlogs would not be created. She asked why it was difficult to register all houses built in a particular financial year.

Mr Chainee responded to the issues of the figures presented showing the number of deeds owners. He said the figures had been compiled after a careful analysis of all facts and figures and so far nobody had come out to dispute the statistics presented. The number of backlogged cases had been significantly reduced. They were now in the low thousands. The DHS took responsibility for this; so that the Deeds Office should not be blamed.

Mr Chainee noted that part of payment to the contractor was withheld to avoid the situation where developers would walk away after completing projects, without registering them; this had been an issue with a lot of provinces. This idea had come from the provinces and it had worked well because the backlogs had since reduced significantly.

He noted that the R1.4 billion was coming out of the HSDG and the provinces had been told to reprioritise, since this is a political commitment. There should be no negative impact from this money coming from the HSDG.

Mr Chainee remarked that the jobs done were always outsourced. Some of the jobs done in the past were done internally, but over the years that capacity had been depleted because some people had retired and no replacements were made.

He explained that the system of title registration was very complex, expensive and a meticulous approach was needed. This was one of the factors behind the backlog. It must not be taken for granted. However, people had been paid to do the work and they must be held accountable.

Mr Tshangana said it was possible to ascertain exactly the backlogs of each town and city and promised to bring that information to the next meeting. On the issue of the existing capacity, he said provinces usually looked outwards for expertise but this was done only if it had been established that the expertise needed could not be sourced internally.

He added also that the method of withholding a portion of payments had worked very well with the big contracts, but for the small projects, the contractors did a trade-off sometimes, or just walked away and the DHS was looking into this.

He also said that the provinces would have to come up with methods to avoid creating any new backlogs, and to this end a breakdown of provincial figures was being done. The February deadline was achievable and should be reached.

Social Transformation and Empowerment Programme (STEP): National Home Builders Registration Council (NHBRC) briefing
Ms Thandiwe Ngqobe, Chief Operations Officer, NHBRC, noted that this presentation that she would give outlined the draft version of the Social Transformation and Empowerment Programme Strategy (STEP). The final document would encompass input from all the relevant stakeholders.

She noted that the NHBRC ensured compliance to national reforms, standards and quality within the home building sector. Its STEP was critical to ensuring the improvement of participation levels of previously disadvantaged groups in the human settlement sector. The beneficiaries of the STEP were youths, women, people with disabilities and the military veterans. They were supported through initiatives such as:
-Entrepreneurial development
-Preferential procurement
-Sector critical skills development and
-Human capital development (internal and external). The internal capital development involved internal recruitment and the external development spoke to bursaries and scholarships offered to youths who were acquiring skills relevant to the NHBRC.

The NHBRC had introduced some measures to improve the STEP through various programmes ranging through women empowerment, youth brigade programmes and the builder training programme.  The STEP had a target of providing 30% opportunities to women owned businesses and entities, whilst the youth empowerment programme had a target of providing 10% of opportunities to youth owned businesses. So far, over 1 300 youths had benefited. The programme was done in conjunction with the municipalities. 10% of opportunities were also to be made available to the military veterans and 5% of opportunities were reserved for people with disabilities. The training provided by the NHBRC was targeted at weaknesses which had been identified by the NHBRC.

The NHBRC worked closely with the National and Provincial Departments of Human Settlements, the Construction Industry Development Board (CIDB), the Department of Public Works, Department of Women, Department of Military Veterans and the Department of Social Development. The NHBRC intended to collaborate with institutions such as the Banking Association of South Africa, the Nurcha (a construction and finance company) and the Sector Education and Training Authority in the sector.

Nurcha reported monthly to the EXCO. Quarterly reports would be submitted to the Social Transformation Committee and to the Council, the Portfolio Committee and MinMEC. Annual reports would also be submitted to the Council.

Discussion
Mr Memezi was impressed with the presentation.

Mr Gana also expressed satisfaction with the report but he remarked that the 55% target should be made a long term goal. He also asked that a specific amount should be given in terms of the budget of the NHBRC so that a clear picture of the current situation was known.

Mr Capa asked about the challenges that can be faced in the transformation agenda, pointing out that this was often not an easy road to follow

The Chairperson recommended that the regional offices commit more so that they could do more training instead of leaving the bulk of work to the national office. She supported the request of Mr Gana that real figures be presented so that a clear picture could be gained of the total costs.

Ms Ngqobe said, in regard to the training, that youths were linked to a contractor who mentored them and then from this it would be possible to know which of the youths were truly interested in further training. These youths would then be provided with some form of support in terms of bursaries. There were also training coordinators in each province. She mentioned that the national plan tool would be presented to the committee during the next meeting and this would show the goals and targets at the provincial levels.

She noted that the total budget of the NHBRC was about R800 million to R850 million and about 63% of this went to operational expenditure.

The meeting was adjourned.