The property industry obviously plays a vital role in our economy, and especially for investors of the Wealth Masters Club because property is our core investment vehicle. However, (believe it or not), there are challenges hindering its smooth operation here in South Africa, and one such challenge is faced by the Property Practitioners Regulatory Authority (PPRA), previously known as the EAAB.

A number of investors have been asking us for clarity on the new requirements from the PPRA, so let’s shed a little light on this and the implications it has on investors and Trustees of Trusts holding properties.

Registration Requirements and the PPRA

The PPRA is responsible for regulating ALL property practitioners in South Africa, but the challenge at hand is that they are only able to register 2 of the 12 categories of practitioners who are operating in the property realm. The primary requirement for property practitioners is to obtain a Fidelity Fund Certificate (FFC) from the PPRA. The FFC validates their ability to operate legally within the industry, protecting the interests of clients and ensuring professional conduct.

Categories Requiring Registration

Once the PPRA’s systems are fully operational, several categories of property practitioners will need to be registered. These include estate agents, auctioneers, bond and bridging finance originators, homeowners’ associations (HOAs) performing property practitioner activities, managing agents, property facilitators and intermediaries, business brokers, developers, timeshare and fractional ownership practitioners, property advertising platforms, and property practitioners specializing in trust monies collection and distribution. Currently, only Attorney employees and estate agents are eligible and in the process of registration.

What is important to note, is that if you are a Trustee of a Trust which holds property, and you are doing all the tenant administration yourself, then you are required to register and obtain an FCC, because, by law, you are seen as property practitioner. That being said, this category is not yet open for registration via the PPRA portal. This is another potential administrative nightmare you will have to face if you decide to do your own tenant administration.

If you are found to be doing tenant or property administration and have not yet been registered (once the systems are operational) then you will be held liable to fines, or even prison time!

Issues Affecting the PPRA

1. Backlog of FFC Issuance: The PPRA is currently facing a backlog of more than 2,500 FFC applications, leading to delays in issuing certificates to property practitioners. This backlog has implications for both practitioners and their clients, potentially causing disruptions in business operations.

2. System Downtime: A true South African proverb: “The system is down”. The PPRA’s system has been experiencing frequent downtimes, further exacerbating the delays in FFC issuance. The unreliable system hampers the efficiency of the registration process and contributes to frustrations among property practitioners.

3. Staffing Challenges: The PPRA is also grappling with a shortage of staff members, making it difficult to handle the volume of applications and inquiries effectively. Insufficient resources hinder the authority’s ability to address the backlog and provide timely support to practitioners and investors.

Seeking Solutions and the Timeline

The PPRA has at least recognized the challenges it faces and has engaged in discussions with the developers of the registration system. Collaborative efforts are underway to find practical solutions and improve system stability. While they claim that progress has been made, it is important to acknowledge that the estimated timeline for system configuration and readiness is approximately four months. However, as a South African who is fully aware of the concept of African Time, I am going to take a guess that this timeline may be a little optimistic at best.

Take Action

So, what does this mean for investors and Trustees? If you are a property owner or Trustee on a Trust holding property, understanding proper tenant administration is essential. Register for our full-day seminar to gain valuable insights into property administration and evaluation. Additionally, our property agency (Destinata Property, which is fully registered) stands ready to assist you with your property administration needs, ensuring compliance and taking away the headache of having to fight your way through endless documents to get registered… once the system allows for you to do so.