In terms of the Property Practitioners’ Act (PP Act) and Regulations, which have been in full force since 1 February 2022, all property practitioners will need to submit valid Black Economic Empowerment (BEE) certificates to apply for or renew their fidelity fund certificates (FFCs). This applies to all business property practitioners and estate agencies and includes sole proprietors.
Current FFCs must be renewed before 31 October 2022. This means that agents and principals will need to start the process now to ensure their documentation is in order timeously.
Valid certificate
So, what is a ‘valid BEE certificate’ and how should real estate businesses go about getting theirs in time to apply for a new FFC in October?
In the Property Professional publication of 6 May, Portia Tau-Sekati, chief executive of the Property Sector Charter Council, was quoted as saying that “although every agency must get the BEE certification, no specific level of compliance is needed.”
However, in terms of the PP Act, any firm with a turnover of more than R2,5 million a year must carry out a formal verification audit to get a BEE certificate. These audits may only be performed by one of the verification agencies registered with the South African National Accreditation System (SANAS).
All BEE verifications must be updated every three years for all companies. The cost of an audited BEE certificate ranges between R8 000 and R100 000, depending on the size and complexity of the company.
Property companies need to appoint the correct verification agencies when doing their BEE certificate. In addition to being certified by SANAS, they must have the expertise to verify the Amended Property Sector Code. Click here to see a list of all suitable verification agencies that are accredited with SANAS.
According to Real Estate Business Owners of South Africa (Rebosa), the organisation has negotiated a preferential rate with SANAS-accredited BEE verification agencies on behalf of the industry. Click here for details.
All firms with a turnover of less than R2,5 m a year - referred to as Exempted Micro Enterprises (EMEs) - will automatically qualify for a level 4 BEE rating. These firms must provide a prescribed affidavit signed by a commissioner of oaths, which serves as a BEE certificate and does not need to be audited. You can download the affidavit from the Rebosa website.
Costly exercise
In a recent edition of the Property Professional, Rebosa’s chief executive, Jan le Roux, is quoted as saying that it is unfortunate that the BEE requirement is included in the PP Act.
He says that since no minimum BEE level is required for a valid FFC, it appears that the objective of the compulsory BEE certificates is to get information about the degree of transformation in the property industry.
Le Roux says this information is already contained in freely available data held by the Property Practitioners Regulatory Authority (PPRA).
“Even at a greatly reduced fee of R6 000, the cost to the industry is probably far more than R30 million. Certificates have to be renewed every three years, and most verification agencies are quoting much more to do the audits,” he says.
“It is well-known that only 25% of property practitioners are black, so it is common cause that this is an untransformed industry. We all agree that transformation is vital and top of our agenda. However, this requirement seems like an unnecessary expense. Surely the information gleaned in this way cannot be worth so much,” says le Roux.
Writer : Sarah-Jane Meyer