How Far Transformation Goes In Terms Of The PPA

With the Property Practitioners Act of 2019 (PPA) now in force, it is imperative that players in the property sector be aware of its requirements and obligations. Amongst the most prominent provisions in the PPA is with regard to transformation with the preamble, sections 47, 48 and 50 (a) (x) being key in this respect.

As per section 47, every property practitioner must apply for a Fidelity Fund Certificate every three (3) years, whilst section 48 provides that no person should act as a property practitioner without a valid Fidelity Fund Certificate. 

Prohibition on rendering services without Fidelity Fund certificate

48.          (1) No person or entity may act as a property practitioner unless, in addition to any

other requirements provided for in or under this Act—

(a) he or she or it has been issued with a Fidelity Fund certificate contemplated in

section 47; or

(b) if he or she or it employs any other person as a property practitioner, that

person has also been issued with a Fidelity Fund certificate contemplated in

section 47.

Perhaps the most critical of the provisions with regards to transformation is section 50 (a) (x) which provides that a Fidelity Fund Certificate may not be issued without a valid BEE certificate. Further, the provisions in the preamble of the PPA are telling, providing that the PPA aims to achieve transformation in the property sector; to provide for transformation of the property practitioners sector; to provide for the establishment of the transformation fund and establishment of the research centre on transformation.’ The goal behind the transformation drive is to achieve inclusiveness and integration in the property sector.

Property Practitioners Act of 2019

Perhaps the most important question at the moment would be, what does this mean for small family-owned estate agencies?

To answer this question, it must be emphasised that the Amended Property Sector BEE Code of 2017 places estate agencies into categories such as the EME which are below R2.5 million turnover, exempt from BEE and only need to do an affidavit to obtain a level 4 BEE status.

Agencies in the category of R2.5 million – R35 million (QSE) have to go through a BEE audit and scorecards relating to management, ownership, employment equity, skills development etc, and these have to be verified. Generic agencies which are over R35 million have to go through the full audit, with high scorecard requirements.

In any event, it is assumed that the meaning of BBE certificate in the PPA is not defined, and therefore the least compliance may legally suffice. QSE and Generic agencies may find it challenging to comply because of a number of factors such as the fact that property practitioners usually pay for their own training (NQF), and therefore a skills development plan may not be in place, many estate agencies are family owned and therefore ownership structures may be a challenge, whilst against the backdrop of the minimum wage regulations the traditional commission-based system in the property sector may prove to be a hurdle.

It is clear that the transformation drive brought about by the PPA is a significant shift from the past, but one which cannot be ignored and is required by the law. The consequences are far reaching, but it is important that property practitioners comply with the new provisions.

Phoenix Group - Estate Agent Courses and BEE Compliance

At Phoenix Group, we are available to consult with Principal Property Practitioners to assist them in navigating through the new requirements under the PPA. We specialize in BEE compliance consulting for all agency categories under the property sector code.

Contact us for professional and comprehensive assistance.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.

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