Property Practitioners Bill: Department response to submissions & final mandates; Committee Legacy Report

NCOP Health and Social Services

25 March 2019
Chairperson: Ms L Dlamini (ANC, Mpumalanga)
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Meeting Summary

The Committee met with the Department of Human Settlement for responses to public submissions on the Property Practitioners Bill. Following the passing of the Property Practitioners Bill by the National Assembly in November 2018, it was referred to the National Council of Provinces for deliberation in terms of section 76 of the Constitution. Provinces co-ordinated and successfully held public hearings across their respective regions supported by the Legal Services of the National Department of Human Settlements.

 

The Department took the Committee through its responses to public submissions on the Property Practitioners Bill. Comments were received from Mr R Ekanayake on clause 50, that the requirement for Black Economic Empowerment (BEE) Certificate may be too expensive and difficult to small companies to comply therewith. The Department’s response was that it is a constitutional requirement to comply with all the BEE empowerment legislations and employment equity Acts and in particular if a property practitioner wishes or intends to do business with the State. The Real Estate Business Owners (REBOSA) believed there was need for clarity on the definition of “Business Property Practitioner”. The Department, in response, said the definition of property practitioners will be clarified and defined by Regulations through the provisioning of different occupational level. REBOSA further called for alignment of the legislation with the Property Sector Transformation Charter. The Department, in response, pointed out that the real intention of the Bill was to advance transformation within the sector and the Bill is fully aligned with the provisions of the Charter. On Sections 54(1), the Institute of Estate Agents of South Africa (IEASA) commented that the Section does not contain requirements relating to the interest received on money in Trust account. IEASA submitted that Trust accounting is not always clear. Requirements for the Trust Account should be set out. These sections do not contain requirement relating to the interest received on money in trust or invested in a separate savings or other interest-bearing account. The extent the Bill requires interest to be paid over the Fidelity Fund. IEASA proposed that similar requirement be included in the Bill or alternatively in the subsequent regulations. However the Department’s response was Section 54 makes provisions for Trust account and the Bill makes further provision for exemption from holding a trust account and d further provisions thereto will provided by the Regulations.

A majority Member agreed with the Department’s position that most of the concerns raised by stakeholders as expressed in the submissions would be addressed upon formulation of the Regulations. She added the majority believed the Bill would go a long way in bringing about transformation in the real estate industry, in ensuring that stakeholders participate on an equal footing. A DA Member disagreed with the thinking that any deficiencies in the Bill would be rectified by the Regulations. It was simply not true and was made clear in the letter sent to the Chairperson by the lawyers. The legal advice stated that it was apparent that the Minister would be restricted to making regulations in relation to two categories: (a) such matters as prescribed in terms of the legislation and (b), incidental matters of a procedural and administrative nature. Outside of the foregoing, the Minister would have no power to make any regulations. Put differently, the making of regulations by the Minister outside the foregoing would be illegal. It was subsequently agreed to that Members with additional concerns should follow due process rather than reopen up discussions in Committee.

Members read out final mandates on the Bill from their respective provinces. Final mandates had not been received from North West and Gauteng.

The Committee gave consideration to the Report on the Property Practitioners Bill. The Report was adopted without amendments.

The Committee Legacy Report was adopted without amendments.

Meeting report

The Chairperson welcomed Members and officials from the Department of Human Settlements (DHS) to the last meeting of the Committee. She indicated that following the passing of the Property Practitioners Bill by the National Assembly in November 2018, it was referred to the National Council of Provinces for deliberation in terms of section 76 of the Constitution. Provinces co-ordinated and successfully held public hearings across their respective regions supported by the Department’s Legal Services. She invited final mandates from the provinces and noted final mandates had not been received from North West and Gauteng.

Property Practitioners Bill: Final Mandates

Free State Legislature

Ms M Moshodi (ANC, Free State) read the final mandate for the Free State Province as follows: The Free State Legislature votes in favour of the Bill.

Limpopo Legislature

Ms T Mampuru (ANC, Limpopo) read the final mandate for Limpopo Province as follows: The Province votes in favour of the Bill.

Eastern Cape Legislature

Ms P Samka (, ANC, Eastern Cape) read the final mandate for the Eastern Cape Province as follows: The Province votes in favour of the Bill and mandates the Eastern Cape Permanent Delegate to the NCOP to vote in favour of the Bill.

KwaZulu-Natal Legislature

Ms L Zwane (ANC, KwaZulu-Natal) read the final mandate for KwaZulu-Natal Province as follows: The KwaZulu-Natal Legislature met and agreed to mandate the KwaZulu-Natal delegation to the NCOP to support the Bill.

Western Cape Legislature

Ms T Mpambo-Sibhukwana (DA, Western Cape) read the final mandate for the Western Cape Province as follows: The Western Cape Provincial Parliament confers on the Western Cape’s delegation in the NCOP the authority to support the Bill.

Northern Cape Legislature

Ms Moshodi read the final mandate for the Northern Cape Province as follows: The Province votes in favour of the Bill.

Mpumalanga Legislature

The Chairperson read the final mandate for Mpumalanga Province as follows: The Province votes in favour of the Bill.

She noted there was overwhelming support in favour of the Bill by Provinces. She invited the Department’s responses to public submissions.

Response to public submissions by the Department

Mr Khwezi Ngwenya, Chief Director: Legal Services, DHS, took the Committee through the Department’s responses to public submissions on the Property Practitioners Bill. 

Comments were received from Mr R Ekanayake on clause 50 of the Bill. He indicated that the requirement for Black Economic Empowerment (BEE) Certificate may be too expensive and difficult to small companies to comply therewith. The Department’s response was that it is a constitutional requirement to comply with all the BEE empowerment legislations and employment equity Acts and in particular if a property practitioner wishes or intends to do business with the State.

On clause 53, Trust Account, Mr G Stroebel had submitted that it is too expensive to hold trust account and the expenses thereto. The Department’s response was that clause 54 makes provisions for exemption from keeping Trust accounts and section 55 further makes provisions relating to keeping of accounting records.

Comments were received from J Lee Sonnekus on the cost of compliance with the provisions of the Act, stating that it will be difficult for the SMMEs both black and white to comply with the legal and compliance requirement as set out in the Bill. The Department’s response was that clause 4 makes provisions for various exemptions from the compliance requirements and in particular targeting the small and medium enterprises (SMME)

On clause 54(1), the Institute of Estate Agents of South Africa (IEASA) commented that this provision does not contain requirements relating to the interest received on money in Trust account. IEASA submitted that Trust accounting is not always clear. Requirements for the Trust Account should be set out. These sections do not contain requirement relating to the interest received on money in trust or invested in a separate savings or other interest-bearing account. The extent the Bill requires interest to be paid over the Fidelity Fund. IEASA proposed that similar requirement be included in the Bill or alternatively in the subsequent regulations. However the Department’s response was that clause 54 makes provision for Trust account and the Bill makes further provision for exemption from holding a trust account and d further provisions thereto will provided by the Regulations.

The Banking Association of South Africa (BASA) submitted comments on the exemption from appointing an auditor (clause 23). The Association stated that this provision permits the appointment of an accountant as opposed both an accountant an auditor for property practitioners with turnover of less than R2.5 million. Whilst the Bill specifies the criteria for an “auditor”, there are no criteria or definition for an “accountant”. While BASA recognized that the intent of this clause is to cater for small new entrants into the sector (reduce the cost burden of having their affairs audited), this poses a risk to consumers who entrust monies to property practitioners in the form of deposits. This may adversely affect consumers whose lives the Bill seeks to support due to fraud or malpractice. Further, this does not support the principle of “public interest”. The Department’s response was that the issue of exemption will be dealt with in accordance with the merits of the submission by the property practitioner and the Minister will then decide to grant or reject the application.

BASA made further submissions on Fidelity Fund Certificates, noting that clause 47 proposes that a property practitioner must apply for a fidelity find certificate and pay the prescribed fees every three years. The possession of a Fidelity Fund Certificate will be a mandatory requirement for acting as a property practitioner. In instances where a juristic person participates as a property intermediary, every director of the company will be required to be in possession of a certificate. BASA believed that this requirement will place an undue burden on all directors/members/trustees/partners if they are to possess a fidelity certificate as such entities employ specialists to fulfil roles without their having any knowledge or involvement as a property practitioner.  In addition, this will also place an undue burden on such entities and these costs will in turn be on passes onto the consumer by such entities, which will hamper transformation. The Department’s response was compliance requirements as set out in section 47 would apply to individual directors to the extent that they engage\involved in the property and business transaction.

The Real Estate Business Owners (REBOSA) believed there was need for clarity on the definition of “Business Property Practitioner”. The Department, in response, said the definition of property practitioners will be clarified and defined by Regulations through the provisioning of different occupational level.

REBOSA further called for alignment of the legislation with the Property Sector Transformation Charter. The Department, in response, pointed out that the real intention of the Bill was to advance transformation within the sector and the Bill is fully aligned with the provisions of the Charter.

Discussion

The Chairperson appreciated the responses from the Department as presented and invited comments from Members. The submissions from the public were very useful as they assisted in the strengthening of the Bill.

Ms Zwane agreed with the Department’s position that most of the concerns raised by stakeholders as expressed in the submissions would be addressed upon formulation of the Regulations. She added the majority believed the Bill would go a long way in bringing about transformation in the real estate industry, in ensuring that stakeholders participate on an equal footing.

Mr C Hattingh (DA, North West) disagreed with the thinking that any deficiencies in the Bill would be rectified by the Regulations. It was simply not true and was made clear in the letter sent to the Chairperson by the lawyers. The legal advice stated that it was apparent that the Minister would be restricted to making regulations in relation to two categories: (a) such matters as prescribed in terms of the legislation and (b), incidental matters of a procedural and administrative nature. Outside of the foregoing, the Minister would have no power to make any regulations. Put differently, the making of regulations by the Minister outside the foregoing would be illegal. He questioned the Department’s fall-back position as supported by Ms Zwane and added that if there were recommendations and suggestions that would improve the Bill, they should be effected in the Bill itself. He observed that no suggestion, however valid, had shifted the Department’s position even an inch. If the real estate industry was to be transformed, red tape should be done away with. He could not understand where the Department’s reluctance was stemming from.

Mr Mbulelo Tshangana, Director-General, DHS, said the real estate sector was not going to transform on its own without legislative intervention. Despite various efforts through charters and negotiations, the sector had failed to transform itself. Blanket exemptions would do away with necessary levers that would bring about transformation. He added that the Regulations would be released within a reasonable timeframe as per the norm and all administrative concerns would be dealt with then.

Mr Hattingh said there was a general understanding about what Regulations were but not all concerns about the Bill could possibly be addressed by them. The question that should be asked was whether the Bill is transformation-friendly or not. He would argue that it was not.

Ms Mampuru expressed concern that the discussions were getting long winded, given final mandates had been submitted and read out. She suggested that Members with additional concerns follow due process rather than reopen up discussions in Committee. The majority could not be held at ransom. She threatened to leave the meeting.

The Chairperson agreed with Ms Mampuru. Provinces had indeed submitted their final mandates but then Members could not be denied an opportunity to traverse issues raised during public hearings. She thanked the Committee for its efforts up to the finalisation of the Bill.

Consideration and adoption of Report on the Property Practitioners Bill

The Chairperson took the Committee through the Report on the Bill and put it up for adoption. She reiterated that following the passing of the Property Practitioners Bill by the National Assembly in November 2018, it was referred to the National Council of Provinces for deliberation in terms of section 76 of the Constitution. Provinces co-ordinated and successfully held public hearings across their respective regions supported by the Legal Services of the Department.

Ms Mampuru moved.

Ms Zwane seconded.

The Report on the Property Practitioners Bill was adopted.

Adoption of Committee Legacy Report

The Chairperson indicated Members had received copies of the Legacy Report prior. She highlighted the substance of the report and noted that on matters that the next Committee should take forward, the setting up of a Border Management Agency was one priority.

Members had no reservations with the report.

The Legacy Report was unanimously adopted without amendments.

Closing remarks

The Chairperson appreciated the engagements and gave a vote of thanks to Members and Committee Staff for their sterling work during the fifth parliamentary term. She wished everyone well.

The meeting was adjourned.

 

 

 

 

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