CONTENTS PUBLISHER Estate Agency Affairs Board (EAAB) PROJECT MANAGER Margie Campbell EAAB Marketing Communications DESIGN & PRINT Bhubezi Printers Estate Agency Affairs Board Dunkeld Crescent Cnr Jan Smuts Avenue & Albury Road Hyde Park Tel: 011 731 5600 Fax: 086 540 9487 Email: eab@eaab.org.za www.eaab.org.za Cover photograph supplied by: Pezula Resort Hotel and Spa
Message from THE CEO Mrs Nomonde Mapetla Chief Executive Officer at some 78,5%, as well as the ever-present effects that necessarily flow from the strict implementation of the provisions of the National Credit Act. There can be no denying that the National Credit Act significantly impacts the lending criteria of banks and limits the ability of many prospective property owners, including first time home buyers, to take up the required additional credit that such a large purchase requires. The situation just described has clearly manifested itself in the relatively small year-on-year growth in both household credit extension and household mortgage finance. Iwould like to take this opportunity to wish all readers of Agent a happy, successful and prosperous 2011. I believe that 2010 was, generally speaking, an exceedingly turbulent and stressful year for most professional estate agents. I nevertheless remain positive and hopeful, as well as cautiously optimistic, that the year that lies ahead will be considerably better not only for the property sector in general but also for estate agents in particular. When one analyses the available economic data it is apparent that a slight, yet encouraging, recovery in house price growth manifested itself during the second half of 2010.It should not, however, be overlooked that such prevailing adverse economic conditions as the continuing slow pace of economic growth, ongoing job losses, stagnant consumer and business confidence and an apparent end to the extended interest rate cutting cycle, could well exert a negative impact on the property sector during 2011. While the fact that interest rates are presently at their lowest level in more than 30 years is certainly to be welcomed, it would be extremely short-sighted to ignore the possibility that this positive trend could well be offset, to a greater or lesser extent, by the relatively high levels of household debt to income, currently standing The inevitable result is that the year-on-year growth in nominal home prices and values presently remains at a generally low level. It is anticipated, however, that house price growth will gradually improve during the course of 2011 especially if, as is likely to happen, real interest rates continue to remain low and economic growth prospects improve with all the resultant benefits in employment levels and growth in disposable household income that this will entail. I am pleased, in addition, to be able to record that a new Board was recently appointed by the Minister of Trade and Industry. Newly appointed Board members have, indeed, assumed office and they have already begun to discharge their often onerous duties with the diligence and enthusiasm that is expected of them. It now gives me much pleasure to introduce the present Board members to readers of Agent. Ms. Mpho Molefe Ms. Molefe is a practicing principal estate agent and the sole member of Ntshebele Estate Agents and Property Investments CC. Ms. Molefe has considerable knowledge of, and experience in, the estate agency sector where she has been active since 2001. Mrs. Anne Fry Mrs. Fry also practices as an estate agent and has been the branch manager of Pam Golding Properties (Northcliff and West 02 AGENT
Rand branches) since 1998. Mrs. Fry previously served as a member of the Board in 2003. Mr. Leslie Seshabela Mr. Seshabela is not only a principal estate agent but also a financial planner. Mr. Seshabela is presently the sole proprietor of Seshabela Financial Services and has been actively engaged in the estate agency environment since 1997. Mr. Seshabela had previously gained significant experience and skills while working in the financial and banking sectors. Ms. Tryphina Dube Ms. Dube, who has previously served on the Board, runs her own estate agency practice under the name and style of Mooba 1 Properties. Ms. Dube, who also serves as a judge for the adjudication of the Nedbank Property Professional Awards, has worked as an estate agent since 1997. Ms. Ina Wilken Ms. Wilken, a renowned consumer activist and author of numerous consumer-based articles and publications, presently serves as Chief Compliance Officer of the Finbond Group. Ms. Wilken also serves on the National Consumer Forum. Mr. Thami Bolani Mr. Bolani, who was, in addition to his many other accomplishments, a radio journalist for Radio Freedom during the period 1985 to 1989, is a tireless consumer crusader. Mr. Bolani has served as chairman of the National Consumer Forum since 2000. Mr. Sindile Faku Mr. Faku, who previously served as chairman of the Board, has extensive experience in the property management, development and marketing spheres. Besides having lectured in psychology and physical science, Mr. Faku is also a constituent assessor, moderator and verifier for the real estate sector. Mr. Faku is presently the managing director of the Dakhile Investment Company. Mr. Mohsien Hassim Mr. Mohsien is not only a qualified chartered accountant but also holds a qualification in electrical engineering and is a certified information systems auditor. Mr. Hassim presently serves as Head: Services Development and Sector Portfolio Management at ABSA. Mr. Aubrey Ngcobo Mr. Ngcobo, a practicing attorney, has been a director of the legal firm of Ngcobo Poyo and Diedericks in Pietermaritzburg since 1994. Mr. Ngcobo is also a past-chairman of the KwaZulu-Natal Rental Housing Tribunal and brings a veritable wealth of knowledge with him to the Board. Ms. Segoale Mojapelo Ms. Mojapelo, who previously served on the Board, has been active in the estate agency sector since 1994 after a successful career as an educationist. Ms. Mojapelo, who is the founder and director of Segoale Properties, is also an auctioneer of note. Ms. Mojapelo, in addition, serves as a Council Member of the National Home Builders Registration Council. Mr. Shaheed Peters Mr. Peters, who previously served on the Board, is presently a Wealth Manager for SP Wealth Management in Cape Town. Mr. Peters has also acted as a research consultant and investment advisor. I am also pleased to report that the Board, at its inaugural meeting held on 8 December 2010, elected the following office bearers, namely: Chairman Mr. T Bolani Vice-chairperson Ms. T Dube Audit Committee Mr. M Hassim Mr. L Seshabela Three external members Finance and Investment Committee Ms. T Dube Ms. S Mojapelo Mr. A Ngcobo Mr. S Peters Ms. I Wilken Risk Committee Mr. T Bolani Mrs. A Fry Ms. M Molefe Mr. S Peters Ms. I Wilken Human Resources Committee Mr. T Bolani Ms. S Mojapelo Ms. M Molefe Mr. A Ngcobo Ms. I Wilken Education and Training Committee Ms. T Dube Mrs. A Fry Ms. S Mojapelo Ms. M Molefe Mr. S Peters Claims Committee Mr. S Faku Mrs. A Fry Ms. M Molefe Mr. A Ngcobo Mr. S Peters Transformation Committee Mr. T. Bolani Ms. A. Fry Mr. M. Hassim Ms. M. Molefe Mr. A. Ngcobo I am confidant that, having regard to the exceptionally high calibre of Board members that have been appointed by the Minister as well as the unique competencies, knowledge and qualifications that each one brings to the strategic decision-making activities of the Board, the EAAB will be able continuously to focus the necessary attention to the continued sound and effective implementation of its approved strategic and business plans. These plans require, amongst others, improved governance practices and the ongoing facilitation of a reciprocal and mutually beneficial interaction between the EAAB, estate agency practitioners and consumers. AGENT 03
Golf estates: Ultimate life or inconvenient eco emba Is golf estate living all it s cracked Many would argue that golf estates offer a trophy property second to none. Our cities are becoming more densely populated because of a shortage of serviced land, which makes open spaces and clean air a privilege for the fortunate few. Golf estates offer beautiful landscaped gardens, complemented by picturesque walkways and picnic sites, now more of a rarity than ever before. Some research into overseas markets reveal that such estates are commonplace there too. These prestigious estates are sought after by golf-playing families. In South Africa, however, these estates are often more popular for the security they offer than for the game of golf itself. Crime has deterred many homeowners from freehold properties and has encouraged them to purchase property in secure complexes. Such properties are popular because of the security they offer, or are perceived to offer. But at the same time, the purchaser is often forced to compromise on living and garden space when choosing such an option. Golf estates, on the other hand, offer 24-hour security systems and guard-patrolled electric fencing. In addition, they afford homeowners the luxury of space. Space is not all residents get. Many owners say they most enjoy the traditional family lifestyle offered by golf-estate living. Knowing your neighbours, and letting your kids ride their bikes and play by the river, while you enjoy a round of Sunday golf, are the lifestyle benefits many of our country s most affluent find too difficult to resist. And the price range to afford such a lifestyle? According to Sold Property Index, the average freehold property price in Johannesburg s prestigious Dainfern for the last six months is R3 988 000. 04 AGENT
style rassment? up to be? The disadvantage of estate living, however, is that the estates are often located far from central business districts and major arterial routes... This compares favourably to last year s R3 537 000 and represents a significant increase of 12.57% per annum. For Jo burgers thinking of a holiday home in Mount Edgecombe Estate on Kwa- Zulu-Natal s sought-after North Coast, the average price is R3 378 000, compared to last year s R3 111 000. This represents an increase of 8.6%. These returns are higher than the national average for properties in this price range and perhaps prove that estate living can also provide lucrative returns for investors. Of course, within the estate, position determines value. One property with riverside frontage in Dainfern is currently on the market for R6 200 000. With four bedrooms and a guest suite, the home offers privacy and seclusion. Another property is aptly described by the agent as a renovator s dream, but owing to its prime positioning and views overlooking three fairways, carries a price tag of R4.5m. In Mount Edgecombe Estate 2, a regal four-bedroomed family home with designer finishes and pleasant views is available at R10 900 000, while more entry level homes are available in the mid-r2m price bracket. At such prices, one would expect purchasers to have every amenity at their doorstep. The disadvantage of estate living, however, is that the estates are often located far from central business districts and major arterial routes. This means that purchasers spend much time getting their children to school and themselves to work. Dainfern Estate is located north of Johannesburg and residents will have to face heavy traffic congestion getting to prime CBD areas such as Sandton and Rosebank. Mount Edgecombe is located close to the rapidly developing Umhlanga Ridge CBD and the new La Mercy Airport. The enormous Gateway Mall caters for every shopper s desire. One has to wonder, however, whether a holiday purchaser with this much to spend would AGENT 05
Already buyers are being swayed by solar heating and energy-saving light bulbs. There which look set to increase substantially. 06 AGENT
GETTING A NEW WEBSITE IS AS EASY AS 1-2-3... 1 YOU GIVE US your agency s logo and your monthly fee of R320 + VAT. 2 WE GIVE YOU your own state-of-the-art website in only 24 hours and show you how easy it is to display your properties. 3 YOU SIT BACK AND RELAX while hundreds of thousands of buyers view your properties on your own site and on prime property portals. settle here as opposed to a property within walking distance of the beach. It all comes down to compromise and personal preference. Many developers have accommodated the purchasers desire to be close to amenities by offering these facilities on site. Coffee shops, crèches, grocery stores and now even schools are being included in the offering. This means that residents can live and play in the estate without a daily commute. But what about getting to work and visiting family and friends who do not live on the estate? Then, of course, there is the eco-aspect. Golf estates use vast amounts of water in keeping the fairways lush and well irrigated. Buyers are becoming increasingly environmentally conscious and homes that are more green seem to sell quicker and often at a premium price. Buying is a decision, after all, driven by emotion and easily swayed by eco-friendly elements. It will be interesting to note any changes in purchasing behaviour as the green trend continues. Residents could start to use grey water such as bathwater for their garden irrigation and to collect rain. Already buyers are being swayed by solar heating and energy-saving light bulbs. There is also the concern over higher water tariffs, which look set to increase substantially. One wonders whether purchasers in this price range will consider this cost in their purchasing decision. Regardless, golf estates look set to remain. Offering high status for the well-to-do and a secure, quality lifestyle for families, developers need to focus on securing centrally located land and offer extra lifestyle benefits for this discerning purchaser. And innovative ways to go green will be more important than ever before. *Lance Levitas is an experienced property investor. He lectures university students and presents property seminars. He graduated with a degree in finance and marketing, and completed postgraduate studies in real estate portfolio management. He lives in Johannesburg. You may email him at lancelevitas@ mweb.co.za. Source: Cover page and main article picture supplied with compliments of Pezula Resort and Spa. AND IF YOU CHANGE YOUR MIND IT S FREE! MONEY BACK GUARANTEE in the first 3 months, no questions asked. So what will you get? We focus exclusively on websites for estate agents. We ve set up more than 500 sites since we launched in 2003, so we re confident that our sites give you exactly what you need: There s no risk. You don t pay any set-up costs, there s no long term contract and we refund your payments if you cancel in the first 3 months. A dedicated account manager will help you with anything from uploading properties to marketing effectively on the internet. It s quick and easy to use we pride ourselves on making managing your own site a piece of cake. Your properties will automatically appear on these major property portals for free: www.enormo.com, www.g.co.za, www.iolproperty.co.za, as well as optional charging portals such as www.propertygenie.co.za, www.sundaytimesproperty.co.za and www.iafrica.com. E-mails will automatically be sent to your list of potential buyers when you put new properties on your site. I endured 4 years with a website that didn t work for me, because I worried about the costs, energy and downtime involved with changing. But when I finally decided to just move to web-box it was a breath of fresh air. Simple, quick, friendly. All I can say is WOW! I really regret that it took me so long and can only suggest that if you re wanting a better site, JUST DO IT! Lew Norgarb www.norgarbproperties.co.za Many of my sales are as a direct result of my web-box site. The backup & support is excellent with no problems ever too big and their patience is commendable. For more information: call 021 460 0456 or visit www.webbox.co.za Trish Joubert www.trishjoubertproperties.co.za
Lightstone reveals SA s top 10 suburbs by value... Cape Town s Atlantic Seaboard dominates the 2010 list with no less than three areas
Cape Town s Atlantic Seaboard dominates the 2010 list of South Africa s most valuable residential areas. This year, it has no less than three of the top ten most expensive suburbs in the country, located along Cape Town s most glamorous stretch of coastline. Being home to some of the world s finest beaches and some of the most expensive property in South Africa, Clifton has claimed the number one spot, with an average house price of almost R12 million. Nestling in a valley that is embraced by the Twelve Apostles mountain range on the one side and the mighty crash of the Atlantic Ocean on the other, nearby Llandudno comes in third at almost R8 million. In between, lies the trendy, cosmopolitan Camps Bay, which is ranked tenth in terms of house prices at an average of R6.6 million. During 2010, we saw premier beachfront properties outperforming golf estates, which dominated the list in 2009, says Hayley Ivins of specialist property consulting firm, Lightstone. However, Cape Town remains South Africa s premier investment property destination across different categories of residential property, with, once again, seven out of ten of the highest priced suburbs in the Mother City. Golf estates still feature prominently, though. Offering excellent security, scenic beauty and a championship golf course, Steenberg Golf Estate, situated in the winelands area of Constantia, is ranked second highest-priced suburb in the country, with an average house price of R11 430 000. Situated on a pristine 700 hectares stretch of KwaZulu-Natal s Dolphin Coast, Zimbali Coastal Resort is seventh at just over R8 million. The posh, leafy suburbs of Bishopscourt and Constantia in Cape Town are ranked sixth and eighth respectively, while the V&A Waterfront residential marina in the heart of Cape Town s working harbour pre- cinct and inner city shopping destination is fifth. South Africa s business capital, Johannesburg, features just two suburbs in the top ten: the old-money enclave of Westcliff, which ranks fourth at an average selling price of R8.54 million, and upscale Sandhurst in Sandton said to be home to many of South Africa s captains of industry, which ranks ninth at just over R7 million. Ivins says South Africa still offers excellent value for money from an international perspective, plus all the attractions that high net worth individuals (HNWI s) demand. What is clear is that the wealthiest buyers want it all: security, scenic beauty, ocean views, mountain ranges, winelands, championship golf courses and proximity to an urban centre. R 14 R 12 R 10 R 8 R 6 R 4 R 2 R - R 11.8 CLIFTON Top 10 Highest Value Suburbs in SA R 11.4 STEEBERG GOLF ESTATE R 9.7 LLANDUONO Mean Value (Rm) R 8.5R 8.4 R 8.3 R 8.1 R 7.8 R 7.1 WESTCLIFF WATERFRONT BISHOPSCOURT Ivins says that while average selling prices can be skewed from one year to the next, depending on the number of properties sold and individual prices recorded, the index remains a useful indicator of price trends and suburbs that attract the highest investment and retain their value. ZIMBALI SWAANSWYK ROAD SANDHURST R 6.5 CAMPS BAY Top 10 Highest-Priced Suburbs - Mean Value No Municipality Suburb Mean Value (R) Mean Value (Rm) #1 CPT Clifton R 11 832 692 R 11.83 #2 CPT Steenberg Golf Estate R 11 430 000 R 11.43 #3 CPT Llandudno R 9 703 574 R 9.70 #4 JHB Westcliff R 8 536 035 R 8.54 #5 CPT Waterfront R 8 440 771 R 8.44 #6 CPT Bishopscourt R 8 276 689 R 8.28 #7 KZN Zimbali R 8 131 892 R 8.13 #8 CPT Swaanswyk Road R 7 764 957 R 7.76 #9 JHB Sandhurst R 7 089 165 R 7.09 #10 CPT Camps Bay R 6 637 596 R 6.64 AGENT 09
The effect of the new educational qualifications on estate agency practitioners who held a valid fidelity fund certificate on 15 July 2008 Both principal and non-principal estate agency practitioners are once again reminded that, if they held a valid fidelity fund certificate issued by the Estate Agency Affairs Board on 15 July 2008, they are required to complete the appropriate SAQA registered educational qualification for estate agents by no later than 31 December 2011 in order to retain a fidelity fund certificate for the 2012 calendar year. The qualification required by principal estate agents is the National Certificate: Real Estate (NQF Level 5) while non-principal estate agents must be certificated against the Further Education and Training Certificate: Real Estate (NQF Level 4). Practitioners may obtain the required qualification either by enrolling for relevant training with an accredited training provider or, alternatively, by fully participating in the Recognition of Prior Learning (RPL) assessment process. The RPL process has been specifically designed to facilitate the recognition of existing knowledge and competences possessed by estate agency practitioners whether that knowledge was obtained formally, informally or non-formally. The purpose of the RPL programme is, indeed, to compare the proven previous learning and experience of estate agents against the learning outcomes and competencies required by the relevant estate agency qualification. It is essential, moreover, that candidates ensure that they utilise the services of a properly accredited RPL provider when seeking to participate in the RPL assessment process. An Equivalency (Exemptions) Matrix has also been created by the EAAB, as a living document, to facilitate the grant to estate agency practitioners of due recognition for any relevant qualifications, and particularly qualifications from South African tertiary institutions, that they might previously have obtained. Such previous qualifications must, however, have been commercially and/ or legally orientated and should, preferably, have covered most of the aspects dealt with in the required real estate qualifications. Applicants for exemption will, similarly, be required to undergo a thorough assessment process to enable the RPL assessment centre to ascertain whether or not they, indeed, qualify for the exemption in question. Estate agency practitioners are reminded that only EAAB accredited RPL assessment centres are entitled to award either a full equivalency exemption or relevant credits in respect of the qualifications in question. It is essential, therefore, that candidates access the continuously updated list of EAAB accredited RPL centres appearing on the EAAB website. Applicants may, of course, apply for an equivalency exemption from an EAAB accredited RPL provider of their choice. While it is desirable that the entire RPL process, from the time of enrolment to the achievement of the final result and the verification of those results by the Services SETA, should have been completed by 31 December 2011, it is to be underscored that the 10 AGENT
EAAB has resolved, in yet a further endeavour to assist estate agents, that provided estate agency practitioners have actively committed themselves to undergo the RPL assessment process with an accredited RPL assessment centre by 31 December 2011 they will be granted a further period of time until 31 December 2013 within which to be awarded the full qualification. This latitude is underpinned by the fact that the Education Regulations provide that candidates who have not been awarded the full qualification, despite having undergone the RPL process, are to be granted an additional period of two years within which to be re-assessed for the qualification in question. Candidates in question will be required to submit proof from an accredited RPL assessment centre that they have committed themselves to undergoing the RPL assessment process when applying for the issue of a 2012 fidelity fund certificate. Estate agency practitioners are advised that in the absence of such proof it will not be possible for the EAAB to issue fidelity fund certificates to non-compliant applicants until such time as those persons have been duly certificated against the required qualifications. INTERN ESTATE AGENTS Estate agents, whether principals or non-principals, who already held a valid fidelity fund certificate, issued by the EAAB, on 15 July 2008 will be exempted from the requirement of having to undergo a twelve month internship period. It will be mandatory for new entrants to the estate agency profession who wish to register as either principal or non-principal agents for the very first time will to serve an initial twelve month internship period during which time they will be obliged to work as intern estate agents under the active supervision and control of a principal estate agent having at least three years practical experience. It is to be emphasised that the EAAB has no discretion whatsoever to waive the internship requirement notwithstanding any academic or other professional qualifications that the new entrant may hold. Unless exempted from having to do so, new entrants will be required, during the duration of the internship period, to complete the NQF Level 4 qualification for non-principals. New entrants may, subsequently, wish also to complete the NQF Level 5 qualification for principals and are encouraged to do so. New entrants, even if exempted from having to attain the relevant estate agency academic qualifications, will nevertheless still be required to compile a logbook underscoring their increasing competences over the internship year. Most new entrants to the estate agency profession will need to register with, and study through, an accredited estate agency training provider to achieve the required qualifications. Those new entrants who believe that they have relevant previous work experience may also apply for the recognition of their prior learning assessment through an EAAB accredited Recognition of Prior Learning assessment centre. The new entrant may be required to attend training and to be assessed against the real estate-specific content. New entrants may also be signed onto a Services SETA learnership. The funded learnership caters mainly for unemployed youth from previously disadvantaged backgrounds. These learners are paid a small monthly stipend to assist the employer in covering some of the training costs. Employers are advised to contact the Services SETA to obtain additional information on the submission of a learnership application. The new entrant may be required to attend training and to be assessed against the real estate-specific content. New entrants may also be signed onto a Services SETA learnership. THE PROFESSIONAL DESIGNATION EXAMINATION (PDE) The Professional Designation Examination for both principal and non-principal estate agents will be set and administered by the EAAB and be based on the entire syllabus for the NQF Level 5 and 4 qualifications respectively. The syllabus for the NQF Level 4 qualification is contained in the work published by the EAAB under the title Study Guide for the Professional Estate Agent: NQF Level 4. It is anticipated that the study material in respect of the syllabus for principal estate agents will be published shortly under the title Advanced Study Guide for the Professional Estate Agent: NQF Level 5. Both sets of study material will be prescribed reading for candidates undertaking the principal and non-principal PDE respectively. It is envisaged that the PDE for both principal and non-principal estate agents will contain a one-and-a-half-hour closed book knowledge component and a two-and-a-half-hour open-book practically based case-study. It is anticipated that three examinations will be conducted each year at venues throughout South Africa. There will be four PDE categories for both principals and non-principals namely, residential, commercial/industrial, community schemes and auctioneering/business broking. A Certificate of Professional Recognition will be granted to successful PDE candidates. CONTINUING PROFESSIONAL DEVELOPMENT (CPD) The EAAB will soon be introducing a system of continuing professional development for all estate agents. The EAAB is aware that a significant number of estate agents already undergo training and/or attend relevant conferences to ensure that they remain fully acquainted with the latest estate agency trends and developments. Estate agents generally realise that their continuing success inevitably depends on maintaining a sound knowledge base in a service-orientated profession. The only difference, therefore, between current practice and the institution of an ongoing, professional CPD programme is that estate agents will have to earn a set number of points over a given time period. Full details of the proposed CPD programme will be published shortly. Estate agents may rest assured, however, that it is not the intention of the EAAB to make the CPD programme unduly onerous or expensive for estate agents. The EAAB is mindful of the fact that the CPD programme should be practical, relevant and achievable. AGENT 11
CONSTRUCTION IN 2010/11 WHERE TO FROM HERE?
Recent data released by Absa, FNB and Statistics SA indicates continuing difficulty in the construction sector. This has a very real effect on real estate supply and demand cycles, as well as risk associated with credit extension. According to Statistics SA, there was an overall decline of 11.2% in plans passed year on year and an even more significant 33.5% year on year contraction in buildings completed. Notwithstanding the fact that the recession may be over in terms of GDP numbers, the lagging effects and impact on the demand for new houses will take some time to play out. The decline is not represented equally across all provinces. Some areas have experienced more pain than others. For example, KwaZulu-Natal has experienced a 24.4% decline in plans passed and a depressing 49.9% decrease in the number of new houses, flats and townhouses completed year on year. However, relative to national data, KwaZulu-Natal only accounts for a small slice (about 8%) of the pie. The two largest players, Gauteng and the Western Cape (accounting for 62% of buildings completed), have also fared dismally. The past year has seen a cumulative year on year decline of 35.7% in the number of buildings completed in these two provinces. The statistics below provide some insight into the economics of this sector Full title small homes ( 80m² down by 31.4% year on year) and full title larger homes ( 80m² down by 23.7% year on year) showed less contraction than sectional title flats and townhouses (down by 43.5%). Overall demand for sectional title properties has lagged the mini recovery in other sectors of the real estate economy. Sectional title has traditionally seen young families discover the joys of home ownership. During the economic downturn, though, the average age of firsttime buyers has increased from 31 to 37 years as lenders raised the stakes for creditworthy mortgagees. As a result, sellers have had to rely on older, more qualified buyers, who may be downscaling due to lifestyle or financial reasons. Then too, some developers just got it wrong; creating spectacularly finished highprice units for which buyers are few and far between. Thankfully, most property developers are approaching each project with more science and less thumb-suck. Rather than simply relying on anecdotal evidence of WHWN (what s hot, what s not), they are increasingly turning to price band statistics, demographics and historical supply and demand cycles to forecast viability in a particular area. With continued reticence on the part of credit extenders, developers have to be smart about choosing projects that are correctly aligned with the subject suburb. In addition to proximity to logical amenities such as schools, hospitals, shopping centres, parks, gyms and libraries, planners also consider traffic flow, transport hubs (taxis, bus, bus rapid transit and the Gautrain) or even sports facilities, depending on the type of development under consideration. The needs of the target market and its specific de- The most recent rate cut will make new developments more affordable for those who are in the enviable position of being able to purchase a new home... mographics must be taken into account, their income level and their risk profile. Developers generally only receive funding after furnishing proof that 60% or more of the plot and plans have been sold. Time is money, and nowhere is this more true than in the preliminary phases of a development. Massive input costs for infrastructure, water, power, sewage, roads and lighting have to be in place before the first house can be built. The sooner the units can be sold off-plan, the faster developers and their investors can see a return on their investment. The South African Property Transfer Guide (SAPTG) supplies developers and contractors with specific reports to assist them to determine appropriate price bands, demographic reports and other specialist property reports to ease the pain and ensure that decisions are informed and impact positively on the bottom line. The most recent rate cut will make new developments more affordable for those who are in the enviable position of being able to purchase a new home. The collective effect of the past two rate cuts will no doubt also provide a modest confidence boost for contractors, architects, developers and others who are dependent on this industry. While growth in this sector is expected to remain pedestrian during the next 12 months, the worst appears to be over. Source: sapta.co.za AGENT 13
On Compliance... Curator appointed to control and administer the trust accounts of Wendy Machanik Property Holdings CC During mid-2010, the Estate Agency Affairs Board (EAAB), the statutory regulator of the estate agency profession in terms of the Estate Agency Affairs Act, 112 of 1976 (the Act), received a disclosure, through its whistle blowing hot line, relating to certain alleged irregularities concerning the business affairs of Wendy Machanik Property Holdings (WMP) as well as numerous instances of non-compliance with the provisions of the Act. The EAAB wishes to emphasise its zero-tolerance approach to any instances of statutory non-compliance by estate agency enterprises and estate agents. The EAAB will not hesitate to take all such measures as may be required effectively to regulate the estate agency profession in the interests of consumers. Consumers are, furthermore, reminded that the telephone number of the whistle blowing hotline is 0800 223 225. The EAAB wishes to emphasise its zerotolerance approach to any instances of statutory non-compliance by estate agency enterprises and estate agents... After duly instituting a forensic investigation to investigate these allegations it became apparent that there had, indeed, been a systemic misuse of trust moneys over an extended time period. The EAAB, represented by attorneys Knowles Husain Lindsay, was consequently obliged, on 30 December 2010, to launch an urgent application out of the High Court (South Gauteng Division) against both WMP and Wendy Machanik personally in terms of the relevant provisions of the Act to prevent WMP from operating on its trust accounts and to appoint a curator to control and administer such trust accounts. The proceedings were instituted primarily to protect the interests of both consumers and the Estate Agents Fidelity Fund, which safeguards consumers against the misappropriation of trust monies by estate agents. Despite the application being opposed a provisional order was duly granted by the Court and a suitable curator appointed to control and administer the relevant trust accounts. The matter will again be heard by the Court on 5 April 2011. This, it is believed, will grant the curator sufficient time to properly investigate the trust accounts and to report back thereon to the Court. The EAAB subsequently successfully applied to the High Court for an order interdicting both Wendy Machanik Properties and Ms. Machanik from acting as estate agents for so long as they had not been issued with valid fidelity fund certificates by the EAAB. AGENT 15
The EAAB intensifies inspectorate manda agents, having due regard for the public interest The EAAB is also a supervisory body of the estate agents profession, pursuant to the Financial Intelligence Centre Act, and is obliged to take all steps required to prevent, or alternatively identify and report on money laundering and terrorist financing activities. Inspections therefore ensure compliance with the Estate Agency Affairs Act, Act No 112 of 1976 (the EAA Act), and the Financial Intelligence Act. The inspection process will in future also be used to monitor compliance of education and training with respect to applicable legislation and internal policies of the EAAB. STRUCTURE AND FUNCTIONALITY OF THE INSPECTORATE The EAAB inspectorate function has been outsourced to three audit firms: SAB & T, Ernst & Young and G & G Chartered Accountants. These audit firms have been contracted to perform inspections on behalf of the EAAB (in their respective regions) for a period of one year starting from 1 November 2010. These audit firms will perform inspections covering the following legislative areas: Act); (ii) it is connected with an act performed by an estate agent; or (iii) there are books, records or documents to which the provisions of this act are applicable; (b) order any estate agent or the manager, employee or agent of any estate agent: (i) to produce to him the fidelity fund certificate of that estate agent; (ii) to produce to him any book, record or other document in the possession or under the control of that estate agent, manager, employee or agent; or (iii) to furnish him, at such place and in such manner as he may reasonably specify, with such information in respect of that fidelity fund certificate, book, record or other document as he may desire; (c) examine or make extracts from or copies of any such fidelity fund certificate, book, record or other document; (d) seize and retain any such fidelity fund certificate, book, record or other document to which any document was taken, and shall, at his request, be allowed to make, at his own expense and under the supervision of the inspector concerned, copies thereof or extracts therefrom. Section 32A (2) further stipulates that no person shall: (i) fail on demand to place at the disposal of any inspector anything in his possession or under his control or on his premises which may relate to any inspection; (ii) hinder or obstruct any inspector in the exercise of his powers as described above; or (iii) falsely hold himself out as an inspector. ESTATE AGENT INSPECTION PROCESS
its te efforts The estate agent can request an appointment of inspector ate letter on receipt of the notice to conduct inspection letter. This letter will consist of the following: the EAA Act; Act; The notice period for inspection should be approximately between two and five working days (this is a guideline). This notice period is based on the discretion of the delegated inspector and/ or agreement with the estate agent. (In accordance with the EAA Act, estate agents should be aware that it is not necessary for the inspector to give prior notice.) appointment of inspectorate letter to the estate agent (if not previously requested) and the estate agent should make all the necessary fidelity fund certificates, books, records and other documents available to the inspector. Estate agents who contravene the requirements of inspections (i.e. fail to produce the necessary documentation on the date of the inspection or refuse access to premises, fidelity fund certificates, books, records and other relevant documents) shall be guilty of an offence and will subsequently be disciplined by the EAAB. This could also lead to a conviction, a fine or imprison- In conclusion, EAAB inspections are necessary for the following reasons:
Are you paying the right price for your new property? 2011 A whole variety of factors will affect the price of a property How does a homebuyer know if he is offering the right price for the property in which he is interested? There are certain checks which can indicate whether the seller and his agent are going for a kill or pricing at market-related values. The first should always be the prices recently achieved on similar homes in the area: a reputable agent, with links to good property statistical services, should be able to produce these on demand. If he or she cannot, this should always be seen as grounds for suspicion and a lack of professionalism. These figures should include the floor area of the homes sold (in square metres) and sometimes of the plots as well. If the floor area is then divided by the sales price achieved (or asked, in the case of a home now being considered) the metre square price can be a useful guideline to the true value of what is now on offer. If several recent sales are analysed in this way, a reasonably accurate average figure for the area can be estimated. Nevertheless, all prices will reflect special benefits or disadvantages and should be explained and analysed in detail. Looking at homes in the more affluent southern suburbs, right now, for example, an apartment in the prestigious Intaba block near Cavendish Square might be priced on average at R20 000 to R22 000 per m 2 - but there would be a significant difference (perhaps 35%) between a unit with a mountain view and one without it. Similarly, in any flat complex, the higher units, especially if they have views, will be priced significantly above the lower units. Whether the unit has a garage or secure parking will also affect the price - in urban areas garages have become highly prized and no matter how good the apartment, one without a garage may not attract buyers. In stand-alone house purchases on their own plots, extras such as solid wood flooring and doors, designer fireplaces, underfloor heating, air conditioning and swimming pools can make it possible for the owner to ask far more than the average price for the area - and in today s market lock-up-and-go units capable of being left empty for long periods are appreciating faster in value than traditional homes with large grounds. This can cause some frustration for those scaling down to apparently simpler and smaller units which, may cost just as much as their larger and grander home. It is always a good policy to buy one of the less expensive homes in a good area rather than vice versa. If, however, a buyer does find himself attracted to a home priced higher than the average for the area, there could be a sound reason for this, which should become evident during the course of the inspection and negotiations. It is not necessarily foolish to buy well above the area average if you like a home - particularly if the buyer plans to stay there for a long time. However, he must expect that when the time comes to sell, the home will take longer to sell. Although it has to be accepted that the estate agent will be working for the seller rather than the buyer, it is perfectly legitimate to ask him or her directly if the home represents fair value and is market-related even though this question can be fairly decisive in maintaining or turning off the buyer s interest. Source: Anton du Plessis (Vineyard Estates) 18 AGENT
The level of home buying activity in the middle-income and lower-income segments held up better in the second half of 2010 compared with the higher-end segment, although both saw activity levels decline from earlier in the year. A significant number of property sales in the second half of 2010 were due to downscaling as a result of financial pressure. The upper-income segment appears to have slowed the most sharply from an early-2010 peak... The FNB Estate Agent Survey, released on Thursday, suggests that the upper-income segment appears to have slowed the most sharply from an early-2010 peak, while the high-net-worth segment continues to show the weakest demand reading, having remained relatively flat throughout 2010. FNB property analyst John Loos says the relative segment results are not too surprising, given that an increasing percentage of agents taking part in the survey have indicated in recent quarters that income levels are way behind property price levels. This, coupled with the second half of 2010 seeing all segments except the high-net-worth segment averaging above 20% selling in order to downscale due to financial pressure, reflects the still-significant degree of household sector financial pressure. In this environment, affordability is key and the lower end of the market was bound to outperform the higher-income segments. The patterns unfolding in the survey results therefore moreor-less fit in with our own estimates of segment average-price trends for the country s six major metro areas, for which we utilise deeds office records of property transactions by individuals only, Loos says. In the fourth quarter, the year-on-year price growth in the affordable areas - valued at about 418,747 rand - still recorded the highest rate, at 17. 5%, followed by middle-income areas, at 13. 4% (761,208 rand). Next on the ladder were high-income areas - 1. 153 million rand - with growth of 11. 1%, and lastly top-end metro areas, with 11% (1. 961 million rand). Source: I-Net Bridge AGENT 19
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N A M A First National Indaba for South Africa The National Association of Managing Agents (NAMA) will be hosting the first National Indaba for Managing Agents in South Africa. People living in communal development schemes e.g. Sectional Title, Full Title etc as well as Lawyers, Estate Agents, Developers and Service Providers in the industry should not miss this opportunity. This event will take place on 6 & 7 May 2011 and will be held at the Ekudeni Resort in Muldersdrift near Krugersdorp, Gauteng. The motivational speaker at this event will be none other than the world famous swimmer PENNY HEYNS who has broken a total of 14 individual world records during her career... Various experts in the field of the Sectional Title Industry will address the delegates at the Indaba. Speakers will include inter alia :- Francesco Andreone - Executive member of the National Community Titles Institute of Australia; Prof Cornie van der Merwe - Ex-Dean of the University of Stellenbosch and a Senior Research Fellow of the University of Stellenbosch and a Professor emeritus of the University of Aberdeen, Scotland; Prof Graham Paddock - Prof of the Law Faculty of the Cape Town University and leader of the team appointed by the Minister of Human Settlements developing the new Sectional Title and Community Schemes Ombud service legislation; as well as a few other prominent role players in the Sectional Title Industry. Various workshops will be presented and chaired by experts in their specific fields e.g. Topics addressed by the main speakers will include : Mrs Nomonde Mapetla; der Merwe and more A cocktail party will be held on Friday evening 6th May 2011 which will give delegates the opportunity for networking with their peers as well as the leading role players in this industry. Various service providers in the Sectional Title Industry will showcase their products at the Indaba. The motivational speaker at this event will be none other than the world famous swimmer PENNY HEYNS world record holder in the 100 & 200 metre breaststroke in Atlanta USA 1996; Bronze in Sydney 2000 and by breaking a total of 14 individual world records during her career. She was inducted into the International Swimming Hall of Fame in Fort Lauderdale, Florida, USA. For more information visit: http://www.namasa.co.za/ or contact the National Secretary on: Tel No. 012 567 7597; namasa@ mweb.co.za. THIS IS AN OPPORTUNITY NOT TO BE MISSED! AGENT 21
2010 Property Market: A tale of 2 halves Too early to call a turnaround in the price trend 22 AGENT
The December 2010 FNB House Price Index completes the picture for last year, a year which proved to be hard work for those in the property industry, although it was significantly better than 2009. For December, the year-on-year rate of increase in the FNB House Price Index was 3.6%, which was unchanged from the November revised rate of growth of 3.6%. In real terms, i. e. adjusting for a November Consumer price inflation rate of 3.6% year-on-year, this means that November saw zero percent real change. Examining 2010 as a whole, the picture was better than what the weak year-end figures suggest. The average price level was estimated to be 6.7% higher than the 2009 average price level, which translates into a real price average that was 2.3% higher in 2010 than in 2009, when taking the 1st 11 months of 2010 into account (We still await December CPI stats). It must be said, though, that 2010 was a tale of 2 halves, with the 1st half of the year showing an acceleration in average price growth, in response to massive interest rate cuts in 2008/9, while the 2nd half of the year showed a de-celeration in price growth in response to the SARB putting the brakes on the pace of interest rate cutting from late-2009. And then, right at the end of 2010, there were hints at some stabilisation in nominal price growth, albeit at a very low rate of price increase. It is too early to say whether the stabilization in the rate of price increase is any sign of a turnaround in the price trend, and at this stage we think probably not. Rather, we believe it possible that the 2 successive interest rate cuts in September in November may have given the market a slight bit of impetus (on top of any seasonal factors) through the summer months, but that this will fade should there be no further interest rate cutting. And so, the market enters 2011, with its fundamentals still mediocre at best. Right at the end of 2010, there were hints at some stabilisation in nominal price growth, albeit at a very low rate of price increase... It is important to accept that the broader property cycles (excluding the mini-recoveries such as that of the 1st half of 2010) are generally long in duration, and the slow times following booms can last for a good number of years while the market slowly battles to eliminate past excesses. Certain indicators suggest that 2011 will probably be another year of hard work for the residential property, related industries. FNB s valuers, as a group, certainly appear to believe that the situation of weak demand relative to supply continues. The FNB Valuers Market Strength Index weakened further in December. When an FNB valuer values a property, he/she is required to provide a rating of demand as well as supply for property in the specific area. The demand and supply rating categories are a simple good (+1), average (0), and weak (-1). After aggregating the individual demand and supply ratings, we subtract the aggregate supply rating from the demand rating. The collective opinion of the valuers is that demand relative to supply has weakened further from -0.19 in November to -0.2 in December, the continuation of a weakening trend in the Market Strength Index. The ongoing weakness in valuers perceptions of the market continues to be of little surprise, with the country s household sector still experiencing a high level of indebtedness. In December, the SARB Quarterly Bulletin showed the household sector debt-todisposable income ratio to have been 78.5% as at the 3rd quarter of 2010, which remains only marginally lower than the 82% all time high recorded at the beginning of 2008. The household sector, therefore, remains constrained with regard to the extent by which it can grow its borrowing of this very high base (a high base by SA standards, at least). A year of expected sideways movement in interest rates, leads us to believe that 2011 will see further de-celeration in the rate of increase of the FNB House Price Index... In addition, 2011 looks set to provide little in the way of additional interest rate stimulus to the market. Already, 2010 proved to be a year of far slower interest rate cutting by the SARB, compared with 2009. Recently, we have seen 2 consecutive months of mild increase in the consumer price inflation rate, from a September low of 3.2% to 3.6% by November. Factors suggesting a further near term increase in consumer inflation include upward pressure on global food prices, rising oil prices and some increase in domestic petrol price inflation recently, as well as mildly rising home rental inflation as measured in the CPI. A 3.6% consumer price inflation rate is by no means a problem, however, and we do not expect interest rate hiking until 2012 (although the performance of the rand this year is probably the wildcard from an inflation point of view, and another year of solid performance by the currency would be crucial to this view). But it is important to emphasise that the stimulus to the market comes from interest rate cutting, not from rates moving sideways, and given the SARB s inflation focus, it would be unlikely to cut rates should inflation be rising. So, after starting the year with some of the mild stimulus from late-2010 interest rate cuts still to feed through into house prices, a year of expected sideways movement in interest rates, leads us to believe that 2011 will see further deceleration in the rate of increase of the FNB House Price Index following perhaps an initial few months of relative stability. Source: John Loos (Strategist at FNB Home Loans) The aggregate supply rating was slightly higher at +0.142, while the aggregate demand rating weakened from -0.057 (revised previous to -0.059 in November. AGENT 23
What you must know about your managing agent There are five things you should consider before entrusting the management of your property to an agent One of the biggest growth areas in the real estate industry at the moment is the management of rental property on behalf of landlords, despite the fact that buy-to-let investments now only account for about 7% of property purchases, compared to about 25% in 2004. The main reason is that owners, as well as tenants, have come under increasing financial pressure in the past two years, and simply cannot afford to risk rental defaults. Many people still own several rental properties that they bought during the boom years, and are in a situation where one bad payer could jeopardise their entire portfolio. The most vulnerable in this respect, however, are homeowners who, having found themselves in financial distress, but unable to sell their properties in a soft market, are renting them out to cover their bond repayments, while living somewhere cheaper themselves. While falling interest rates have steadily reduced the incidence of non-payment or part-payment among tenants since last year, this is still around 20% (one in five) in most areas and income brackets, according to the latest Rental Payment Monitor compiled by Tenant Profile Network (TPN). In addition, low inflation and rising municipal service charges are going to make it very difficult for landlords to raise their rents by next year, which means that they will have little or no cushion if a tenant defaults. In short... the need and demand for expert help in managing rental properties is set to grow even more. However, there are some important things for owners to check before entrusting the management of their properties to an agent. These include the following: Affairs Board and has a trust account for holding tenant deposits; NQF4 or NQF5 qualification by the end of 2011, when these will become essential for an agent to practice legally; the creditworthiness and payment history of prospective tenants, and that the agent will also establish that they are not currently under debt review; over the keys to the property until the deposit and the first month s rent have been paid; what services the agent will provide in return for his or her management fee, and whether this is a set amount or a percentage of the rent. Source: realestateweb AGENT 25
Signing body corporate documents 26 AGENT
Although a body corporate is a legal entity capable of entering into contracts with both legal and natural persons, it is not a natural person itself and must therefore rely on its duly authorised officers and representatives to sign its instruments and documents. Prescribed Management Rule (PMR) 27 stipulates who is authorised to sign documents on its behalf: SIGNING OF INSTRUMENTS No document signed on behalf of this body corporate shall be valid and binding unless it is signed by a trustee and the managing agent referred to in Rule 46 or by two trustees or, in the case of a certificate issued in terms of Section 15B(3)(i)(aa) of the Act, by two trustees or the managing agent. WHO MUST SIGN AND WHY? The rule requires instruments and documents to be signed by two people, either a trustee and the managing agent or two trustees, except in the case of levy clearance certificates, which must be signed by either two trustees or the managing agent alone. The legislative rationale behind making it compulsory for two people to sign body corporate instruments and documents, with the exception of levy clearance certificates, is referred to by Prof CG van der Merwe as the four-eyes principle, i.e. that at least two natural persons must subscribe. This principle was introduced to avoid abuse by a single person signing documents to the detriment of the body corporate, as it imposes a check on each trustee s motivation for signing a particular instrument or document. For example, the four-eyes principle may prevent a single trustee who wants to sell his unit from acting in bad faith and signing his own levy clearance certificate, despite the fact that levies for his unit are outstanding. The reason for the managing agent alone being authorised to sign levy clearance certificates is presumably because managing agents are generally independent professionals who have no personal interest in the scheme. However, PMR 5 was amended to make it possible for a managing agent to own a unit in a scheme that he manages and for him to act as a trustee of that scheme. When PMR 5 was amended, PMR 27 should also have been amended to take into account the possibility that a trustee who is also the managing agent of the scheme may act in bad faith and sign his own levy clearance certificate, despite outstanding levies on his unit, by disallowing a managing agent to sign a clearance certificate for his own unit. WHAT INSTRUMENTS AND DOCUMENTS MUST BE SIGNED? While the heading of the rule refers to the signing of instruments, the text refers to documents. Therefore, the rule can be interpreted widely to cover all instruments, including negotiable instruments (for example, cheques), legal instruments (such as powers of attorney and contracts of employment), as well as all other less formal documents. Our view is that a judge or arbitrator would accept that the absence of a proper signature is a procedural defect... However, the prescribed rules also make other specific provision for the signing of certain body corporate documents. PMR 15 makes it clear that any one trustee can give notice of a meeting of trustees. PMR 38 requires that the annual trustee report must be signed by the chairman. So, clearly, PMR 27 is not applicable to those documents. But PMR 53 and PMR 54 require a decision by trustees and written notice to owners for the calling of a special or annual general meeting. Is notice of a general meeting a document for the purpose of PMR 27? It is certainly an official communication by the body corporate and has all the features of a document. The notice should, strictly speaking, be signed in accordance with PMR 27. In practice, however, many notices calling for body corporate meetings are not signed by any trustees or by the managing agent. Does this non-compliance with the provisions of PMR 27 invalidate the proceedings of and the decisions taken at the meeting, even if the notice was otherwise properly given? Some would argue so, but this will not be known for sure until the question is considered and pronounced upon by a judge. Our view is that a judge or arbitrator would accept that the absence of a proper signature is a procedural defect, but, before declaring proceedings invalid for want of technical compliance, he or she would want to look deeper into the matter and establish whether due process was, in fact, followed by the trustees in deciding to call the meeting and setting the agenda, as well as whether any owner was materially prejudiced by the defect. Jennifer Paddock is a sectional title expert. Learn more about the benchmark course in sectional title scheme management, presented by Paddocks, in conjunction with the University of Cape Town. Late registrations will be accepted. Please contact Kate at kate@paddocks.co.za or go to www.paddocks.co.za AGENT 27
New Recruits At the start of 2011, many in the industry are concerned about attracting and retaining talent in this newly regu lated and emerging profession. Real estate has historically been a high-turnover industry, with a one third churn, where a third of the 90 000 registered agents would leave the industry and another third would enter. However, since the economic downturn and the introduction of the Education Regulations in July 2008, these numbers have decreased significantly to less than 40 000 agents. Even more significant for the industry is the slow entry of new recruits, with only about 7 000 interns registered in 2010. This is a decrease of over 75% in the number of new entrants from 30 000 to 7 000. This represents an opportunity in the industry as it is now wide open to anyone willing to enter and work towards achieving professional status through the internship programme. Since the inception of the Education Regulations in July 2008, new recruits have continued to register with the Estate Agency Affairs Board (EAAB) for the compulsory one-year internship, and have been issued with an intern status Fidelity Fund Certificate (FFC). The regulations stipulate that an intern agent must work under the mentorship of either a principal or a full-status FFC agent of a minimum of three years standing. The purpose of this relationship is to ensure that the new recruit receives quality workplace guidance, support, mentoring and coaching during the one-year internship. However, the reality in the workplace is that most principals are too busy and the majority of agents are not interested in developing their own future competition. This is what the new recruit will become, once qualified. Invariably, new recruits are then left to their own devices or are required do menial work, failing to receive the educational exposure to the various facets of the profession, as intended. Furthermore, the intern must, during the one-year internship, achieve the compulsory qualification for non-principal agents, i.e. the Further Education and Training Certificate in Real Estate at NQF Level 4. This can be done in one of three ways: gramme, where 30% of the learning is provided by a registered, accredited training provider and 70% of the learning is provided by the intern agent s employer. the learnership for more experienced entrants to the industry, who are still required to meet the structured learning requirements of the learnership, using elements of Recognition of Prior Learning to fast-track the process. ing to gain workplace experience and then attempt to achieve the qualification through RPL only. This is very risky as it shortchanges the new entrant from much of the fundamental learning required to perform as a professional agent. This route seriously undermines the purpose of the new Education Regulations and the professionalisation of the industry. It is a costsaving compromise. Agencies should be warned against opting for this route, as it is questionable whether qualifications achieved through RPL after only a few months in the industry will be upheld by the quality assurance authorities of the Sector Education and Training Authority (SETA) and the EAAB. How are business owners practically going to apply the requirements in a way that makes business sense and still meets the compliance requirements? Who is going to pay for the new recruits training and who is going to perform the regulated mentoring role required? How does the agency owner achieve the targets detailed in the Property Transformation Charter? Read the follow-up article in the next AGENT to find out more. For more information contact Margaret Nicol, CEO of Margaret Nicol and Associates (MNA) on 021 763 3360 or go to www.inrecognition.co.za. AGENT 29
FINANCIAL INTELLIGENCE CENTRE UPDATED NOTIFICATION TO ALL ESTATE AGENTS OPERATING IN SOUTH AFRICA CASH THRESHOLD REPORTING OBLIGATION The obligation on all accountable and reporting institutions to report cash transactions amounting to R25 000 or more, to the Financial Intelligence Centre (the Centre), came into effect on 1 December 2010. Cash threshold reporting has been implemented in terms of section 28 of the Financial Intelligence Centre Act, No 38 of 2001 (the FIC Act), and forms part of the Centre s mandate to identify the proceeds of crime, to combat the financing of terrorist activities and to prevent criminal money being laundered into the South African economy. Thus far, the number of cash threshold reports from estate agents has remained disappointingly low. Estate agents, like all reporting and accountable institutions, are encouraged to comply with its reporting obligations to avoid heavy penalties including imprisonment and fines of up to R100 million. REGISTRATION WITH THE CENTRE Also as of 1 December 2010, it became compulsory for all accountable and reporting institutions, among them estate agents, to register with the Centre. All accountable and reporting institutions have until 1 March 2011to register with the Centre. The objective of registration is to ensure that the Centre is aware of the number of estate agents that fall within the ambit of the 30 AGENT
FIC Act as well as to provide the Centre with all the details it requires to fulfill its statutory mandate. Having businesses across the various industry sectors registered with the Centre will discourage illegal operators and ensure competition on a more equal footing. In terms of registration the Centre noted that few estate agents have registered with the Centre. Not registering with the Centre, is an offence, and estate agents, along with all other industry sectors, stand to be penalised with imprisonment or fines of up to R10 million for non-registration. NEW POWERS FOR THE CENTRE The Financial Intelligence Centre Amendment Act, 2008, came into operation on 1 December 2010, effecting a number of amendments to the FIC Act. The Director of the Centre, Mr Murray Michell says: These amendments bring about a significant change to the legislative framework of the Centre as it broadens our functions and those of supervisory bodies to ensure greater compliance. It also strengthens our ability to detect and to prevent illicit monies from being laundered through our financial system. With these amendments, the Centre and supervisory bodies are afforded a number of administrative measures to ensure compliance and to deal proactively and reactively with failures to comply with the FIC Act. These measures include: Centre; etary penalties; and challenge decisions of the Centre or supervisory body. Members of the Appeal Board will be appointed by the Minister of Finance. - Not sending a report to FIC - Misuse of information - Conducting transactions to avoid reporting duties 5 Years or R10 million - Failure to formulate and implement internal rules - Failure to provide training / appointing a compliance officer - Failure to register with Centre It strengthens our ability to detect and to prevent illicit monies from being laundered through our financial system... FEEDBACK AND ENQUIRIES Enquiries may be sent to the Centre by e-mail to fic_feedback@fic.gov.za. You may also telephone the Centre on +27 860 FIC FIC (342 342). Kindly consult the Centre s website at www.fic.gov.za to keep abreast of further developments. Financial Intelligence Centre January 2011 All estate agents who have previously acquired login credentials from the Centre before 1 December 2010 will be required to update and confirm their details, to comply with their registration obligation. An updated guideline on registration and cash threshold reporting can be found on the Centre s website at www.fic.gov.za. ENFORCEMENT OF THE FIC ACT The Centre will soon be embarking on a joint inspection process with the Estate Agency Affairs Board. During these inspections the Centre s officials will be conducting reviews to ensure that estate agents are complying with the provisions of the FIC Act. Estate agents are therefore encouraged to ensure that they are fully compliant with the provisions of the FIC Act to avoid the criminal and administrative sanctions provided for by the FIC Act. The FIC Act makes provision for new penalties which include: 15 Years or R100 million - Not identifying persons - Not keeping records - Destroying or tampering with records - Not reporting suspicious or unusual transactions
The GREEN Revolution - EAAB goes GREEN With all the hype and talk around the concern relating to Global Warming & Climate Change and the need for all to undergo a paradigm shift in how we treat Mother Earth, the EAAB has embarked on an internal programme to positively contribute to the GREEN Revolution. 32 AGENT
WHY IS BEING ENVIRON- MENTALLY RESPONSIBLE SO IMPORTANT? As inhabitants of Planet Earth, our only home, we are slowly but surely destroying it through the use of products and behaviour mentality that contribute to factors that harm our environment. The global events of Climate Change Conferences, summits and natural disasters are stark reminders that Mother Earth is calling out to all of us to change our behaviours and take care of Her. By positively protecting our planet, its environment and our only home, it is imperative on all to take positive stepstowards becoming and remaining environmentally responsible. Footprint. Some of the planned initiatives the EAAB is investigating include the following: tal set of greenhouse gas (GHG) emissions caused by an individual, organisation, event or product - it is often expressed in terms of the amount of carbon dioxide (CO2), or its equivalent of other GHGs emitted. how the EAAB conducts its business through more responsible procurement that has a positive green spinoff, selection of suppliers that meet the Green intentions and activities of the EAAB material and information in digital format (CDs, Website) fices with a move towards more energy efficient lighting and reduction in energy utilisation change between industry stakeholders on Climate Change, Sustainability and Going Green The EAAB will include in its publications and other mediums of communication updates on the GREEN programme and how Estate Agents affiliated to the EAAB are able to benefit from this. Mother Earth is our only home. We all need to join forces and contribute in making a difference, a GREEN difference. 2002 2025 Water availability per person By positively protecting our planet, its environment and our only home, it is imperative on all to take positive steps towards becoming and remaining environmentally responsible. As a result, the EAAB, as the statutory regulator for the Estate Agency industry in South Africa, is taking the lead in becoming the thought leader and environmentally responsible corporate citizen for the industry. As the Estate Agency industry in South Africa comprises of many SME and SMME who do not have access to guidance and good practice on Green compliance and practices, the EAAB will serve as a point of reference and information on this. WHAT IS CLIMATE CHANGE? Basically, this refers to a variation of the Earth s global climate due to anthropogenic (human) activity induced global warming. Global warming is when there is an increase in the average temperature of our planet s air and ocean temperature, largely due to human influences resulting in the melting of ice caps and raising of ocean water levels and the change in living conditions. WHAT IS THE EAAB PLANNING? Going Green is a process that needs to be properly planned thereby resulting in a sustainable approach in reducing ones Carbon South African Key Focus Areas (National Green Economy Summit, May 2010) Alternative and Clean Energy Sustainable Waste and Management Options Green Buildings and the Built Environment Sustainable Transportation Agriculture, Forestry and Water Management Resource Conservation and Management (incl. Eco tourism) Green Cities and Towns Financial Instruments for environmental protection and resource management Green technologies and Innovative Ideas (R & D) As a high carbon emitter, South Africa has the responsibility to demonstrate leadership on the continent. Such leadership must be accompanied by target setting, measurement and verification of performance Source: Mr Mohsien Hassim (EAAB Board Member) AGENT 33
New National Body launched to represent Estate Agents In this year s most significant development for the real estate industry, the three largest black estate agents organisations have after merging, officially launched the National Property Forum (NPF) at Bytes Technology Conference Centre in Midrand attended by more than 500 Principals and agents from Gauteng, KZN, Eastern Cape and Western Cape, as well as dignitaries from the Estate Agency Affairs Board (EAAB), Services Sector Education & Training Authority (SSETA) and executives of financial institutions. Officially established in September last year, the NPF combines the strength of the Nu Nation Property Network, the Black Estate Agents Forum South Africa and the South African Forum of Real Estate, which together represent more than 5000 estate agents and agency principals around the country. The chairman of the new organisation Mr Leo Mlambo says the NPF is comprised of professionals who are committed to creating sound businesses and finding solutions to problems in the real estate industry, while building mutually beneficial and respectful relationships with all stakeholders. He further emphasised their total commitment to the transformation of the industry and therefore their unqualified support of the Property Charter as is currently being finalised. 34 AGENT
The NPF already represents a very large percentage of the estate agents currently registered with the Estate Agency Affairs Board (EAAB), and our membership is growing daily. Although stressing that we are a non-racial organisation that is open to all estate agents who subscribe to our constitution and values, we however recognise that our past has not enabled previously disadvantaged estate agents to actively participate and enjoy the benefits of this multi-billion rand industry says Mr Leo Mlambo, the Chairman of the NPF. Therefore our aim is to be the authoritative voice of the industry, speaking in the interests of agents on all major platforms nationally and internationally, he says. For the NPF skills development, member and organisational capacitation, ethics and governance will be our immediate focus in 2011. Our members will abide by regulations governing the industry and by doing this eliminate unregulated so called agents from operating. For the benefit of its members the NPF intends, for example, to form strategic alliances with a variety of independent service providers such as financial institutions, attorneys and mortgage originators to secure innovative and efficient services that are affordable and client-focused. We also want to contribute to the creation of employment by ensuring that school-leavers are able to consider our industry as a viable career option, and to this end we are committed to working with the Services SETA to facilitate training programmes for new entrants as well as for our members. says Leo. ISSUED BY THE NATIONAL PROPERTY FORUM FOR MORE INFORMATION CONTACT LEO MLAMBO CHAIRMAN NPF 011 326 0498 or 071 834 8263 EMAIL lmlambobondwealth@telkomsa.net
NEW LAWS CLAMP DOWN ON SELLERS P