The gazetting of the property sector charter appears unlikely to come to the rescue of listed property companies, which for the past five years have been cold-shouldered by the Department of Public Works in the award of long-term leases for office buildings because the companies are not 100 percent black owned.
Norbert Sasse, the chairman of the Property Loan Stock Association of SA and chief executive of Growthpoint Properties, said it was “very disappointing” that the charter had not led to a normalisation of business between the department and property owners.
Sasse stressed it was impossible for a listed company to be 100 percent black owned and asked what benefits there were for property companies that fully complied with the charter.
The property sector code is a legislated guiding document for how transformation and empowerment should be achieved in the property sector. It is based on sector targets in terms of seven key aspects: ownership, management control, employment equity, skills development, procurement, enterprise development, socio-economic development and economic development.
Sasse said Growthpoint previously had a level four rating under the broad-based black economic empowerment (BEE) codes of good practice, but was a level three contributor in terms of the charter.
But he said this status had made no difference to Growthpoint because the department treated companies with a level three rating the same as a company that did not have a rating.
Sasse said the department’s stance caused confusion in the industry because property owners started questioning why they should bother trying to comply with the charter.
Sasse said Growthpoint was the largest landlord in the country and the government one of the biggest users of offices and the firm had to do business with the government.
“But we can’t do it on the basis that we get a one-year or two-year lease. Today we are sitting with monthly leases.”
Several listed property firms have sold office buildings they leased to the government to black-owned companies because they could not secure a long-term renewal of the lease.
The policy has been at least partly responsible for the debacle surrounding some of the leases entered into by the government, particularly with businessman Roux Shabangu.
The department is a member organisation and signatory to the property sector charter, which was officially gazetted in June and applies to all businesses and organisations involved in commercial and residential property.
However, spokesman Thami Mchunu said last week that the department was in the process of reviewing its strategy to include “elements of the property sector transformation charter”.
Mchunu said the policy to give long leases only to buildings that were 100 percent black owned was adopted in 2007 by the department to address skewed property ownership patterns.
“At the time, the multibillion-rand industry had less than 1 percent black ownership in the commercial property space – a challenge which still persists,” he said.
Mchunu said the department derived its mandate to set policy on this issue from the constitution and a number of other pieces of legislation.
He said the property sector transformation charter was not a government programme but a sector-wide programme that included the government as a participant through the Public Works Department.
The department’s policies recognised all companies in the industry but because of the skewed ownership patterns, the established companies were still benefiting most from doing business with the department and the government.