Regulations tabled in terms of Community Schemes Ombud Service Act, 2011 & Sectional Titles Schemes Management Act, 2011: Department of Human Settlements briefing

Meeting report

Briefing: Department of Human Settlements (DHS)
Adv Seeng Ntsaba-Letele, Chief Executive Officer: Social Housing Regulatory Authority said the Community Schemes Ombud Service Act (CSOSA) No 9 of 2011 and the Sectional Title Schemes Management Act (STSMA) No 8 of 2011 had been promulgated and assented to by the President on 11 June 2011 and subsequently published in the Government Gazette on 14 June 2011. In accordance with section 14 of the Interpretation Act No 33 of 1957, the Minister had the power to make regulations. The power to regulate was also derived from, or contained in, section 29 of the CSOSA and section 19 of the STSMA. Therefore, regulations had been drafted. These draft regulations ought, in principle, to be published in the Government Gazette and be approved by the Parliament. There was a legal opinion offered by the Office of the Chief State Law Advisors, which confirmed that the provisions of the regulations were intra vires.

In complying with the law regulating the passage of legislation and regulations, Adv Ntsaba-Letele noted that the Draft Regulations had been published. Information sessions and consultations had taken place in 2015. A total of 746 stakeholders had attended the sessions nationally. In order to raise public awareness, there had been a lot of media coverage. As a result, the Department of Human Settlements had received a total of 1 648 written comments from the general public and stakeholders. The summary of comments was underlined.

Adv Ntsaba-Letele went through 23 regulations of the CSOSA, including those dealing with levies and fees, the levy formula, principles for the CSOSA funding model, and the rationale for CSOSA regulation.

Adv Ntsaba-Letele explained the eight regulations of the STSMA, including the schedule attached to the regulations.

Discussion
Mr S Gana (DA) raised a point about the process of adoption of regulations and said that the Committee could have been consulted before the DHS had consulted the public. For that reason, he felt that the Committee could not go ahead and approve the regulations to CSOSA and STSMA. Why had the DHS conducted public road shows without involving the Committee?

The Chairperson responded that Mr Gana was missing a point, because adoption of regulations to the principle legislation differed from the adoption of Bills. If it had been a Bill, the Committee could not be informed after public consultations. However, the principle legislation had been dealt with accordingly, and the DHS had to adopt regulations that would allow the principle legislation function. Members needed to consider those regulations and adopt them, or provide their suggestions and guidance.

Mr Gana said he noted this response. He sought clarity on the levy formula with respect to the lesser of R40 or 2% of the amount by which the month’s levy charged by the scheme exceeded R500. How did the DHS arrive to these figures? What would happen if a person did not pay a monthly levy? Would there be an interest charge imposed on those who did not pay on time? How much time was given to the body corporate to change its rules to comply with the CSOSA?

Ms T Gqada (DA) sought clarity on how the Community Schemes Ombud Service (CSOS) would work with municipalities to ensure that municipal valuations took place to determine the levy payable to it. She asked about the staff component of the CSOS and what its actual projects were. Had a consumer awareness project been implemented? What was the role of the CSOS, and was there any relationship between it and the Association of Residential Communities (ARC).

Ms L Mnganga-Gcabashe (ANC) sought clarity on relationship between the CSOS and the Rental Housing Tribunal and on issue of transparency with regard to the manner the CSOS ran its business. Why did the regulations allow an AGM to take place after 12 months had elapsed?

The Chairperson drew Members’ attention on the rationale behind the adoption of the CSOSA and STSMA. These two statutes had been promulgated after the need to have them had been identified. That need was to transform the housing sector. It was dominated by one section of society. Most Members – at one point or another – had been renting and knew the kind of treatment they had received. The statutes would address the issues of abuse and degradation in the housing sector. The regulations in question were needed to ensure that the two statutes were operational.

Mr Mbulelo Tshangana, Director-General: DHS, echoed the Chairperson’s sentiments. He explained that Members should understand that, when the CSOS was established, there had been a number of issues that needed to be addressed. Social transformation could take place through addressing substantial abuse in the housing sector, problems related to sectional titles schemes, and legal recourse, more notably, the dispute resolution process.

The Chairperson rsaid that it was the duty of Members to assess whether the regulations were in line with the statutes in question, as well as with the Constitution.

Adv Ntsaba-Letebe responded that the regulations had been developed in line with the CSOSA and in line with the Constitution. She said that the levy payable to the CSOS had been arrived at by looking at what corporate bodies were reasonably charging. The CSOS was a regulator that had to set out the basic levy that could be afforded by customers. The CSOS also had a mandate to monitor and evaluate whether housing rules were complied with, and whether the rules of corporate bodies were in line with the Constitution. For example, in situations where a body corporate was charging exorbitant fees, consumers should have the legal recourse of approaching the CSOS to seek guidance, or approaching the court. To achieve this, the CSOS would ensure that consumers were educated about their rights. They should understand how levies were determined.

With regard to the non-payment of CSOS fees, Adv Ntsaba-Letebe responded that legislation prescribed offences and penalties that could be imposed. Levies would be collected quarterly.

She agreed that there would certain implications in relying on municipal valuations. Some municipalities were well organised, whereas others were not.

On the question of the Rental Housing Tribunal, she responded that the Tribunal dealt with disputes arising from landlords’ and tenants’ relations, but it did not have jurisdiction over sectional title schemes. There was no legal recourse when an injustice occurred within the ambit of sectional title schemes. The CSOS would be filling that gap, as it could call the Tribunal to hear matters arising from sectional title disputes.

On the question of annual general meetings, she said it was preferred that the AGM took place after the financial report had been audited. Regarding the payable levy, the amount of R40 had been arrived at after consultation with relevant stakeholders and after conducting the public road shows.

Adv Ntsaba-Letele said that the CSOS would examine governance documents in order to check the quality of documents of a body corporate, to see whether they were in line with the regulations and the Constitution. The CSOSA was all about driving social transformation, and the CSOSA gave power to the CSOS to drive the desired transformation.

Adv Menzi Simelane cautioned both the DHS and the Committee about the operationalisation of the CSOSA and STSMA. He said that the CSOS had not been brought into force by the assent of the President. Rather, they would come into force upon Parliament’s approval of the regulations.

Ms Mnganga-Gcabashe sought clarity on the distinction between the Estate Agency Affairs Board (EAAB) and the CSOS.

Adv Ntsaba-Letebe responded that the EAAB was a different entity which had its own enabling legislation. It was, however, the closest sister of the CSOS. They worked together in delivering their mandates. Put simply, there was a close relationship in terms of operation.

On the issue of the staff complement, she said that the CSOS had only 40 staff. With regards to consumer awareness projects, the CSOS educated consumers through the use of media coverage.

The Chairperson thanked the DG and his team for the presentation and for the clarity it provided. The engagement had been a very enlightening encounter. Members should familiarise themselves with the statutes and seek clarity where it was difficult to understand their provisions. She asked whether the regulations should be sent to National Council of Provinces (NCOP).

Mr Gana said that the DA did not support referring the regulations to the NCOP. It needed time to discuss it within its caucus.

Mr H Chauke (ANC) said that the discussion was unnecessary because there had been an extensive debate and deliberation in Parliament when the CSOSA and STSMA were tabled for adoption. Why should the regulations be a problem?

The Chairperson said that the progress towards transformation of the housing sector should be applauded. She would be reverting back on Mr Gana’s concerns in the following week.

The meeting was adjourned.