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New property code lacks proper research - estate agent body

Jul 04 2017 14:34
Liesl Peyper

Cape Town – The Institute of Estate Agents of South Africa (Ieasa) has expressed concern that the new amended property sector code was compiled without adequate research into the true state of affairs at the industry.

The amended Property Sector Code setting a black ownership target of 27% for property owning companies came into effect on June 28 2017. The target is higher than the 25% black ownership target of the Generic Codes.

In addition, the new sector code has set a target for established companies to financially support those that are at least 51% black-owned.

Ieasa president Lanice Steward told Fin24 by email that the organisation is concerned that adequate research into the industry was not carried out before targets were set.

“The perception that 20% of the (property) companies earn 80% of the income is inaccurate. Presently, there are about 30 000 agents who are registered and compliant with the Estate Agency Affairs Board (EAAB) and there are about 6 000 companies.

READ: 27% BEE target for property sector comes into effect 

“It is estimated that the average estate agent in South Africa earns around R15 000 per month before the deduction of tax and business and personal expenses. It is obviously not feasible for any non-income partner to join such a business.”

This in itself, Steward said, is an indication that more research must be undertaken, as the overwhelming majority of companies have selling principals with one or two agents.

“Ieasa would welcome the opportunity to assist with more research about the industry,” Steward said.

In a statement issued on Monday, Trade and Industry Minister Rob Davies said only 13% out of 38 000 estate agents in South Africa are black, and that this one of the challenges that the new amended Property Sector Code needs to address.

Steward, however, says according to Ieasa’s numbers there are currently less than 30 000 registered and compliant estate agents.

READ: New threshold for BEE transactions positive, but stakes higher - expert

“There are a number of agents of all races operating illegally in South Africa because of the cost of Fidelity Fund Certificates, trust accounts and continuing professional development training, which makes it impossible for these agents to comply.”

Steward says one of the first priorities of the sector must be to legalise all the existing agents and ensure they are adequately trained.

“These (high compliance) costs and the fact that it is a commission-driven industry are barriers to entry for new intern estate agents to join the industry.” 

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