Housing Consumer Protection Bill: DHS briefing; with Minister and Deputy Minister

Meeting report

Opening remarks

The Chairperson welcomed the Committee Members and emphasised the importance of the meeting. The matter under consideration was one of the seven pillars of the housing policy created in 1994 by the late Joe Slovo. He explained that as the Housing Consumer Protection Bill was under Section 76, it required all provinces to be engaged and to assess the necessary mandate to ensure its adoption. Therefore, it was important that the Committee work together and follow the timelines to ensure that at the end of the day, they were assisting the process of promulgating the Bill, as it was an important piece of legislation.

DHS briefing on the objects of the Housing Consumer Protection Bill (HCPB)

Minister’s overview

Ms Mmamoloko Kubayi, Minister of Human Settlements, said that the Department had hoped that the Bill would have been passed [by both Houses of Parliament] already. There had been quite a lot of feedback from communities regarding what the passing of the Bill would mean for them. From the start, the draft Bill focused heavily on protection and introducing financial cover that extends to hospitals, townships and share blocks. The idea of a warranty that covers construction had also been included. The issue around inspectors was also covered to stop corruption, conflicts of interest, and the importance of employing competent people. The Minister handed over to the Department to brief the Committee.

Purpose of the Bill
 
An official of the Department of Human Settlements (DHS) delegation said the presentation would summarise the Bill and deal with economic, employment and infrastructure development issues and the implications for the provinces. The Housing Consumer Protection Bill, 2021, sought to repeal the Housing Consumers Protection Measures Act, 95 of 1998, to ensure adequate protection of housing consumers and effective regulation of the home building industry. It also aimed to strengthen the regulatory mechanisms for the protection of housing consumers, introducing effective enforcement mechanisms, and prescribing appropriate penalties or sanctions to deter non-compliance by home builders. Provisions had been made to reimburse a housing consumer, which would be deducted from an administrative fine paid by the home builder for losses incurred. Additionally, one of the objectives was to assist with economic transformation of the industry by introducing provisions related to the Warranty Fund surplus.

(See presentation for further details.)

Discussion

Ms S Shaikh (ANC, Limpopo) thanked the Minister and Department for the presentation and indicated that the Bill repealed existing legislation that had been amended in 1999, 2001 and 2007. Evidently, there had been challenges with key provisions within the Act, so she asked that clarity be given on what exactly the challenges had been that had led to the repeal of the legislation. Secondly, as the Bill had undergone various processes with the National Assembly, she asked what key amendments the Portfolio Committee proposed were and why. Thirdly, on the issue of owner-builders within a rural setting, she asked how the provisions of this Act would apply to an individual in this context. She also questioned what additional requirements this legislation placed on rural households, and how it was managed and monitored. Regarding registration with the National Home Builders Registration Council (NHBRC), she asked if the registration fee was a once-off payment or an annual one. If the payment was on an annual basis, she asked if a specific payment period had been put in place.

The Chairperson welcomed Mr C Smit (DA, Limpopo) and Mr N Hadebe (IFP, KZN), and provided an update on what they had missed.

DHS's response

The Department responded that some of the challenges were issues of governance. The Minister stepped in to explain further, stating that the issue they were attempting to rectify within the appointment of executives was accountability. As such, the chief executive officers (CEOs), chief operating officers (COOs) and chief financial officers (CFOs) must be appointed by the board in concurrence with the Minister, to ensure that there is no abuse of power within the organisations.

Regarding the input from National Assembly, they had requested that the clause which referred to a non-profit company be removed, as it was deemed unnecessary at this time.

Responding to the matter of fees, it was explained that there was a once-off registration fee and an annual fee. Regarding registration fees, the Department said home builders were required to renew their registration annually.

It was stated that the Bill was applicable to individuals in rural areas, and would be countrywide.

On the topic of changes made to the Bill, the Department noted that they were hoping to extend the coverage offered to allow more protection for housing consumers. As it currently stood, the law offered protection to homeowners only at the point of occupying the house. Within the amended Bill, there was a proposal for extended coverage which would protect housing consumers from the very start of the construction process. Coverage would also be offered to other human settlements, such as hostels. The Department had also begun looking into ways to extend coverage to those who would be renovating homes, as they had not been included in the Bill.

The Chairperson asked Ms Shaikh if all her questions had been answered sufficiently.
Ms Shaikh said that the Department had answered all her questions. However, on the matter of owner builders and registration fees, she added that most owner builders would build only once in their lives as opposed to a development builder. She voiced her confusion about the fees and asked for further clarity on the matter.

The Chairperson suggested that the Department clarify the difference between registering as an NHBRC builder and an owner builder.
The Minister responded that from government's point of view, they were trying to discourage unqualified people from building due to the high risk of injury. The registration process aimed to provide assurances that the quality and type of houses being built were up to standard.
An official of the Department provided further clarity on the issue of owner builder, commenting that the current Bill offered exemptions such as when individuals build their own houses, they could apply to be exempt from enrolling with the Municipality. The amended Bill had removed this clause to ensure that everyone, including owner builders, was enrolled within these formal structures, which would mitigate the risks the Minister had alluded to. The annual and once-off registration fees were mainly relevant to developers, as they were required to renew their registration on an annual basis.
Ms A Maleka (ANC, Mpumalanga) said that most of her questions had been answered. However, on the point where it had mentioned that the Minister could provide an exemption, she asked what these dire circumstances looked like.
The Department said that the exemptions on these exceptional circumstances would still be published regarding regulations, which would then be made available to the public for comment.

The Chairperson asked that an example of an exceptional circumstance be provided.
The DHS official that, essentially, the Department would want all homes to be enrolled, as the basis of the Act was to provide protection to housing consumers. As such, consideration would need to be implemented upon each request.
Regarding the 12-month cover for an exceptional circumstance, the Department stated that the new Bill had made an extension to cover roof leaks. However, it was aware that some areas in the country had very minimal exposure to rainfall.
The Chairperson said during this deliberation, the Department should share with the Members if the foundations were covered, and for how many months.

Mr M Tseki (ANC) referred to the issue of peoples' protection, and asked if this included community residential units (CRUs), because there were individuals in the industry who would try to manipulate technicalities which could cause issues moving forward. Regarding the requirements for registration, he asked at what stage a builder would be liable for suspension of registration, and what the deciding process would be. He raised his concerns over the Department's capacity constraints, but said it could be overcome by having adequate monitoring measures and reporting systems in place. He asked what needs to be considered during situations where a structure or building had been constructed in an unproclaimed area. Lastly, he said the presentation had indicated that there were expectations that employees investigating criminal offences were granted the power to act as peace officers. He questioned whether this could be interpreted as officials meeting in a corner somewhere, and conducting unsavoury activities with those who had committed offences. As such, he asked what the Department relied on to be informed about disputes and the procedure to correctly deal with them.
The Department replied that township management and planning were the responsibility of the municipalities and local government. There were processes to be followed, but they faced various challenges, such as the occurrence of floods because of poor township establishment. This was a sign of an issue at the municipal level, which helped inform current engagements.

On the suspension of builders, there was a complaints process set up which started with a complaint filed from the housing consumer which would then be investigated. The home builder was then summoned to come forward and provide an explanation. In the event that the home builder was found wanting, the disciplinary committee would then intervene, a suspension would be discussed, and the matter concluded. As such, the matter was not handed over to the NHBRC, as their role was simply to assist with the complaints process.
Concerning the peace officers, the Department was hoping to empower these officials in their daily routine. As it currently stood, the inspectors visited sites and were being treated with disdain by developers. This new status aimed to empower them to issue non-compliance certificates, and they should be able to stop these developments from taking place.

The Chairperson said he understood the Department's intention of wanting inspectors to be peace officers, but for this to take place, they would need to be designated by the National Commissioner of Police. They would also need to meet certain requirements, such as training and possessing no criminal record. He asked if the Department had checked with the Department of Police whether this was possible.

The Department responded by saying that currently, there was a committee in place that was tasked with looking into these issues and the implications of the new Bill. The committee was slowly going through all these matters to ensure that they were ready by the time of implementation, with no delays.

The Chairperson suggested that the matter of peace officers should become a priority for the committee.

On the issue of unproclaimed areas, the Minister said that the Department was always discouraging individuals from building in these areas, but they were not able to provide the necessary protection. The Department was trying to find a mechanism to advocate more on this issue, as there were serious consequences from building on these lands.

Mr Tseki thanked the Department for answering his questions, and added that there was one issue that needed to be emphasised, that being discrepancies. It was important to be aware and include situations where the NHBRC officers and the municipal inspectors form close relationships and approve structures that are not up to standard.

The Department responded that the matter of peace officers was one of their main focuses, as the current Bill had enhanced the role of inspectors to assist with anti-corruption. There had been many complaints lodged against inspectors, but the Bill did outline in detail the duties they were expected to perform. In the event that it was discovered that an inspector had influenced or passed the construction of a building that had not met the required standard, they would be deregistered as stipulated within the Bill.

Mr K Motsasmai (EFF, Gauteng) asked his questions in Setswana.

The Chairperson responded that the Committee would deal with the issue of public participation at a provincial level soon. He was aware that some provinces had already scheduled their public engagements.

Mr C Smit (DA, Limpopo) referred to the annual renewal system and its administrative processes, asking if they had the capacity to deal with high volumes of applicants, and if it could be done online. He voiced his concern over the Minister's statement about using the Bill to discourage people from building their own homes. Since the government could not build homes for everyone in need, allowing people to build their own homes would help to solve this issue. He asserted that the Department could not say they were trying to solve the housing crisis and then restrict people from being able to do something for themselves. Obviously, basic standards needed to be met, but it was unrealistic to place a construction company and individual home builders on the same level. On the issue of financial capacity, he noted that at the local government level, there were skewed funding models and evidence that they were struggling to survive and keep up with their responsibilities. He asked if the Department was going to be allocating additional funds to support local government. Lastly, he questioned how the Department planned to police the Bill.

Minister Kubayi replied that they were not trying to discourage everyone from building, but it was important to understand that building was a profession, and those not qualified should not be building. There was a high risk that these buildings would collapse and kill people. In local government, this was not an unfunded mandate, as not all municipalities had development status, and those that did were supported.

Responding to the question on annual renewals, the Department said that they had measures in place to ensure that they could respond to all applications, and they already had an online portal set up. The Department was currently digitising its services to limit the number of people coming to queue at the offices. In terms of geographical footprint, there were offices throughout all the provinces which satellite offices complemented.

Mr Smit argued that whether there was a Bill in place or not, people would continue to build on illegal wetlands and that the Bill would not deter them from doing so. However, some people would want to do this legally, but did not have the capacity because of the fees attached to the registration process, which placed restraints on people trying to improve their lives. He also argued that the volume of work that would need to be done to monitor and police construction sites would require a large budget.

The Minister asserted that the point of the Bill was to provide an opportunity for citizens to be protected by ensuring that certain conditions were being met.

Regarding financial support, she explained that before one went to Parliament, they requested previous years' financial reports to conduct a socio-economic impact assessment. Cabinet looked at the financial implications before matters could be passed, which was why they were required to report on the implications of the Bill.

On the issue of NHBRC's capacity, she said that there were officials already all across the country conducting inspections, proving that they had the capacity to enforce the Bill. With unregistered builders, the Bill provided a parameter for government intervention, so if financial support was needed, there was a process for this to take place. When looking at the budget at the municipal level, there were funds allocated for these matters, whether the Bill was passed or not, as it was part of local governments' responsibilities.

Mr Smit asked if there were any consequences in place to deal with non-compliance by individuals who were building for themselves. He sought clarity on whether fines or penalties would be implemented.

The Chairperson responded that everyone needed to register with the Department, except those who received an exemption.

The Department reiterated what the Chairperson had said and the fact that the Bill was here to provide protection. If people decided to build their own homes without following the regulations and then sold the property to another person, it would become a dangerous situation. If an individual was to build without being registered, it would be considered as non-compliance with the Act.

Mr N Hadebe (IFP, KZN) asked about the proper and practical accountability for both provincial and national governments, which hold concurrent jurisdiction. He said that when conducting oversight, it was difficult to see any coordination between the province and local housing departments when it was time to provide simple updates on progress, challenges, and reasons for delays. He asked if they would be able to hold provinces accountable to implement the Bill effectively.

The Department said that provinces would be held accountable for their compliance with the Bill. There had been cases where the NHBRC had to interdict one province after various intergovernmental interventions had failed. It was also a requirement that provinces ensure that house builders were enrolled with the NHBRC, and that the entire project was complete to benefit from the warranty fund. In terms of Section 6, the current Bill requires all developers to be in line with the grading as indicated within the compliance requirements.

Concluding remarks
 
Minister Kubayi said that they were taking into consideration everything that had been said during the meeting. The Department was continuously learning, and things would be rectified where needed.

Ms Pam Tshwete, Deputy Minister of Human Settlements, also thanked the Committee for their time and their efforts to work together to ensure the Bill could be implemented. She commented that there was no Bill that would be 100 percent perfect. She wished everyone the best with processing the Bill.

The Chairperson reiterated the importance of the Bill, and thanked the Minister for her leadership and expediting the process to protect consumers.

The meeting was adjourned.