A Shift in Property Law: Introduction of the Property Practitioners Act

The Property Practitioners Act 22 of 2019 (PPA) came into effect on 1 February 2022, repealing the outdated Estate Agency Affairs Act of 1976. With this change, all individuals and entities involved in property transactions as part of their ordinary business are now classified as property practitioners.

Key Regulatory Changes Under the PPA

The PPA introduces significant shifts in the regulation of South Africa’s property sector. These include:

• Revised procedures for issuing Fidelity Fund Certificates (FFCs)
• Mandatory disclosure forms
• Section 58 prohibitions
• A stronger emphasis on transformation in the property sector

Transformation and the Purpose of the PPA

One of the core objectives of the Act, as outlined in its Preamble, is to transform the property market. This transformation is intended to promote inclusion and benefit historically disadvantaged individuals.

In terms of Section 48, no one may operate as a property practitioner without a valid FFC. Importantly, Section 50(a)(x) states that FFCs cannot be issued without a valid BEE certificate. While the Act does not specify the level of B-BBEE compliance required, the assumption is that minimum compliance is sufficient.

Is BEE Compliance Achievable for All Property Practitioners?

Although compliance may prove challenging for some, particularly family-owned estate agencies and sole proprietors, the law is in force—making compliance necessary to continue operations legally.

Understanding BEE Classification Under the Amended Property Sector Code

The Amended Property Sector Code (APSC) of 2017 classifies property businesses into three categories:

1. Exempted Micro Enterprises (EMEs)

• Annual turnover: Below R2.5 million
• BEE Level: Automatically Level 4 if less than 51% black-owned
• Documentation required: Sworn affidavit or CIPC certificate verifying turnover and black ownership

2. Qualifying Small Enterprises (QSEs)

• Annual turnover: Between R2.5 million and R35 million
• Requirement: Must be measured against the full BEE scorecard

3. Generic Enterprises

• Annual turnover: Exceeds R35 million
• Requirement: Full scorecard evaluation under stricter BEE targets
• Most property practitioners and estate agencies exceed the EME threshold and will need to be evaluated on various elements of the BEE scorecard.

Key Elements of the QSE BEE Scorecard

Ownership

Measures the percentage of ownership by individuals classified as black under BEE legislation.

Skills Development

Assesses the agency’s efforts to improve the skills and qualifications of black employees and external black beneficiaries.

Other Elements

These include management control, employment equity, enterprise development, procurement, and socio-economic development.

How Black Ownership Affects BEE Levels

• 51% black-owned businesses qualify as Level 2 BEE contributors
• 100% black-owned businesses qualify as Level 1 BEE contributors

EMEs can also opt to undergo scorecard evaluation to potentially increase their level recognition.

The Practical Realities of BEE Compliance in Property

For some agencies, complying with the BEE requirements under the PPA will involve operational changes or restructuring. Smaller agencies, in particular, may need support to achieve even minimum compliance.

Van Deventer and Van Deventer Inc. - Professional Support for BEE Compliance

Our attorneys in Johannesburg understand the intricacies of both the PPA and BEE legislation. Our team is available to assist Principal Property Practitioners and other stakeholders in complying with the new legal requirements. We specialise in BEE compliance consulting across all agency categories defined by the Property Sector Code.

 Contact us.