Estate agent warning for South Africa

The Property Practitioners Regulatory Authority (PPRA) has issued an urgent warning to South Africans to only use the services of registered estate agents and other property practitioners who possess valid fidelity fund certificates (FFC).

The PPRA said that consumers should double-check all the fine details of property practitioners, especially before handing over trust money directly to them.

Trust money refers to any money entrusted to a property practitioner in their capacity as a practitioner or money collected or received by a practitioner and payable on account of the sale, purchase, letting, hiring, marketing or managing of immovable property.

It also includes any other money they may deal with, including insurance premiums, business undertakings or contracts for the building or erection of any improvements on immovable property.

The association said that whenever doing business with a property practitioner firm or estate agency firm, consumers should check the following:

• The firm is registered with the PPRA;
• The firm has been issued with a valid fidelity fund certificate (FFC);
• The certificate is valid for the year in question;
• Any candidate property practitioner is working under the supervision of a registered property practitioner.

The PPRA said registered estate agents and practitioners should have an active trust account held at a registered bank in South Africa and consumers should make sure that the trust money will be deposited into this account.

If unsure whether a property practitioner or property practitioner firm is registered with the PPRA, consumers are urged to contact the PPRA on 087 285 3222 to confirm the registration status of the property practitioner or property practitioner firm before doing business with or handing over trust money to the practitioner or firm.

Controversial certification

The PPRA’s warning comes in the wake of a battle over the FFCs it is urging consumers to double-check.

In September 2024, the association temporarily reversed a decision to enforce high-level BEE requirements to qualify for an FCC.

The PPRA started enforcing a policy in April 2024, where Fidelity Fund Certificates (FFCs)—required for property practitioners to operate—would be denied if applicants did not meet BEE requirements.

The need for a BEE certificate has been part of the Property Practitioners Act since it was enacted in 2022; however, until April 2024, FFCs were issued based on the requirement of having a BEE certificate, not necessarily being BEE compliant.

In April, the PPSA reminded practitioners that BEE compliance was required and that FFCs would not be issued unless they met the “accepted level of compliance” of 40 points or more (BEE Level 8).

Industry stakeholders, including Business group Sakeliga and industry body Rebosa, raising concern over the impact of the PPSA’s interpretation of the regulation on small businesses, sole proprietorships, and “one-man” or “mom-and-pop” operations.

They challenged the policy, arguing that the association’s interpretation of the regulations was incorrect and that the requirement of a BEE certificate was not necessarily a requirement for BEE compliance.

While the PPSA did reverse its enforcement of these specific laws, Sakeliga noted that the underlying legislation remains unchanged, leaving the door open for future overreach.

It has since launched legal action, challenging the Act itself.

At the heart of the dispute is the Property Practitioners Act’s broad definition of “property practitioner.”

When the Act replaced the Estate Agencies Affairs Act in 2022, it expanded the term to encompass a wide array of roles, including estate agents, property developers, lessors, management agents, homeowners associations, bond originators, and auctioneers, among others.

This sweeping categorisation has drawn criticism for entangling diverse entities into a web of costly and burdensome compliance requirements, which Sakeliga argues undermines their ability to create value for themselves and their communities.

The group aims to challenge this definition—hoping to narrow it—while also challenging the BEE certificate requirements for FFCs.