Zenteq

The Property Practitioners Act is here – What now?

As most will know, being highly publicised of late, the Property Practitioners Act, and its Regulations, have been fully promulgated and will become fully operational as from 1 February 2022. So, what changes for you as a managing agent?

Firstly and most importantly, yes you are now defined as a property practitioner. The old act, being the Estate Agency Affairs Act, which has now been replaced, was not always clear on this point. The new Act, specifically defines a property practitioner as any person who for gain, manages, lets, hires or sells any immoveable property. This is a clear and direct departure from the previous Act, which focused on sales and letting more so than management. This definition also goes further in “e” in the definition page to also include any and every person who is employed by a property practitioner. This means that any portfolio manager, portfolio assistant and even accountant should be registered with the new authority and should have a valid FFC. This will no doubt have serious implications, most of all a direct cost implication, for all managing agents.

So what do you need to do to make sure you are compliant? Firstly, you will need to make sure you are in possession of a valid Fidelity Fund Certificate, and secondly make sure you have met certain educational requirements.

Obtaining the FFC is relatively simple, as does simply mean an application to the authority along with the associated fee payment. Interestingly, and seemingly well intentioned, the authority must issue the FFC within 30 days, if there is no reason to bar issuing same. If there is no feedback in 30 days, the application is deemed as approved, and the FFC must be physically sent within 10 days from the aforementioned date. This new approach is much better than the older version, which was onerous and frustrating at the very least.

The authority can refuse issuing an FFC to any person if any of the facts that are mentioned in Section 50 of the Act apply to any applicant. For the most part the exclusions are as expected, such as if the applicant is not a citizen, is a criminal, an insolvent, of unsound mind and so forth. Section 50 however does now dictate further requirements before an FFC may be issued. Importantly, before an FFC will now be issued any applicant (which includes any company or other juristic entity) must show that it is not in arrears with any taxes owed to SARS, has a valid BEE certificate and meets the minimum educational standards as defined by the authority if applicable.

The educational standards referred to are set out in the Regulations to the Act, specifically Regulation 33. In this regulation, those who are already principal and full status agents will not have to redo any training already done. However, those who do not fall in the above category will now have to complete a 6 month course, which will cover no less than 6 modules, in order to gain the required academic knowledge. This can be done whilst employed as a candidate property practitioner, or before entering the market, allowing for some flexibility.

The act does still recognise the candidate property practitioner, and defines this as any person entering the industry who has not yet achieved the academic knowledge needed in order to be eligible to sit for the professional designation exam envisaged in this regulation. What are the educational requirements exactly? In short that is a bit unclear. Regulation 33 specifically states that the Authority must engage with industry leaders and representative bodies to determine what exactly these educational standards are for each industry, and that transitional arrangements must be made by the authority to allow for the aforementioned. In the Act however, under Section 75(6) all regulations made under the Estate Agency Affairs Act, remain in full force, and one can assume that these would include the old educational requirements as well until amended. This would mean for time being still having to comply with the NQF4/5 qualifications until the revamped and renewed standards have been set, as well as the required one-year candidacy period.

Why bother with all of this? Well, the Act has taken a dim view of persons who do not comply. In terms of Section 48 of the Act, no person may act as a property practitioner unless he or she is in possession of a valid FFC. Acting as a property practitioner when not in possession of a certificate is a criminal offence, and furthermore in terms of Section 48(4), any monies paid to any person during the time of contravention must be repaid immediately to the payee upon their request.

While the Act does encumber property practitioners in the management space with additional duties and obligations, it does go a long way toward professionalising the industry and setting the required standard for continued operation in this space.

Speak to us about how we can help YOU navigate these newest pitfalls and safeguard your business!