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Section 48 of the new Property Practitioners Act came into effect in 2022, but has recently raised red flags amongst smaller property agents over its Broad-Based Black Economic Empowerment (B-BBEE) requirements, which is a major problem for 65% of the industry,

Section 48 states that ‘no entity may act in the capacity of a property practitioner without a valid Fidelity Fund Certificate (FFC)’, but according to the BEE rules, no FFC can be issued without a BEE certificate – which for small businesses and sole proprietorships “amounts to more than 50% black ownership”.

Jan le Roux, the CEO of the Real Estate Business Owners of South Africa (Rebosa), noted a concerning shift in the PPRA’s requirements for the next round of FFCs for 2025.

There are three categories for B-BBEE: Exempt Micro Enterprise (EME), Qualifying Small Enterprise (QSE), and Generic. These categories are determined by a business’s annual turnover, with EMEs having the smallest turnover at less than R2.5 million and Generic businesses making over R35 million.

Le Roux said the surprise was first noted in a webinar with speakers Deli Nkambule, legal manager and acting transformation manager at the PPRA, and Chris Dykes CEO of Infinity Learning to clarify matters around BEE certificates.

“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),” she said.

According to Le Roux, only a valid BEE certificate is currently required. This means the certificate is valid if it has been issued by a proper verification registered with SANAS (South African National Accreditation System) and that no minimum score is required.

However, Nkambule explained that “the PPRA’s position is that it will not issue an FFC unless a compliant BEE certificate accompanies the application”.

Le Roux added that the majority of BEE certificates obtained in the previous round of FFC issued in 2023 were noncompliant.

“Based on estimates, it is likely that most of the almost 6,000 certificates issued scored below the required 40-point mark.”

“Despite this, the PPRA went ahead and issued FFCs, even though the minimum BEE score was not met. According to our sources, the process was mainly aimed at gathering information, and there was no minimum requirement,” he said.

Speaking to City Press, Le Roux noted the consequences could be catastrophic, as nearly 65% of the real estate agencies in the country are small businesses or sole proprietorships.

Sakeliga’s Piet le Roux said they already have plans to fight the PPRA in court and invite businesses affected to join the legal action.

The PPRA’s surprise has been described as illegal, unconstitutional, and harmful to the economy. It has also given too little consideration to the industry’s composition.

For now, the future of 65% of the real estate agencies remains worryingly uncertain.

[source:businesstech]