The Department of Human Settlements (DHS) hosted the Estate Agent Industry Summit at Gallagher Estate on the 4th and 5th October. It was pleasing to see over 400 delegates attended ranging from the established franchises, independent offices, auctioneers, IEASA, principals, agents and even unregistered agents.
The summit was opened by Minister Tokyo Sexwale. The tone of the summit was set upfront; day 1 was set aside for raising issues and day 2 was about finding solutions.
The afternoon session on day 1 was split into 4 breakaway groups; each delegate attended one of the below sessions:
• Redefining the role and mandate of the EAAB
• Creating an inclusive and integrated estate agency industry
• Estate agency industry as an economic driver to stimulate growth & development
• Research and development
Day 2 of the summit was a feedback session by the DHS summarizing each of the break away sessions. During the feedback session it became clear there were many overlaps in the group discussions.
For summary purposes I have listed the topic points and feedback received from the various sessions below. It was noted that the industry will need to find a balance between transformation and education while maintaining (improving) professionalism.
Solutions were not necessarily found to all points, but robust discussions took place.
Estate Agents Affairs Board
The role of the EAAB was debated. Should the EAAB represent the Industry or protect the interests of the public. On this point there was clear communication from DHS: the mandate of the EAAB would remain regulator and the Industry should form a national body to represent the estate agents.
The composition of the Board was discussed, should the make-up of the Board remain the same with the addition of other professional bodies such as auctioneers; or was there a need to reduce the number of Board members to those with specific expertise?
The idea of regional EAAB offices was suggested.
The need to enhance the capacity of the EAAB’s inspectorate to enforce compliance.
The EAAB should conduct education and training for both consumer and practitioner.
Fidelity Fund
There is a concern that the fidelity fund is being depleted; it came to light that the fidelity fund is being used where transgressions are made by unregistered estate agents and the fund remains liable to pay claims of unregistered estate agents. Managing agents were highlighted as the other culprit resulting in large claims.
A suggestion was tabled to re-insure the fund or to levy a fee at the deeds office at the point of registration.
Other suggestions included naming and shaming those involved who resulted in a pay-out from the fund; promote consumer awareness with regards to only dealing with registered estate agents or capping the maximum pay-out allowed.
There was need to improve the claim pay-out process as the current 3 month waiting period was far too long.
Unregistered Estate Agents
The deeds office has over 300 compliance points to check prior to a property transfer; the idea of validating the current FFC status / registration of the estate with the EAAB was proposed prior to the transfer to prevent sales by unregistered agents.
The DHS encouraged registered estate agents to “out” their unregistered peers.
Transformation
There is a need to make the industry more inclusive; discussions were held around internships / mentorship programmes and how to make “estate agent” a career path.
Suggestions were made as to transformation enablers:
Career guidance at school’s career days
Inclusion of property ownership in life orientation subject
DHS to fund previously disadvantage (education or a stipend)
Government to make sale / rental / development stock available especially to previously disadvantaged category of estate agents.
Education
There are 40000 registered estate agents (unclear how many are active) vs. less than 1000 agents who have written the PDE exam.
The majority of delegates supported further education but there appeared to be clear frustration with the SSETA, the curriculum (especially as it related to specialist services such as rentals, sectional title, auctioneers and commercial agents) and the difficulty understanding training funding / the subsidy programme.
There was a pressing need to allow for specialised training; example to rental agents and other areas such as finance and admin.
Overall delegates seemed to encourage the NQF 4 and 5 as a minimum requirement and questioned the matric exemption as this was not estate agent specific training. Delegates agreed with the policy of 3 attempts to write and pass the PDE then a 12 month cooling off period if unsuccessful.
Consumer Education
Consumer education was raised in a number of the breakaway discussions; the industries role in changing the negative perception of estate agents in the market by educating consumers (particularly the vulnerable) of their rights.
Suggestions such as an industry standardized “consumer protection disclosure document” were proposed.
Capital Formation
Real estate has the ability to create wealth through home ownership and job creation. There is an untapped market in the predominantly “black” areas but there appears to be a racial bias in terms of the type of title deeds and property valuations in these areas, as well as discrimination by the banks in offering finance.
There is an estimated R1 trillion worth of “dead capital” trapped in these townships as property owners have no certainly of ownership (there are 100 different types of “right to use land” title deeds as opposed to full ownership title deeds in the more affluent areas)
Legislation
The Estate Agents Affairs Act was originally drafted in 1976 and although there have been amendments over the years, it does not take into account the more recent legislations: NCA, CPA, PIE, RHA and the Debt Collectors Act. There is a pressing need to align all the relevant pieces of legislation and ensure agents are well versed in their application.
The definition of an Estate Agent was raised; is there a need to either expand or clarify the definition to include all intermediaries or specialists such as auctioneers?
Estate agents seemed to be confused about which other bodies they needed to be registered with; for example the Council of Debt Collectors.
The application of the various pieces of legislation was not well understood in the industry.
The DHS wanted a better consultation process with more meaningful engagement with industry, including understanding key impediments impacting SMMEs.
A suggestion was made to give the code of conduct legal status.
Municipalities
The vast majority of delegates agreed that the municipalities frustrated the sale process with regards to clearance certificates etc. The DHS committed to engaging with local council in this regard.
Market Facilitations
Concerns were raised regarding the perceived “monopoly” of the market by the more established franchise groups; examples were made of how the banks in their “quick sell” type initiatives would only engage with agents with a national footprint thereby excluding the small businesses.
Questions were raised regarding how to involve small agents in the large scale DHS affordable housing developments given their capacity constraints – DHS brings on a large 50000 unit project but small agents are only able to participate on a much smaller scale and are thereby excluded.
Government holds 25% of property ownership and could deliberately intervene to promote access to stock.
Spatial separation
Urban land is in short supply; there is a need to provide low income households with housing close to work, schools etc.; mixed cost residential areas were on the agenda but research was required to assess the price impact on existing properties.
Included in the delegate pack were the:
EAAB 3 year Annual Performance Plan
EAAB 5 year Corporate Strategic Plan
From my perspective, this first step taken by DHS of engaging with the industry to fully understand the frustrations and problems faced by the industry is an encouraging step forward. I found the representatives of DHS to be well prepared and well versed for the summit, given that the EAAB has only fallen under their leadership in May.
I look forward to their continued support in leading the industry through these turbulent times.
