Title Deeds Programme & Property Practitioners Bill: Department of Human Settlements briefing; Transformation Integrated Strategy: Estate Agency Affairs Board briefing

Meeting report

The Chairperson welcomed all and reminded the Committee that the Estate Agents Affairs Board (EAAB) was originally meant to present its transformation strategy on 17 November 2016, however during that time the EAAB was in the middle of finalising its strategic plan and was unable to make the presentation. The agenda of the meeting was for the EAAB to present its turnaround strategy; she requested that the Department also include an update on progress made on the title deeds programme, as well as an update on the Property Practitioners Bill.

Briefing by Department of Human Settlements

Mr Mbulelo Tshangana, Director-General, Department of Human Settlements, updated the Committee that the EAAB consists of 15 members; with Mr Nkosinathi Biko as the chairperson. The Department had met with the board on many occasions to discuss its challenges and a way forward. The presentation would reflect on some of the challenges and highlight key strategies to be implemented. The Property Practitioners Bill would not be presented because it still needs to be tabled to Cabinet before being presented to the Committee.

The Chairperson requested that the names of the 15 board members be sent to the Committee Members.

Mr Neville Chainee, Deputy Director-General: Human Settlements and Planning, Department of Human Settlements, said the Property Practitioners Bill has been drafted and is in the process of being submitted to the Economic, Social Protection and Human Development clusters. Once the process has been completed the Bill will be published for public comment. The Bill’s main aim is to transform the estate agency industry because a large percentage of it is dominated by white people.

Mr Tshangana added that the issuing of title deeds still poses as a major problem for the Department; none of the nine provinces have been able to meet their targets and this is mainly due to administrative issues within the provincial departments and that there are still a large number of beneficiaries whom have not claimed their title deeds. The budget for the title deeds programme of the previous financial year was ring-fenced and this budget amounted to R300 million. The Department was scheduled to present on 24 February 2017 a title deeds presentation, outlining the progress made for each province and nationally, as well as the strategies that will be implemented to decrease the backlog, however the Minister has not yet signed off on the presentation.

Mr Chainee added that the Property Practitioners Bill, with the recommendation of the Committee, was tabled to MinMEC for approval. Once that process has been completed the Bill and the title deeds programme will be presented to the Committee. The Committee can expect the presentation to happen three weeks after 24 February 2017.

Discussion
Mr H Mmemezi (ANC) said he did not understand why the Department has not prioritised the title deeds programme yet. He was not impressed with the recent developments regarding the programme as the Committee had previously been clear about what kind of developments it wanted to see.

Ms T Baker (DA) said a year ago the EAAB was linked to an insolvency case and an audit investigation was then done. She asked for the details of the report and if there were copies available for the Members. She also inquired whether title deed owners are expected to pay rates and taxes.

Mr Tshangana replied that the Cape Town, Johannesburg and eThekwini metro cities often do charge their title deed owners rates and taxes. However, they are exempt from paying the full amount that is normally expected from a home owner as a threshold has been implemented. The audit investigation was completed and the findings were presented to the Committee; the original audit will be sent to the Committee. The provincial backlogs will also be included in the report.

Briefing by Estate Agency Affairs Board
Ms Tsepiso Moloi, Chief Director, Department of Human Settlements, reported that there has been an increase in black professionals (Black, Coloured and Indians) from 12% in 2012 to 17% in 2016, but transformation of the property sector is still a lingering challenge. There was an increase in young black professionals in the property sector from 13% in 2015 to 17% in 2016 but it had dropped in the beginning of the year to 15%. Currently, the size of the property sector is R7 trillion, while only R6 trillion is owned by South Africans. This sector consists of commercial, residential, public sector, informal residential and zone land. She explained that transformation of the property sector is represented for each province:  Western Cape and Northern Cape have the biggest percentage of white owned property sectors, with 92% and 95%, respectively.

The EAAB funded a total of 2109 learners for the One Learner Transformational Programme in 2016. Although there has been substantial progress with the number of learners who complete the programmes the EAAB still faces some challenges. For example, attraction to the industry can be overcome but there is still a low retention, the commission based remuneration seems to become a challenge for the youth, there is a lack of stock in the market, there is a resistance to change from the already existing estate agencies and there is a bad perception on the idea that youth may become new competition.

The number of learners in the transformational programmes decreased from March 2015 to June 2016; in March 2015 there were 706 learners in the programmes and in June 2016 only 309 learners had enrolled in the programmes. The number of interns also dropped between 2015 and 2016: in March 2015 there were 906 interns but by June 2016 there were only 355 interns in the programmes. The cause of the dropouts is due to the low stipend that learners receive from the Sector Education and Training Authorities (SETAs), the unavailability of transport and support systems, the commission based remuneration and lack of stock in the market, amongst those which have been previously mentioned. The EAAB has set out a transformational strategy on how the entity will do things differently: the current curriculum and programme will be reviewed, the architecture of the model will be redesigned and black consumers will be educated on how to patronise their previously disadvantaged individual (PDI’s) Estate Agents.

In terms of their Medium Term Strategic Framework (MTSF), the EAAB plans on having awareness campaigns that they hope to reach 400 000 households using radio and 300 000 households through print media for the 2016/2017 year. In the previous 2015/16 year, the target reached through radio awareness campaigns was 9 811 000 households and 100 000 households using print media. The EAAB also targeted increasing the number of estate agencies operating in the subsidised and affordable housing areas; estimating this number to increase in the 2016/17 year by 10%. In the 2015/16 year the transactional support project was successfully implemented and by the next year the EAAB is hoping to release the bi-annual data indicating the industry trends and analyses. Their annual performance plan target is to increase the number of estate agents from the previously disadvantaged backgrounds to 1800, develop a process, policy and procedures for the incubation process and develop mechanisms and transformational initiatives to assist estate agents and the public to participate in the property sector.

The EAAB is committed to transforming the property sector and forms a part of the DHS MTSF in helping the department achieve its targets. In doing so, the EAAB has developed a learnership programme aimed at unemployed youth. The learnership caters to 10 000 candidates over a period of three years. The entity aims to help establish 10 000 new firms via incubators and to start Small Medium and Macro-Sized Enterprises (SMME) incubation programmes.

A number of changes have been made to accommodate the transformation programmes. The EAAB also plans on driving transformational programmes within the entity and externally to ensure compliance to legislation such as the Employment Equity Act. The EAAB aims to ensure economic inclusion of the PDI in the property sector, to engage with Department of Public Works to ensure that PDIs participate in the property business and that the EAAB promotes consumer education and awareness and protection by engaging other stakeholders in the property value chain.

Ms Eugenia Kula-Ameyaw, Board Member, EAAB, added that when the Board started developing the transformational programmes it had looked at a number of statistics. They were guided by the Property Chapter, insights from the State of the Nation Address (SONA) and the current status of learnerships and the industry itself. What is confusing is that the public sector has property valued at almost R20 Billion, but the property is not being managed by the public sector; instead it is managed by the minority population. The Board believes that transformation can only take place when the Property Practitioners Bill has been implemented, hence the Board had asked for the Bill to be made urgent. The EAAB is concerned about the status of impact and how their targets are evaluated. Some of the targets have mainly become ‘tick-box’ exercises and there is no proper analysis to determine whether the information that has been published in a newspaper was actually read by the public, or whether the public heard the advertisements on radio.

The issue of the title deeds is also a concern for the EAAB. The EAAB was appointed as project manager of the issuing of title deeds, but that was not clearly identified and communicated. The small estate agencies that find it hard to sell houses or get stock in the areas that they operate in must be given some kind of amnesty when it comes to submitting their audited financial books. An estate agency that only sells 10 or less houses a year is not in the financial position to pay for an audit report that will cost the agency thousands of Rands; these estate agencies end up paying a lot more money than they make a year from selling property. She advised that instead of an audit report, they should be asked to submit an affidavit confirm Ms Eugenia Kula-Ameyaw, Estate Agency Affairs Board in their sales.

Ms Kula-Ameyaw asked that presentations for learnerships and awareness campaigns should be conducted in the home languages of the public who attend the campaigns and learnerships.

Discussion

Ms V Bam-Mugwanya (ANC) asked if there were a limitation to the number of learners that are admitted to the transformational programmes. She was concerned as some learners may not be able to get stock in the market and there is a possibility that the stock in the market may not increase to accommodate all the estate agents.

Mr S Malatsi (DA) said he appreciated the informative presentation but he had hoped that the presentation would include time-lines for when the programmes and targets would be implemented and when they hoped to achieve these targets, or how stock would be made available. The time-lines would also be useful to the Committee as it would assist them in evaluating the progress programmes and the entity. He asked how the department determined the level of demand for estate agencies when the enrolment of learners is not fixed. 

Ms Baker asked how long it would take for one to see real transformation in the property sector. Agencies located in affluent areas recruit some black estate agents for the purpose of transformation but the black agents are mandated to sell property in the township areas. This procedure automatically means black agents earn less due to the remuneration commission. She asked if the EAAB had any regulatory measures in place to ensure that once the learners have completed their programmes they are not placed in areas where the stock is low.

Ms L Mnganga-Gcabashe (ANC) said most of the questions were linked to the Bill. She suggested that whenever a new Committee Member requests a report that has already been presented to the Committee the report should be emailed to the Member instead of having another presentation.

Mr Chainee replied that the Department cannot transform itself without receiving direction and guidance from government; the Department received directives regarding the Bill from the Minister. The Department is in the process of putting together the mechanics and policy to determine how radical transformation will be achieved. The title deeds programme is somewhat related to the work of the EAAB. When the number of people with title deeds increases the market for property increases as well. It is important to note that estate agents do not only sell residential properties but also commercial, retail and industrial properties.

Mr Moloi replied that most estate residential areas ask estate agencies for a fee of R30 000 if they want to sell the property. Procedures such as these prevent black estate agencies from working in the affluent areas. In terms of the lack of stock, the EAAB is working with the Department of Public Works, municipalities and provincial departments to secure properties for the previously disadvantaged individuals.

Mr Anresha Rajkumar, Assistant Director, Department of Human Settlements, added saying that the EAAB does not deal with the recruitment of estate agencies, nor does it influence who estate agencies hire. However, the EAAB keeps track of the hiring trends; whether it has increased or decreased.

The Chairperson said the provinces, excluding Mangaung metropolitan, have not shown positive results with regard to the title deeds backlog. She was not happy with the mild answers the Department and the EAAB responded with, however she understood that many of the questions related to the Bill and many of the issues raised during the meeting will be solved with the implementation of the Bill.

Adoption of the Draft Minutes: 29 November 2016
Minutes of Committee meeting held on 29 November 2016 were adopted.

The meeting was adjourned.