Core Business operations & guidelines: National Home Builders Registration Council briefing

Human Settlements (WCPP)

08 May 2018
Chairperson: Ms M Maseko (DA)
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Meeting Summary

The National Home Builders Registration Council (NHBRC) briefed the Committee on its core business operations and its guidelines. Its mission was to protect housing consumers and to regulate the home building environment.

The NHBRC identified the foundations of a building as the most crucial stage at which inspections occurred. There were legal processes in the regulatory functions of the NHBRC which fell into place if building contractors failed to comply with its orders. It recognised that there was a gap in the legislation regarding the warranty fund and what the NHBRC could use it for, and the protection of housing consumers prior to the issuing of an occupational certificate. Plans were in place to formalise a process by which inspectors could be trained specifically for an inspector’s qualification.

There had been a focus by the NHBRC to implement a better information technology (IT) system in order to ensure that they could keep track of where their inspectors were in real time, and what still needed to be done on site. At the national level, 339 cases had been handled by the NHBRC, resulting in 14% of the contractors involved being issued with warnings, and 69% being suspended. Roughly half of the cases came from the Western Cape, but this was due to the Western Cape being the most proactive in pursuing cases.

Members of the Committee said they were concerned that what the NHBRC had presented did not tally with what was actually happening on the ground. Questions were raised over why subsidised housing developments in certain areas had come to a halt due to problems with structural defects. Members asked why the NHBRC was not more proactive in engaging with consumers in subsidised housing developments. They resolved to visit some unfinished building sites with inspectors to see the situation for themselves.

Meeting report

National Home Builders Registration Council (NHBRC): briefing

Mr Stefan Janser, Provincial Manager: Western Cape Division, NHBRC said that the vision and mission, as set out in the annual performance plan (APP) was “to be a champion of the housing consumer” and “to protect housing consumers and to regulate the home building environment.”

All builders needed to be registered with the NHBRC on an annual basis, and they had to renew their registration.

In terms of the housing consumer protection process, the highest risk lay in the foundations of houses. Once the house had been completed and the inspection had been carried out, there was an occupation certificate which was given to the housing consumer, usually through the municipality. The warranty cover started from the date of occupation and was a three-month maintenance warranty, a 12-month roof leak, and a five-year structure warranty, which the builder had to give to the housing consumer by law. If the builder did not give any of those warranties, housing consumers could then log a complaint with the NHBRC, which acted as an independent party to see if the builder had any legal liability in terms of those warranties. If the builder did have a legal liability, the NHBRC could through its regulatory functions force the builder to go back. If the builder did not have a legal liability, the NHBRC would convey that message to both parties. Where there was a structural failure of a building, the NHBRC would do the remedial work on behalf of the housing consumer to restore the asset. A legal process would then begin against the builder to recover the money if it was possible. In most cases it was a dead end, as those builders were no longer in business.

The regulation of the home building industry was done through the registration of builders. Grading was something that would be implemented. They had a database of competent builders. Any builders who were not compliant were deregistered from the NHBRC through a formal disciplinary committee (DC) process. The home building manual had recently been changed since they had been working together with South African National Standards (SANS) to create a comprehensive, single document, so now everyone was working from the same technical standards.

Mr Janser said that the key programmes came from the NHBRC’s APP. It was striving to become a well-functioning organisation with an efficient information technology (IT) system. It had moved to a digital platform on inspections which provided live data on inspections, compliance and where they were. They had migrated to SAP as their IT system. The implementation had not gone as well as they would have hoped. They were working on improving that.

The NHBRC had done well in mitigating structural risks in buildings. Their biggest problem now lay in the finishing of buildings, such as painting and plumbing.

They had about 200 in-house inspectors at the national level, and had advertised to outsource inspectors to supplement that number. They had a full training centre and were in the process of establishing a full inspection school. The NHBRC was looking at professionalising the industry. Currently, there was no particular course which would deem someone a qualified inspector. Inspectors migrated into the field from other professions, such as quantity surveying and architecture.

Of the national figure of 339 cases taken by the NHBRC, 69% of homebuilders were suspended and 14% were issued warnings by the NHRBC. The Western Cape had the leading figures -- about 50% of the national figure -- but this was because the Western Cape division was the most proactive in pursuing cases.

Discussion

Mr Thando Mguli, Head of Department: Department of Human Settlements (DHS), said his department often worked overtime and on weekends, so the NHBRC needed to avail their inspectors over weekends and when need be.

Mr Janser responded that the NHBRC would need to look at their operational model on how to work with the Department outside of regular hours.

Mr N Hinana (DA) welcomed the work done by the NHBRC. In certain communities, very poor work had been done by contractors on homes. He asked how the NHBRC assisted communities where contractors had not completed the building of subsidised houses.

Ms T Dijana (ANC) referred to the challenges within the subsidy housing sector, where departments/municipalities were appointing homebuilders who were not registered with the NHBRC. She asked whose responsibility it was to share information between departments and municipalities. Was it not the responsibility of the NHRBC to inform departments and municipalities of those builders who were registered with them? On the cases taken up by the NHBRC, for how long were the builders suspended?

The Chairperson asked how it was possible that the NHRBC, on the various inspections on sites, failed to spot poor building materials.

Mr Janser said that the key issue was to ensure the builder was registered and the house was enrolled before they started. A lot of the problems came from conditions not being met at that stage. He was comfortable that the inspection process was sound. If they find that improper materials were being used, they issue non-compliances. It then became a legal issue if the builder was not willing to go back to sort the problem out. In many cases, if they identified where the problems were, the builders were happy to go back and fix them. If not, it becomes an internal process which is presented to an independent party. This would result either in a warning, a fine of a maximum of R 25 000 per infringement, or the withdrawal of the builder’s registration.

Where the housing consumer had engaged the building contractor and the work being done had been stopped and there was a new contractor on site, costs for those legal processes for the housing consumer were their costs for the construction phase. The NHRBC had recognised that this was a gap in the legislation. They could not access the warranty fund in this regard. They could force the builder to remember the issues, but if the business had gone into liquidation they could not do so. The warranty fund itself was set aside for structural defects.

The Chairperson said that they were trying to establish when the warranty fund came in.

Mr Hinana said that he was not satisfied with the response of Mr Janser. He had been referring to cases where the building of subsidised housing had been suspended. Would it be possible to fix a date when they could visit those communities so that the NHBRC could provide a solution to the problems they had been having for a number of years?

Mr Janser said that if there was a specific case that warranted their attention, it needed to be presented and looked at. It could be that the issues of the case were in the framework of the NHBRC so that they could provide relief or assistance to housing consumers. The warranty fund only came in from when occupation of the house took place.

The Chairperson said that she thought that this was happening only in CapeTown. The problems were not being addressed in the rural areas.

Ms S Davids (ANC) said that the NHBRC needed to look at Bella Vista in Ceres where there had been poor work done on houses, particularly with respect to building materials, as a case study. What was the relationship between the NHBRC and the municipal inspectors like? How many inspectors did the NHBRC have, and where were they located? How many times were they supposed to visit a house that was being built, or a development?

The Chairperson asked if the NHBRC looked for SA Bureau of Standards (SABS) certificates on materials when it did inspections. She also asked about the construction of houses and the geological reports.

Mr Janser noted the concern over Bella Vista, and said they would send out an inspector. They sent inspectors a minimum of four times, and the most important stage of the inspection was the foundation of houses. They had about 200 inspectors nationwide, and 23 in the Western Cape. 80% of their work came from the metro area, and within about a 40 km radius of the NHBRC’s offices.

There were problems which came from large scale projects, and they were looking at outsourcing for that.

Regarding the quality standards, the SANS 10400 was the technical standard in home building, and the provincial and municipal inspectors all complied with that standard.

The geo-tech report was very important as it determined the type of foundation that was given to houses. The appointed contractor would appoint a geo-tech specialist. The specialist would then give the NHBRC a full and comprehensive report. The NHBRC’s engineer who sat in the department would evaluate the report and then sign off on it. It was then important for inspectors to go to the site and evaluate compliance with the report.

Ms Davids asked why were there still issues in housing developments -- were the inspectors not signing off on the houses?

Mr Janser said that there was very robust control from the three spheres of government on that. He could not talk about the provinces and the municipalities, but he did know that they had certain processes in place before they handed over occupational certificates. The NHBRC was concerned with the structural components of houses. It would sign off on a house if it met the final unit report.

Ms Davids said that what Mr Janser was saying was not being implemented on the ground.

The Chairperson wanted to know why there was such a big gap between what Mr Janser was saying and what was being done.

Mr Janser said he thought it was about the partnerships and the way in which information flowed between the parties concerned.

The Chairperson asked how the NHBRC enforced contractors to comply with guidelines. If it had suspended a contractor’s NHBRC registration certificate, how did it monitor that the contractor did not operate under a different business name again? For how long were the suspensions?

Mr Janser said if they picked up issues on site, they would issue a notice of non-compliance. On that notice would be exactly what was wrong on site. There would also be a timeframe given to the contractor to fix the issues. Builders would generally fix the problems. If the problems in the non-compliance notice were not resolved, the NHBRC went straight into a legal process. The NHBRC legal team would issue a notice to suspend the builder if the builder did not address the issues within seven days. If the builder did not comply with this, then the NHBRC would suspend the builder on their database. If the builder still did not comply and the issue became serious enough, the NHBRC would take out an interdict at the High Court. If the issue was not serious enough, there would be an internal disciplinary committee process. The extreme case was where the contractor refused outright to address compliance issues despite the legal process, and they would leave the industry. Coming back into the industry was a problem, because the NHBRC’s database picked up ID numbers of contractors, contractors’ staff and other associates.

Ms Phila Mayisela, Chief Director: Human Settlements, said that there was a good relationship between the Department and the NHBRC. The DHS would look at the gap in the legislation where the awarded tenders and NHBRC suspensions were not in sync.

The Chairperson asked how many warranty cases there had been in the Western Cape during the last financial year.

Mr Janser said there had been around 75 claims. The largest claim had been for 22 houses in a retirement complex in the Southern Suburbs.

The Chairperson thanked Mr Janser for the presentation.

Resolutions

Mr Hinana said he would like the Committee to visit sites where houses were incomplete with inspectors, in Nyanga, Philipi and Khayelitsha.

Ms Davids suggested going to Bella Vista also.

The Chairperson said that they would determine the exact sites before the oversight visit. She also wanted clarity around the issue of the outsourcing of inspectors.

Ms Dijana said the NHBRC needed to send a report about the 22 houses in the warranty claim so that the Committee could analyse the cases.

Adoption of Minutes and Reports

Members considered the draft Committee minutes of the meeting held on 15 March 2018

Mr Hinana moved their adoption, and Ms Davids seconded.

The minutes were adopted

Ms Davids moved the adoption of the draft Committee reports for the fourth quarter of 2017, and the first and third quarterly reports as at 8 May.

The reports were adopted

Ms Davids moved the adoption of the draft Committee reports for the fourth quarter of 2018. Mr Hinana seconded, and the report was adopted.

The meeting was adjourned

Documents

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