Blow for state over BEE requirement for estate agents
Lobby group Sakeliga has struck an arguably decisive blow in its legal challenge to moves by the Property Practitioners Regulatory Authority (PPRA) to no longer issue fidelity fund certificates to non-Black Economic Empowerment (BEE) compliant businesses.
It announced on Tuesday that Minister of Trade, Industry and Competition Parks Tau 'has withdrawn his opposition' to its case.
This ministry is responsible for driving government's BEE agenda through legislation, codes, policies and sector charters.
Sakeliga originally filed papers in the North Gauteng High Court against the PPRA and the ministers of human settlements; water and sanitation; and trade, industry and competition. It made these papers public in January.
The Minister of Human Settlements, Water and Sanitation (Thembi Simelane, since December 2024) had already indicated that the department would abide by the decision of the court, effectively not opposing the matter. The PPRA falls under the ambit of this department.
ALSO READ: Real estate agents warned of licensing risks over BEE compliance
Sakeliga brought the papers following decisions by the PPRA last year to deny operating licences, in the form of fidelity fund certificates (FFCs), to property businesses that did not meet the regulator's stipulated minimum BEE score.
It argues that this was a 'brazen effort to put people out of business unless they comply' and that the case is needed to 'resist further overreach'.
The first formal warning from the PPRA came in March 2024, when it warned practitioners in the property sector that failure to comply with BEE legislation 'may result in the inability to obtain or renew' a FFC. Property practitioners, including estate agents, need these certificates to operate.
This followed a webinar in March, during which the PPRA's legal manager and acting transformation manager, Deli Nkambule, made it clear that the regulator 'will not issue an FFC unless a compliant BEE certificate accompanies the application. The accepted level of compliance is 40 points or more (BEE level 8). You will not be issued a BEE certificate if you score below 40 (making your BEE certificate non-compliant).'
After sustained pushback from the sector, the PPRA quietly made an about-turn in August, with its chair sending a letter to estate agent industry grouping Real Estate Business Owners of South Africa (Rebosa) stating that the PPRA had sought legal advice and would no longer be requiring level 8 broad-based black economic empowerment (B-BBEE) certificates with new FFC applications.
Sakeliga described this at the time as a 'tactical retreat'.
ALSO READ: State sued over estate agent BEE plan
It argues that the mandatory requirement for a 'valid' B-BBEE certificate for the issuing of an FFC 'serves no legitimate government purpose'. It says, 'there is no relationship between fulfilling the requirements for a fidelity fund certificate and having a B-BBEE certificate.' Currently there are around 40 000 FFCs issued, mostly to estate agents operating in the country.
It highlights that the 'certificate requirement extends even to those thousands of businesses that do not participate in BEE (due to falling below certain turnover thresholds), bizarrely requiring them to fork out in the region of R10 000 every year just to buy and submit a 'valid' yet 'non-compliant' B-BBEE certificate.'
Through the case, it is also seeking to roll back the expanded definition of property practitioner, which it says was 'unnecessarily expanded by the PPRA' to 12 new categories. Sakeliga says this includes developers, property administrators, landlords, homeowners' associations, auctioneers, bond originators and even property marketing companies, which 'improperly expands the reach of the PPRA over thousands of businesses and hundreds of billions of rand in turnover'.
Achieving both outcomes would be seen as a success by the group. It is finalising its replying affidavit and, after filing it, will await a date for the matter to be heard.
This article was republished from Moneyweb. Read the original here.
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