Consumer Watch: New law set to whip the property sector into line?
With last week’s signing of the Property Practitioner’s Act, many in the industry are questioning whether the new law, which repeals the Estate Agency Affairs Act, is truly a case of out with the old and in with the new.
The act, which is yet to be promulgated in the Government Gazette and could take years to see the light of day, applies broadly to the property sector, setting standards and regulating the marketing, promotion, managing, sale, letting, financing and purchase of immovable property, and to any rights and obligations related to property.
The Estate Agency Affairs Board, which has long been derided as toothless, inept and ineffectual, is set to be replaced by the Property Practitioners Regulatory Authority, funded by the state, and property practitioners will be required to pay membership fees.
The new authority will also ensure that the Property Sector Transformation Charter Code applies to property practitioners who are dealing with organs of state.
Anyone in contravention of the act will be required to repay any fees received from a property transaction. And conveyancers may not pay any money to a property practitioner unless they receive a copy of the practitioner’s certificate.
The act now makes provision for fines or imprisonment of up to 10 years.
The SA Housing and Infrastructure Fund has welcomed the development, calling the act “innovative”. The fund’s chief executive, Rali Mampeule, says this is a “progressive step in ensuring seamless processes and professional standards are adhered to in the real estate industry”.
But others have questioned whether the new legislation will see a much-needed overhaul of the sector.
Conveyancing attorney Michelle Dommisse says she’s cautiously optimistic about the act because it will apply to more people in the property sector. But it’s not likely to be gazetted soon.
“The Estate Agency Affairs Board (EAAB) only applied to estate agents; it wasn’t there for consumers and it didn’t affect others involved in the sector,” Dommisse explains.
“Now, property professionals including auctioneers (who weren’t regulated before), bond originators, property developers, home inspectors and even timeshare is affected. Attorneys, though, are exempt. But until the regulations attached to the new act have been passed, it is not known to what extent.”
She says she hopes the legislation won’t be toothless, as is the case of the Consumer Protection Act, which, “in many ways was passed too quickly, not thought through properly in terms of practical consequences, and a bit of a white elephant”.
Dommisse says with the EAAB, the same staff are likely to be recycled. “From my experience, it’s been impossible to get hold of them. In one case, an estate agent was holding a substantial amount of occupational rental from my client. I contacted the board and asked them to release it - but the agent had vanished. I went through various people at the EAAB - the agency involved was a big company - but eventually, I had to get the police involved.
“Unlike the Law Society, which keeps close tabs on lawyers, the EAAB hasn’t worked for the industry.
“The estate agents always complain - they are forever having to go for training to get points but then the board isn’t available to help them. One would hope that the new act will change that.”
She says she’s hopeful the act holds service providers to account and that the body is effective so consumers will have a body to fall back on.
“It’s all down to the implementation and what the regulations will say.”
Agent Mandy Jamieson from Keller Williams says the new law will require everyone trading in the sector to become complaint.
“We hope it will put an end to reckless trading: there will be a fine imposed if you don’t carry a Fidelity Fund certificate and it will hit rogue agents financially. It will weed out wannabe agents and give professionals an opportunity.”
She’s not hopeful of any big changes at the EAAB, but says the act allows for the creation of an ombudsman, which will give recourse to both sellers and buyers.
The Real Estate Business Owners of SA (Rebosa) has voiced concern too. It says while the bill has been signed, there’s a long road ahead because the regulations need to be drafted, published for comment and approved by the Human Settlements minister.
In a statement on Thursday, it said: “It is even technically possible that it never gets to be promulgated. This process will not only take considerable time but will give a much better indication as far as the practical implications are concerned. Rebosa is fully prepared to comment on the draft regulations and will do whatever possible to promote the best interests of the industry in the process.”
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.
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