Q: The Estate Agency Affairs Board (EAAB) recently offered a reprieve to estate agents who have historic debt. What are the details of this, and what will it mean for the industry?
A: Practice note ETD022019 was issued following huge interest from agents who did not comply with the Estate Agency Affairs Act regulation, which stipulates that all agents wanting to discontinue practice should notify the board in writing. In essence, the reprieve allows for agents who have not applied for renewal of their Fidelity Fund Certificates (FFCs) for three years or more to apply for re-admittance. Agents will have to pay a minimum of R1 000 for acknowledgment of historical debt in terms of outstanding FFC fees and sign an undertaking to pay off the debt over either six, 12 or 16 months. The debt incurred over a three-year period amounts to R16 200 for principal agents and R8 640 for full-status agents and interns.
The special re-admittance practice note issued in June 2019 ultimately allows agents who have historical penalties to re-enter the industry after fulfilling certain requirements. This initiative aims to remove barriers to entry and will allow more estate agents to practise legally.
Q: The EAAB is also implementing a new resolution to assist previously disadvantaged individuals (PDIs) who are aspiring to become estate agents. What does this entail?
A: The PDI resolution makes it easier for previously disadvantaged individuals to become estate agents, as of 1 April 2020. The intention of the resolution is to make it easier for persons from a PDI background with a turnover of less than R5 million per year to become estate agents. In essence, it provides an opportunity for estate agents who can prove that they were previously disadvantaged to apply for exemption from all regulatory fee requirements, including for FFCs, financial audits and mandatory fees for education and training.
Q: Will PDIs also be exempted from ongoing industry training requirements?
A: It is not an exemption from any educational and training requirements. To preserve the professionalism and credibility of the profession, PDI applicants will have to meet all the applicable training requirements. They will be expected to undertake continuing professional development to acquire those points. The only exemption is that they will not pay fees for the training and exams.
Q: How will this resolution help level the playing field?
A: The resolution will remove the regulatory financial impediments for a period of five years to allow agents to acquire clients and gain financial stability. We will thereafter ask for the financial requirements, bearing in mind that the black estate agent comes from a low-income base so they start from a negative. The industry operates on a commission basis, so this resolution will give PDIs an opportunity to stabilise their income.
Q: How ‘transformed’ is the industry?
A: SA’s real-estate sector is still largely dominated by white estate agents. The numbers speak volumes – they’re shocking and clearly show the industry is highly untransformed. Of the 45 626 registered estate agents, 35 171 are white and 6 378 are black, with Indians and coloured people making up 4 077.
Q: What are the reasons behind the sector struggling with transformation?
A: Various reasons, and to varying degrees. There is no real will to transform. There are low retention rates for black estate agents because the industry is commission-based, and when you come from a low-income base you may not have the luxury of being able to wait for long periods for the business to break even, let alone become profitable. There are also challenges with bond originations as this service is largely based on existing relationships. If you do not have such relationships, you will find it difficult to get bonds for your transactions. Lack of access to markets is another barrier to entry, and the EAAB will assist black estate agents to get access. It is imperative for the EAAB to ensure that the industry is properly transformed and a true reflection of the demographics of our country.
Q: What are the implications of not having a transformed industry?
A: The consequence is that we will not redress historical imbalances, and we’ll have a perpetuation of preventing black people from getting access to proper wealth-creation initiatives. It will have an impact on increased employment opportunities for black people and enterprise development in the sector. Transformation will not only increase participation of black estate agents but will also stimulate the growth of enterprises and employment opportunities in the property sector as a whole.