Housing Consumer Protection Bill: public hearings

Human Settlements

09 November 2022
Chairperson: Ms R Semenya (ANC)
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Meeting Summary


The Portfolio Committee convened on a virtual platform for public submissions on the Housing Consumer Protection Bill [B10-2021]. The Committee heard from Master Builders South Africa (MBSA) and the Development Action Group (DAG). Members from the Department of  Human Settlements (DHS) and the National Home Builders Registration Council (NHBRC) were also present to provide their input.

The Bill was intended to repeal the current Act, the Housing Consumers Protection Measures Act 95 of 1998 and was disseminated across provinces for public comment.

MBSA, representing over 4 000 people in the builders' industry, said that the Bill in its current form would increase the cost of home ownership and result in additional registration fees being imposed on homebuilders. In particular, the extension of scope of the definition of ‘home’ in the Bill to include alterations and renovations would result in regulatory and financial burdens on housing consumers.

The Bill also repealed a provision allowing cheaper private insurance for home consumers and imposed a warranty fund instead. MBSA said this would increase costs for the consumers the Bill sought to protect. 

There was also a request to limit the definition of ‘homebuilder’ to align it to the current Act which captured it better.

DAG recommended that the Bill be clear on who was going to be responsible for the enrollment of a home because not all emerging developers were familiar with Council requirements and homebuilders would not take the responsibility of enrollment due to fees. 

DAG was also mainly concerned about the lack of education drives to provide relevant information in the industry and the provision of practical technical training to developers and homebuilders.

Members asked whether there was a working relationship between MBSA, DAG, and the NHBRC. Both said they had a good working relationship with the NHBRC regarding sharing ideas and collaborating.

The Committee was concerned about poor building material and the lack of quality assurance in building projects. MBSA said it intervened and assisted in instances where homebuilders were unsatisfied with the quality of work and where the builder had been a member of MBSA. In other instances, these complaints were referred to the NHBRC.

The NHBRC said the Bill aimed to fill the gaps in the Act by imposing provisions requiring builders to enrol building projects and register with the NHBRC for greater supervision of projects.

The Committee wanted a better understanding of how exactly the Bill’s provisions could result in greater costs and less protection for housing consumers.

MBSA highlighted the definitions of various terms as the key cause and said that regular homeowners were restricted in conducting minor renovations and alterations in the Bill. Furthermore, there were added administrative and compliance burdens in the form of the requirement of enrolling and the need to employ a builder, which would ultimately result in additional costs and discourage homeowners.

A Member emphasised that the requirement for enrollment was in place to prevent illegal building, ensure compliance, ensure the structural integrity of builds, and ultimately prevent injury to the consumer. MBSA said that this requirement would be difficult to fulfil for those living in rural areas where they faced issues of title deeds.

The Department said that the Bill provided for exceptional circumstances where certain persons could be exempted from the Bill but emphasised that the ultimate purpose of the Bill was to protect the consumer.

This foundational goal also addressed the issues raised about the warranty fund in that the purpose was to prevent circumvention of the protection afforded by the fund through other agreements. The extension of the warranty fund would also help consumers who only discover structural defects in their homes at a later stage.

MBSA suggested self-regulation in terms of building agreements but the Department said that this suggestion had to be abandoned as it had previously not worked and the NHBRC was precisely established because the industry had failed to self-regulate adequately.

Meeting report

Public submissions on the Housing Consumer Protection Bill [B10-2021]

Master Builders South Africa  (MBSA) submission
Mr Roy Mnisi, Executive Director, MBSA, noted that he was also a board member at the NHBRC and introduced the senior manager that would be conducting the presentation on behalf of the MBSA. Some of MBSA’s member associations were invited to be part of the presentation but were not going to be presenting. The MBSA consolidated the comments and presentations from the regional and provincial member associations into their presentation. He introduced Mr Musa Shangase, President, MBSA.

Mr Terrence Mwase, Senior Manager: Membership Services, MBSA, introduced the members from different parts of the country from the association and conducted the presentation. The MBSA has eight master builders associations, and two affiliate associations and represents over 4 000 contractors and employers in the builders' industry. The MBSA and its members agree that there is a need for legislated protection for housing consumers in South Africa but believe the Bill in its current form is undesirable to the building industry and the housing consumers it seeks to protect. Of particular concern is the increase in the cost of home ownership that will affect housing consumers due to additional registration fees imposed on homebuilders. The MBSA’s proposals to the Committee are presented in good faith to improve the protection of housing consumers in South Africa.

General concerns about the Bill:

Extension of the scope of the definition of ‘home’ to include alterations and renovations with the effect of regulatory and financial burdens on housing consumers. The NHBRC’s inspectorate will perform legislative and administrative functions that fall within the exclusive constitutional competence of municipalities.

Funds collected for the enrollment of home consumers arising from alterations and renovations will be funding a warranty for major structural defects in respect of construction that, by their very nature, will not cause a major structural defect.

As currently structured, home consumers and developers will have to register as homebuilders even though they are not homebuilders and would, in the ordinary course, contract with registered homebuilders to effect the alterations and renovations.

The Bill repeals Section 23, which, among other things, provided for the possibility of cheaper private insurance for certain categories of home consumer.

On the Section 29 exemptions, Standard Building Agreements, which homeowners should be conscious of, already provide for supervision by Principal Agents who also have to carry comprehensive professional indemnity insurance company. The agreements provide significantly more comprehensive protection to the consumer. Self-regulation is the more sustainable long-term solution.

Section 42(3) on creating a warranty fund works against the current fact that homeowners can choose a service provider or insurer for the provision of a warranty. The result is an increase in costs for the consumer it seeks to protect.

An annexure with clause references has been provided to the Committee.

Mr Mnisi said that most of MBSA’s members were homebuilders so the inputs were based on what they received from them. The homebuilders welcomed the housing consumer protection reforms. However, they found the Bill cumbersome to homebuilders and homeowners as it increased costs of home ownership. It also discouraged home improvements and economic growth.

They made the following inputs on the Bill:

• The Bill seemed to be taking more from the housing consumer than it protected. It provided no option for alternative insurance cover as with other industry protection measures; for example, the Compensation for Occupational Injuries and Diseases Act which made provision for private role players. The availability of role players relieved administrative burdens on the government and provided choices for the industry. The reforms intended to benefit the housing consumers would likely result in the regulator controlling the fund and benefiting as opposed to the home consumer benefiting.

• Requested careful consideration of their comments in finalising the Bill, including limiting the definition of ‘build’ to just include a house or components thereof because the current Bill catered for everything, which was problematic.

• Requested the limitation of the definition of ‘homebuilder’ to align it to the current Act, which defines who the homeowner is and captures it better. With the new Bill, almost everyone including the homeowner himself who tried to make minor renovations, was included as a home builder and would have to register with the NHBRC.

• Requested the limitation of the definition of ‘home’ to align to the current Act and exclude from the Bill minor renovation work and improvements not necessarily for dwelling purposes, such as boundary wall extensions.

• Proposed that reimbursements be introduced for housing consumers who did not lodge any claim in their years of coverage. This was because many houses retained their structural integrity during their coverage period and the owners had not claimed. They felt that there should be some sort of reimbursement for the money that was not used.

• Requested clarity on whether homebuilders would contribute towards state-developed houses. If they were not, it could mean that when there were structural defects to be repaired, they would be claiming from the fund of private owners who would have contributed to the fund.

• Requested that the Bill retain the owner-builder option to apply for exemption as is with the current legislation.

Development Action Group (DAG) submission
Mr Chuma Giyose, Project Coordinator, DAG, conducted the presentation.

General concerns and comments about the Bill:

Due to Council fees and the process of enrollment, the process was inhibiting developers from following up on the process.

• On the training provided by the Council, boardroom training alone is insufficient and should take a more practical approach.

• The technical training for “homebuilders” should be linked to live projects driven by both public sector or public-private partnerships.

“Developers” should also be included in the training especially if section 30(1) requires a homebuilder or “developer” to enroll the home.

The Council should provide homeowner education drives to disseminate relevant information about achieving and maintaining satisfactory technical standards in the home building industry.

The Bill has excluded the establishment of a fund or funds targeted towards training of historically disadvantaged homebuilders and developers.

• Not all emerging developers are familiar with the Council requirements and homebuilders will not take responsibility for enrollment due to the fees. It is recommended that the Bill is clear on who is responsible for the enrollment of the home.

The Chairperson opened the floor for questions of clarity from Members so that when they engaged on the Bill, they were clear on what the Bill had to cover and respond to, taking into account that it was supposed to strengthen the protection of the consumer.

Ms S Mokgotho (EFF) asked MBSA for clarity on some of the statements they had uttered about the Bill.

Although the Bill had been drafted to protect the consumer, according to MBSA, the Bill would take more from the consumer than protect the consumer. Could they expand on this point so that the Committee would be in a position to understand how the Bill was contradicting itself?

The Bill was supposed to protect the consumer which was why there were amendments made to the previous Act. How did the Bill increase the cost for homeowners? The Bill intended to protect the consumers and reduce the cost for homeowners. Or was it the homebuilders that were going to make sure that they increased the prices of building the houses for consumers? How was the Bill going to discourage home improvements? If a consumer’s budget allowed them to make some improvements in their home, how would the Bill discourage this? This would be the case if the homebuilders were going to increase the prices and make it impossible for consumers to improve their houses. If the prices they were going to charge consumers were going to be above the inflation rate because they were chasing profit, this was going to be a problem. She said MBSA must make the Committee understand otherwise. She asked DAG to illustrate how the Bill was going to take more from the consumer’s pocket than protect the consumer? The aim of the Bill was to protect the consumer and not to take more from them.

Mr A Tseki (ANC) asked how the Bill would increase the cost for consumers.

MBSA said that they represented the contractors. The contractors had said that the annual registration was costly because they would sit for more than a year without getting jobs. He asked MBSA whether this could be reviewed. Many community members complained about the quality of the building material. Was MBSA able to supervise and ensure that their contractors were doing a quality job instead of waiting for consumers to complain? He acknowledged that submissions could be made to Parliament. But considering what MBSA was saying, they could have at least attended one public hearing to have a perspective on what the consumers and small contractors were saying. It was mainly the small contractors that had attended the public hearings.

The MBSA and DAG seemed to have a perspective from big contractors whose viewpoints contradicted what the Committee had heard. As a politician who was also a member of the ANC, upon hearing the suggestion of self-regulation from MBSA, he was inclined to ask what the benefit of this was. History shows that self-regulation tends to disadvantage consumers.

Mr C Malematja (ANC) said he wanted to make it clear that the NHBRC was a government entity and the role of government was to ensure that whatever was in its territory of governance had to be regulated and had to meet certain standards set by the government.

It also had to protect the constituency itself and those that would find themselves within that particular product, which in this case was a house. How was MBSA and DAG’s relationship with the NHBRC, bearing in mind that they were doing the same work and serving the same constituency? If the relationship was indeed good, considering they all advocated for quality and compliance, had they met or attempted to meet to engage and show each other the good and the bad sides of the Bill itself? If not, the Committee would not be surprised because they were contradictory.

It was important that the NHBRC’s work, through the Committee, went where it mattered most in the constituency and that people were given opportunities. The masses, including homebuilders, contractors and every stakeholder, had to agree on the Bill.

How would the NHBRC guard against unregistered homebuilders who built structures that ended up taking the lives of people?

The NHBRC’s current position is that things must be left as they are. Whether a person was registered or not, they could wake up and build a house that was not inspected, regulated or registered. Once a disaster occurred, the homeowners would not benefit because the person who built it was not registered. What was the NHBRC putting in place to ensure that benefits were accruing to that particular beneficiary in such case? DAG had condemned the boardroom training as if they had something permanent they could run throughout the year. Had they partnered up with a TVET college, he would understand but they were not training people through a 3-year course where they could end up with a formal trade by way of a diploma.

What was DAG offering in comparison to what the NHBRC was currently offering?

How was DAG regulating and minimising the mushroom of unregistered homeowner builders?

How were they dealing with the fact that anyone could wake up and build because it seemed this was what they were suggesting?

Had they approached the NHBRC as a private developer to be incorporated into their training and homeowner builder education?

Some Members had already covered some of the questions he was going to ask.

Ms N Tafeni (EFF) said that Members had gone to provinces and left people with high hopes of solving their problems. But Human Settlements had a crisis of people.

The NHBRC was the protector of homebuilders.

The Members heard the cries of small contractors who had not been appointed as builders.

There was also the problem of contractors buying cheap building material, and the NHBRC had said nothing about this.

MBSA response
Mr Mnisi said he would attempt to deal with some of the issues raised and avoid those related to the NHBRC.

The NHBRC was one of the key stakeholders of MBSA. As the Executive Director of MBSA, he was also serving on the board of the NHBRC. The MBSA was one of the key stakeholders that the NHBRC recognised to the extent that it was represented in the Industry Advisory Committee of the NHBRC. The Industry Advisory Committee was made up of key industry stakeholders that were supposed to be advising the organisation and the Minister insofar as the business of home building was concerned. The MBSA was well represented and enjoyed a good working relationship with the NHBRC.

In terms of sharing the ideas and concerns that may be coming either from MBSA’s members or members of the public, that was also done at that particular advisory committee. For example, Committee Members asked about issues of poor workmanship, use of poor quality material and so forth.

In as much as MBSA was an industry body and its members were made up of contractors, it also served members of the public. Some people knew that the NHBRC existed and others did not. People would come to MBSA and indicate that they had hired a homebuilder to build their house and were not happy with the quality of work done and material used. MBSA would look into this and check if the homebuilder was a local Master Builder Association member and, if so, intervene and try to assist. They intervened and tried to assist precisely because they stood for quality work. They ensured that when contractors applied for membership to their local MBSA, they understood the standards of professionalism, quality workmanship, honest and integrity which MBSA stood for. It was ensured that members of MBSA subscribed to these qualities.

Unfortunately, MBSA was not an institution created by statute and people were not forced to be members. But where MBSA had jurisdiction by virtue of membership, they ensured they intervened in those matters. They had not had instances of poor workmanship where the homebuilder was a member of MBSA or a local MBSA. In such instances, they would refer the complaint to the NHBRC which was the rightful organisation to assist a member of the public or a housing consumer insofar as their complaint concerned the quality of their house.

On MBSA’s concern about the protection of the housing consumer and the increase in cost of home ownership, the Bill extended the scope of particular definitions compared to the current Act. The new definition of ‘home’ that did not appear in the current Act introduced and covered minor installations, repairs to a house, renovations, alterations and other extensions to homes that were deemed to relate to the home's structural integrity. The definition in the Act referred to a dwelling unit constructed by a homebuilder. The definition of ‘homebuilder’ in the Bill defined a homebuilder as a person who causes a home to be built for any person, including the homebuilder himself.

The scope was extended in such a way that if an individual wanted to do a minor renovation such as putting up a boundary wall and taking it from three meters to four meters in terms of land, they would have to be enrolled because it forms part of renovation. He made the further example of if he as a homeowner just wanted to make his wall look better or add a bathroom, which in some instances he could know how to build a bathroom himself and make minor additions, he would have to enrol when he currently did not have to. This was discouraging because he would have to make an application and pay a certain amount of money just to increase the size of his home. These administrative burdens could create discomfort because a homeowner did not always have to employ a builder whenever needed to make a minor renovation. In some instances, homeowners knew the basics of building and could put together their own bathrooms.

In the current Act, a provision exempted these kinds of people who were allowed to apply to the NHBRC for an exemption if they could build themselves. Going forward, this did not seem to be the case anymore which would discourage those who wanted to make minor improvements.

MBSA was of the view that there were homeowners who would want to sell their houses and therefore would want to fix things and make improvements by embarking on minor renovations. Enrolling would cost money and cause stress to look for somebody who knew how to approach the regulator and wait for approval. It would also be stressful for these homeowners to know they were not complying with the law. MBSA did attempt to attend some public hearings.

MBSA’s association in Eastern Cape attended the public hearings where the public was invited the make comments. Notes had been taken in that regard and they were looking into these notes.

Mr Mwase thanked the Members for their questions and hoped his attempt to respond would do them justice.

He responded to the Members’ question on how the Bill would increase costs significantly and not protect the very consumer it was meant to protect.

He pre-empted his response by highlighting that MBSA was very much in favour of the Bill and the regulation of the housing consumer sector. What they were challenging were certain aspects of the Bill. Before going forward, he asked if there could be a conversation on how it [the Bill] could be refined so that it offered more protection to consumers.

He emphasised that they were not rejecting the Bill.

On public hearings, MBSA had engaged with the DHS right from the onset. Many years ago, MBSA had tabled their input on the Bill when proposals were first made for amendments. They had been in engagements with the NHBRC on a similar matter. They had also engaged with the Public Relations Office of Parliament for these public hearings. Not all of them attended because MBSA did not get all the invitations. However, for example, they were invited to attend the Eastern Cape public hearing and honoured the invitation. He was adamant that this was not the first time they were tabling their proposals.

On how the Bill would increase costs for consumers, there was an additional compliance requirement for enrollment because of the new definition of ‘home’ which now extended beyond the current definition. There was the additional compliance requirement by the local authorities, and the NHBRC and local government would both require licensing on the part of the homebuilder and the consumer. Ultimately this would result in increased costs for consumers.

He highlighted that construction had the thinnest margins which at that point in time was 2%.

Similar to any other organisation, a cost recovery model would require that additional cost of compliance would ordinarily, at the very least, be shared with the final consumer, which in this case was the homebuilder. This was what they meant when they said that, ultimately, all the additional compliance requirements and enrollment fees would be eating into the pocket of the consumer.

Another element of the increase in costs was the warranty fund. Where there was competition, there was a reduction in the overall price of a product or service, which was an economic effect that the MBSA could not fight against. The MBSA advocated for opening up the space to allow private sector players to come in. This was not a space they operated in as MBSA in that they did not provide indemnity cover. When a consumer was provided options, the ultimate goal was to ensure that they could have a choice over their costs and a choice over their coverage.

In response to Ms Tafeni and Mr Tseki’s questions relating to defective work and poor quality building material, he was aware that these were concerns and that when the Members, as lawmakers, heard of self-regulation, it was scary. He assured that self-regulation was the most sustainable and gold standard of any law-making process to ensure sufficient checks and balances within a system that required limited intervention. What the MBSA was advocating for was the continued use and promotion of things such as the standard suit of contract documents the industry offered and which MBSA was promoting. He had received communication from a homebuilder in the Eastern Cape who was a military veteran and who highlighted the efforts that he had made to try to remedy a situation he was facing. This was an example of the daily queries that MBSA received from consumers.

Their approach was to first insist and educate members of the public that the standard building agreements that organisations such as MBSA and many others offered were available for the consumer to provide sufficient protection for any work conducted on their behalf. MBSA was in engagements with the Banking Association of South Africa (BASA) because they acknowledged and realised that continued use of these project documents not only protected the consumer but also served their interest, as those who provided were asset financing for the construction and renovation of homes. So self-regulation had its flaws but it was not the enemy. But within the industry it would be the gold standard that needed to be aimed towards a more sustainable industry.

He hoped that he provided adequate responses to the questions posed by the various Members.

DAG Response
Mr Giyose said Mr Mwase had already captured his answers in his response.

In his presentation, he said that DAG was looking through the lens of emerging contractors and developers. He clarified that when he said emerging contractors, he was referring to Grade 1 to 4 contractors as per Construction Industry Development Board (CIDB) regulations. DAG was therefore not only speaking in the interests of large construction companies. In that regard, DAG’s submission was made last year when the Bill was made available for everyone to respond to. DAG took it upon themselves to attend a public hearing which was hosted in Hout Bay, Cape Town, last week. Similar points were raised there as raised in the presentation and the points made were circulated to Members of Parliament.

DAG was not only engaging because of the hearing in Parliament, but also engaging on the ground. DAG has been in the space of working with communities for a long time since 1986. Whatever influence DAG received was guided by what was coming from the ground. They had been engaging with emerging contractors and homeowners in that regard and all their proposals stemmed and were guided by the realities that were being faced day-to-day on the ground.

In response to Ms Mokgotho on that the Bill itself was an additional cost or burden to the homeowners, he clarified this issue similar to what Mr Mwase said. There was an absence of public knowledge about the processes of the NHBRC, which was what they got from their engagements with the contractors for many years. Very few knew what was required in terms of enrollment and being NHBRC accredited; hence DAG had been conducting information sessions, specifically looking at the various industry bodies such as the CIDB, NHBRC and the Building Industry Bargaining Council (BIBC) and why it was important to be registered with these bodies, what were the requirements and where to access them.

Accessibility was also one of the issues from the contractors and the public hearing held in Hout Bay. Currently, the offices of the NHBRC are inaccessible as they are based in Century City. Accessibility was a day-to-day challenge due to the lack of access to proper transport systems and the question was how to make NHBRC services accessible at community level.

Section 31(2)(b) of the Bill requires the homebuilder to provide a guarantee to cover the technical standards. If they have not enrolled the project or the home, they are required to stop construction before they provide the necessary documentation and guarantees. How did the NHBRC expect a person to provide such guarantee when it was not even factored within the costing of the project itself? They also might not be familiar with the requirements.

How would the NHBRC become more intentional in doing education drives and providing easily accessible information at community level? A law could not be enforced just because the Bill had been enacted and expected everyone to fall in line without providing capacity building initiatives that were satisfactory for the community and that created awareness. This had to be a consideration from the NHBRC regarding education drives.

In response to Mr Malematja’s question on whether DAG had attempted to engage with the NHBRC, DAG had tried to engage with the NHBRC within their local context and find out how they could partner up on their training programmes. What DAG experienced through the Khayelitsha project was that the contractors were able to do the physical work on site, and had the necessary technical skills and knowledge as deemed appropriate by the NHBRC because one of DAG’s requirements was to work with NHBRC-accredited contractors. During that process, DAG supported the contractors in registering, writing the test and getting certified. Because the training was an entrepreneur development course, they were also looking at soft skills such as business administration, financial management, and the ability to run a business and grow sustainably. The question was how to incorporate the current technical training programmes that the NHBRC provided with an outside stakeholder.

The response was that the NHBRC, in its current form, was a public sector entity and had not necessarily partnered with private stakeholders. Only when they received a directive from the national body would they consider such an opportunity to partner with a private stakeholder and deliver the technical training programmes. So DAG was in favour of considering partnerships as they had a partnership approach and believed in working collaboratively to realise the building of new quality township areas. The presence of the NHBRC was required in this regard.

The definition of ‘home’ encompassed renovations and had an extra burden in terms of costs.

It had to be borne in mind that the property owner would have to go through the Council processes of submitting building plans and getting the necessary approvals on whether they were doing an extension or building a boundary wall. This was a requirement by the legislation and by-laws that they submitted the building plans and was a cost on its own. It was expected that the same property owner would go to the NHBRC and enroll an extension of a boundary wall which was an extra cost for these particular individuals. This was another lens through which the definition had to be looked at because it was quite broad in its current form. How could it rather focus on the building and the structural integrity prospects of builds? He was open to more questions.

Follow-up questions
The Chairperson asked, on the point that the homebuilder was expected to register annually under the NHBRC, how did the same process affect the consumer if the consumer wanted to expand their house and employ a registered contractor of the NHBRC?

She did not get the how part.

There were no annual fees for renovations, alterations and building. A builder registered as a builder annually. How was the consumer affected?

Ms Mokgotho said there was something she wanted to make MBSA and DAG aware of about the NHBRC since the NHBRC was part of the association affiliated with MBSA. Most of the houses or the RDP houses that inspectors from the NHBRC had inspected had defects but had been approved by the Council.

There was a lot of wasteful expenditure that had been incurred.

Her advice was that MBSA goes to NHBRC and tell them to pull up their socks. If their inspectors required refresher courses, they must do so because most of the houses that they had approved were of poor quality. She did not know what the problem was or whether they just went to the houses at the end when they were completed and, for whatever reason, approved even if the quality was substandard.

Mr Malematja cautioned that care needed to be taken in this engagement, specifically with every term used.

There was the issue of enrollment and then there was the issue of the enrollment fee. If MBSA and DAG were concerned about the increase in the enrollment fee, they must be clear so that the Committee could say that it was concerned that the homebuilders would have to pay more in terms of the enrollment fee.

On the enrollment of any building work, this was legislated and had to remain this way because there was no way illegal building could be allowed on the basis that contractors did not need to enroll. If there was an agreement that the enrollment fee would be the problem, so be the case regarding this discussion. It could not be that the Bill could go forward on that basis because the Bill was not about the fee; it was about the totality of what was happening and the guarantee that the beneficiaries benefit.

The Committee, in saying this, was influenced by the notion that any building work had potential for risk, especially without quality assurance hence it was so emphatic about quality assurance in any building.

Mr Mnisi and his colleague said people must be exempted from extending a wall for a distance of two to three meters. But the very same wall, which was not regulated or enrolled, carried the strength of the house. What would happen if the wall that had been exempted fell onto anyone including a child? He said they needed to be practical when dealing with construction because anything could do damage in construction. One brick at a high level could cause problems or even kill a person.

He said the language must be simplified to indicate a request for help with the extra costs but with benefits because this would provide insurance. He suggested that MBSA and DAG speak with the NHBRC, have technical meetings and reach an agreement of some sort.

The Committee would lobby them to support the Bill to protect everyone in the country.

DAG Response
Mr Giyose responded to Mr Malematja’s question and said there were two parts to DAG’s concerns.

DAG was referring to the enrollment of a home. What needed to be clarified was who was responsible for the enrollment. DAG was on the same page in ensuring that homes were formally enrolled, compliant and ticked all the boxes regarding health and safety and fire regulations. Because the current Bill was not clear in terms of who was required to facilitate the enrollment of the home, in his understanding, if a person wanted to extend their home by building at the back of the house, he would have to source an NHBRC accredited contractor to erect and build the structure itself. It was within the contractual arrangements of the homeowner and the contractor that, as part of the obligation, they needed to enroll the property and have it inspected within the costs. But the majority of the contractors were not doing this. Many property owners in township areas and communities did not understand the requirements. DAG supported one property owner to fulfil the requirements because, in their understanding, the property owner needed to enroll the development under their own name.

That property owner came from an educational background and was required to write the technical test to be NHBRC accredited before they could enroll the development under their name. Hence the Bill needed to be clear about who was required to enroll. Even the emerging developers did not necessarily have the resources that the mega developers had regarding technical skills. So as part of training, how could emerging developers also be targeted along with homeowner builders. If it was a requirement for the developer to enroll the home under their name, then the training had to be geared or aligned with the developers as well.

MBSA response
Mr Mnisi said that although he was a board member of the NHBRC, he did not have the mandate to respond to questions relating to it. He would limit his response to questions related to MBSA.

MBSA fully supported the housing consumer protection reforms and believed there was a need to improve. The MBSA also supported the enrollments and believed that each and every house that was being built in the country should be enrolled. He advocated for the inclusion of rural homes because the Act applied across the country and did not discriminate against urban, peri-urban and rural areas. However, under the Bill, rural areas were not covered by the system which required a person enrolling a property to have a title deed and proof of ownership of that particular property. But it was well known that those things were not available in the rural areas because the chiefs and kings were the custodians of the land and sometimes people only had permits to occupy. The protection needed to cover not only urban areas, but also people in marginalised areas and those who needed it most. It would even assist in developing the housing market in those areas.

He emphasised that there was an appreciation of the protection of home consumers and wanted to see this happening and were not against it. It was just the areas that MBSA had highlighted that it believed needed to be looked at in terms of the scope and coverage which they believed would create a burden.

He said they were amenable to disagreement and were not suggesting a hard and fast perspective but were simply sharing their view. There was a difference between enrollment and registration. The property or the house itself was what was being enrolled while the homebuilder was being registered with the NHBRC. There was no renewal of enrollment; enrollment was done as and when there would be building.

Registration had to be renewed from time to time because things had changed. Without renewals, there would be financial problems because the regulator used the registration fees to cover operational costs. The registration of renewal could be debated in that it could be once or twice a year, an issue that the regulator could be left to look at and find an appropriate solution.

However frequent registration would be cumbersome and create problems for contractors but rather than arguing, the regulator could decide on this aspect.

He acknowledged Mr Malematja’s concern about quality assurance in building where there could possibly be personal injuries but said that the warranty fund did not cover personal injury claims. It purely dealt with issues of quality. Here and there, it could be linked to personal injuries but the NHBRC and the regulator were not dealing with these issues. These issues were dealt with in terms of other insurance covers that specifically provided for the scenario where a wall collapsed and somebody got injured.

If he missed any questions, he requested that he be reminded so he could respond.

DHS Response
Mr Paul Masemola, Acting Chief Director: Legal, DHS, said that the Bill intended to protect the people.

He heard the submissions talking about self-regulation, where people were engaged in agreements and contracts with builders. Currently, enforcing those agreements in courts is very expensive and most people would not be able to enforce them even though they existed.

The Bill intended to ensure that it covered everyone. The Department was aware that the self-regulation did not work up to now so it was important to ensure that everyone was protected as per the government mandate. They needed to avoid the situation where somebody would just decide that they were able to build and start renovating their house and later have structural defects. Sometimes such people would even sell the house before the structural defects appeared and those defects would appear when somebody else had already bought the house. So it was important that every project undertaken be enrolled irrespective of how small it was because it could be dangerous in the long run.

The Department noted DAG’s quest for public education and said they were welcome to continue engaging on how best to improve on the issues of building capacity for builders, especially small builders and contractors, to ensure that the standards required by the NHBRC and housing codes were met.

NHBRC response
Ms Natasha Fouche, Head of Legal, NHBRC, said that there had been numerous issues raised and she would not necessarily respond to them chronologically.

On the homebuilder renewal, Section 25(6) of the current Bill provided that the homebuilder must renew his registration annually. It was a once-off registration and then a renewal on an annual basis of that registration of the homebuilder.

There had been much said about excluding the owner builder from the Bill. As Mr Masemola had indicated, the main purpose of the Bill was to maximise the protection of housing consumers through the warranty fund and its enforcement. In this regard, public interest required that an owner builder be included in this dispensation as owners who built homes also fell into the category of housing consumers.

Section 2(5) of the Bill made provision for the Minister, after consultation with the Council, in exceptional circumstances and if in the public interest on conditions that may be determined, exempt certain persons or homes from the provisions of the Act.

At the end of the day, the purpose of the Bill was to ensure that there was mandatory protection for all housing consumers in the home-building industry.

On the issue raised concerning certain agreements being exempted from the Bill, it was important to note that a contract could not override legislation. By placing reliance on a particular contract, the protection afforded by the NHBRC through its legislation was effectively being taken away. Exempting homes built in terms of particular agreements would result in an avenue of avoiding the protection afforded by the warranty fund.

On the issues raised around other insurance, negligence would have to be proven and it was difficult for an ordinary housing consumer that the Bill aimed to protect to approach the court to solve that particular issue. The law of contract was limited to private law whereas the public interest required intervention through regulation by the legislature.

The Bill aimed to ensure principles of equity, justice and fairness in the contractual provisions provided for. These contractual provisions provided remedies for both housing consumers and homebuilders to protect their respective contractual rights. The Bill also sought to protect up-and-coming homebuilders.

The use of particular contracts would effectively mean that housing consumers could use those specific provisions to circumvent payment to up-and-coming homebuilders who, at the end of the day, needed to enter the building market. With those disputes and contracts, obtaining a court date could take considerable time and entail spending considerable money. The Bill’s provisions ensured that disputes may be referred to adjudication and made provision for a 28 day period in which these disputes had to be adjudicated. This would ensure speedy justice for both homebuilders and housing consumers equally.

On the issue of the extension of the warranty that was raised, the main aim of the Bill was to protect housing consumers and, by extension of the warranty, that was exactly what the Bill sought to achieve, especially concerning roof leaks. If the warranty was limited to a certain period, housing consumers would not necessarily be aware of defects in their roofs. Extending the period, particularly because rain only came during certain times in certain provinces, would allow housing consumers to become aware of that defect in time.

On whether the Bill sought to include minor renovations, the Bill, in its regulations, made provision for the exclusion of certain minor alterations. However, once a particular renovation or extension required municipal plans, it would no longer be regarded as minor.

Mr Makapela, who was the NHBRC’s technical expert, would guide in that regard and answer any other questions that may have been raised.

Mr Craig Makapela, Acting Executive Manager: Business Services, NHBRC, said that it was worrying that the industry wanted to self-regulate.

He said that the business of business was business. Currently, the NHBRC was developed because of the 1996 resistance of the Building Industry Federation of South Africa, where the then Director-General of Housing decided to establish the legislation not because government wanted to have control, but because it wanted to protect housing consumers by ensuring that the NHBRC became a statutory organisation in 1998 because the industry was not doing what it was supposed to do.

To say that the industry had matured enough to self-regulate, the recession in the industry could be seen and begged to differ. The NHBRC’s inspectors were finding a lot of houses being built by small, medium and large contractors without enrollment and those builders were registered with the NHBRC, so it was not that they did not know about the Council. He did not believe that the industry was mature enough to regulate itself.

Mr Mnisi tried to address the issue of what the warranty covered. The current Act referred to major structural defects but the NHBRC noticed the gaps that the Act was not fulfilling and it had to change to adjust to cover the gaps that were not anticipated. But as society matured, there were areas identified that needed improvement.

Mr Malematja spoke about boundary walls.

Boundary walls were regulated through the municipality but the NHBRC noticed that in most cases, builders built boundary walls that were supposed to be structural elements without doing structural designs. A wall was above 1.2 meters in height. A boundary wall could be looked at as a boundary wall but once it became a structural element, a builder needed to ensure that there was an engineer that was involved in ensuring that they designed that wall because the NHBRC had seen instances of walls falling on people. Housing consumers needed to be protected from non-structural elements that were supposed to be structural elements of the property.

Ms Mokgotho said that the BNG houses, the former RDP houses, were substandard. The Bill wanted to extend into this space because most of the time, there were contracts between a builder and the Department whereby the NHBRC was caught between a rock and a hard place instead of stopping development and making sure that they complied and addressed the grading.

In most cases, the Department would take a builder with an NHBRC certificate without looking at the capabilities of that builder. If the builder was a provision one, he could not build 100 units. These were the areas where the Bill emphasised quality assurance and making sure such spaces were covered. Regarding minor and major renovations, the regulations provided for the instances in which a project could be exempted and where the NHBRC’s structural engineers would have to look at it and confirm. They had seen extensions whereby people were decapitated by slabs because there was no requirement for the builder to go to the NHBRC for an assessment and have a competent person, being the structural engineer, sign off on that property.

The Chairperson thanked MBSA and DAG for their inputs.

The Committee Members would look at the issues raised as they deliberated on the Bill.

They would also look at the public comments on the Bill, consider everything that the public had raised, and continue to get clarity on certain issues from the Department and NHBRC.

They would ensure the Bill that represented to Parliament represented the aspirations of the majority of people. Indeed as the Bill was said to aim for the protection of consumers, the Members would look at it clause-by-clause and see whether, indeed the consumer would benefit and be protected. She thanked the entities for attending the meeting.

The entities were released from the meeting.

The minutes dated 31 August 2022 were duly adopted.

The minutes dated 7 September 2022 were duly adopted.

The minutes dated 14 September 2022 were considered. These were the minutes of the Committee’s meeting with the provinces and there were resolutions.

The Chairperson proposed that the secretariat develop an action plan on the issues that Members had raised with each of the provinces, including the issues that people had raised in the public hearings and circulate the plan to Members in the next meeting so that the Department and provinces could respond to the issues.

Mr Malematja seconded the proposal.

The minutes dated 14 September 2022 were duly adopted.

The meeting was adjourned.

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