NOVEMBER 18, 2022
MAIN IMAGE: Vuyiswa Ramokgopa, Chairperson of the NPPC
Gated communities or estates have become a common sight in the South African residential landscape with estimates indicating that there are now roughly 6,000 of these communities across the country. According to the latest Africa Wealth Report released by Henley & Partners, South Africa is seen as a pioneer in estate living, boasting some of what can arguably be called the world’s best lifestyle estates.
New World Wealth has released their list of the top ten lifestyle estates in South Africa including Zimbali near Umhlanga, Steyn City in Johannesburg, Highland Gate near Dullstroom, Fancourt in George, Val de Vie near Paarl, and Waterfall Equestrian Estate located in Waterfall City.
Generally, properties in estates are of higher value with the average price starting at R2 million, making these estates very attractive to real estate agents who stand to earn good commissions.
All agents aren’t equal, according to the HOA
While all estates are certainly not created equal in terms of amenities and property prices, they do all have HOAs (Home Owners Associations), many of which have capitalised on their authority by asking real estate agents to pay for the privilege of operating within their community with an ‘accreditation fee’, and restricting the number of estate agents allowed.
Why is this an issue?
Several reasons have been given for the fee, from the additional security efforts taken to secure agents and potential buyers access to the estate, to marketing services offered in the form of the estate newsletter and other marketing materials etc. “If you strip away all these so-called reasons, at its core these estate HOAs make money out of estate agents, while unfairly barring other agents from trading in the estate. The NPPC has addressed this with the PPRA and the matter is currently being looked into,” explains Vuyiswa Ramokgopa, Chairperson of the NPPC, “Not only are they excluding agents, but also penalising sellers who suddenly find themselves forced to work with ‘approved’ real estate agencies as defined by the HOA”.
What does the PPA say?
According to the Property Practitioners Act, and pursuant to the provisions of Section 63 (1) of the Act, the Minister of Human Settlements declared in Regulation 35 that the following business practices are undesirable and therefore prohibited:
Any arrangement in terms of which any party or person that directly or indirectly controls or manages any residential property development, including any body corporate or homeowners’ association (the “managing organisation”):
- receives money or any other reward in exchange for a benefit, advantage or other form of preferentialtreatment in respect of the marketing of properties in such property development;
- requires that any property in such property development may only be disposed of through the agency of the managing organisation or a property practitioner designated by the managing organisation or which imposes any form of penalty in respect of a failure to do so;
- requires that any property in such property development may only be disposed of to the managingorganisation or a person or entity designated by the managing organisation;
- effectively provides an advantage to any one property practitioner or group of property practitioners overand above any other property practitioners, in providing services in relation to properties in such propertydevelopment; or
- effectively excludes or disadvantages any property practitioner or group of property practitioners from being able to provide services in relation to properties in such property development.
“While it may be tempting for an estate agent or agency to buy restricted access via these ‘accreditation fees’ into a gated community, the law is very clear – this anti-competitive behaviour is not allowed – agents who are in contravention of this regulation may be prosecuted by the PPRA and could lose their Fidelity Fund Certificates, and so the right to trade,” warns Ramokgopa, “I would also urge estate agents to notify sellers in these communities of their right to work with any agent or agency they choose. It is not up to a HOA to dictate this”.