Accreditation in estates now banned

Private Property South Africa
Cathy Nolan

Luxury home marketer Ronald Ennik has welcomed the decision by the Estate Agency Affairs Board (EAAB) to finally outlaw the payment by estate agents of accreditation fees to Homeowners’ Associations (HOAs) for permission to market homes in their gated residential estates.

Ronald Ennik has welcomed the decision by the EAAB to finally outlaw the payment by estate agents of accreditation fees to HOAs for permission to market homes on their gated residential estates.

This is according to founder and CEO of Christie’s International-affiliated Ennik Estates, who says it is great news for sellers in gated estates. At last they now have access to achieving best-possible sales prices for their homes in a free and open market.

“Agent accreditation has been a dubious practice ever since it was first applied in the 1990s, and I have been calling virtually ever since then for it to be scrapped. Accreditation obstructs the free flow of market forces, and could thus impact negatively on homeowners’ return on the capital investment in their most precious assets – their homes,” he says.

Ennik says however, that outlawing the practice does not detract from the fact that HOAs exist for a purpose: they create and enforce rules, regulations, and codes that preserve and protect their estate neighbourhoods and the property values within them – which estate agents must adhere to and respect.


Legal consequences

A recent official EAAB notice has been declared as unlawful “the practice of requiring estate agents to pay accreditation fees in return for the exclusive marketing of properties situated within HOAs” – stating that it contravenes the Estate Agency Affairs Act, 1976.

The EAAB notice cautions that both estate agents and HOAs involved in accreditation will face legal consequences in terms of the Act.

EAAB CEO Bryan Chaplog says the notice was issued in the interest of ensuring good governance within HOAs, and to ensure that estate agents operating within HOAs apply fair and lawful practices which promote the public interest generally.

This action by the EAAB was tardy in coming, says Ennik. “But, now that it is here, it deserves warm applause because it removes one of the most vexing barriers to best-practice and best-price sales in homeowner communities.”

“In the past, estate agents have been paying HOAs up to R20 000 a year, and often significantly more for the privilege of marketing homes in their estates.

“No matter how this cost was packaged – as a straight fee, a sales levy, or enshrined in title deeds – it always had a feel of tenderpreneurship about it.”

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