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Monday Jun 13, 2011

Illegal estate agencies surrender

An estimated 10 000 estate agencies were operating illegally and since the start of a six month amnesty period, more than 4 000 illegally operating agencies had surrendered, Thami Bolani, the chairman of the Estate Agencies Affairs Board (EAAB), said on Friday.

Speaking at a six-month residential property review in Cape Town, Bolani said by the end of the amnesty term, the board expected at least half of the illegal agencies to have come forward. "If there's still interest after that period, we will expand it by another three months," he said.

Bolani said the EAAB had investigated six big organisations since January and more than R70 million had disappeared from the trust funds of these estate agencies.

Bolani said the deadline for compliance would be extended for the estate agencies who had valid fund certificates issued after July 15, 2008.

"They will not have to sit for exams. They'll have until December 2013 to update their certificate to National Qualifications Framework (NQF) level 5 qualification," he said.

He said the EAAB was not going to make it easier for the estate agencies. "Our intention is to clean up the industry."

According to Bolani, the board was only able to carry out 16 inspections out of 40 000 registered estate agencies last year. The EAAB would increase its capacity to do inspections. "We'll hire 30 new inspectors in this department and we'll conduct more than a thousand inspections a year from 2012 compared with the 16 we've been able to achieve in the past," he said.

Bolani added that the EAAB was in discussions with the National Prosecuting Authority to conduct its own prosecution of agencies that were not compliant. "But before we put all that into effect, we've introduced the amnesty period because we've had mistakes from our part as well. But after that, all the agencies who abuse trust funds and those who fail to comply will have their contracts terminated," said Bolani.

Estate agencies have slammed the country's tight regulatory environment, saying it was suffocating the property industry's growth and the only solution to rescue the industry was more consolidations.

Industry players said the estate principals were now faced with a host of challenges because of regulations such as the Consumer Protection Act (CPA), the NQF5 and the upcoming property transformation charter. "Since the introduction of the National Credit Regulator, being an estate agency in South Africa has not been easy and now with the new provisions of the CPA and NQF4 and 5, not only have the barriers to success been raised, but those of entry as well," said Samuel Seeff, the chairman of Seeff Properties.

The number of registered estate agencies has declined to about 35 000 from more than 90 000 in 2007.

Bolani said there was a slight recovery in the property industry last year, but this had slowed down in 2011.

"The market is at its flattest in 27 years. The past three to four years have shown no growth at all," he said.

Seeff said this was because the industry faced sizable changes in a short period of time. "There still has to be a period of consolidation as we go to the future. We are going to need it," he said.

It now took five months on average sell a property from the day it was listed.

Seeff said the likelihood was that prices would be forced down. "We'll have to price our properties on levels lower than 2011 terms if we want them to move," he said.

The prices achieved when selling property this year were closer to those of 2007 andwere expected to remain the same for the next year and a half.

Volumes of transactions also took a knock. About 20 percent of the transactions that went through in the first half were those of distressed properties. Seeff blamed this on a lack of lending by banks.

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