Business

Sectoral shake-up for estate agents

2019-10-29 11:00

The Property Practitioners Act, which is soon to be promulgated, is set to be the tool the property industry has been waiting for to speed up transformation in the sector.

The Estate Agency Affairs Board (EAAB), led by its chief executive, Mamodupi Mohlala-Mulaudzi (pictured), plans to use the new piece of legislation – which will replace the current Estate Agency Affairs Act – to turn around the embarrassingly untransformed sector.

Mohlala-Mulaudzi, in an interview with City Press earlier this week, said it was not a myth that the sector has remained highly untransformed. The organisation has about 43 000 registered estate agents of whom only 3 000 are black and, of those, only 400 are principal agents.

“Out of the 3 000 who are black, about 500 are full status agents, 400 are principal agents while about 1 000 are just interns. The balance are Indian and coloured agents. This is the picture 25 years into democracy,” she said.

The board, which is also the custodian of the sector’s Fidelity Fund to which all estate agents contribute part of their annual earnings, now has plans in place to recruit 10 000 trainee “property practitioners”, which is the new term estate agents and other property professionals are referred to as in the new legislation.

“We have three critical initiatives that are in place. Through the One Learner, One Estate Agency internship programme, we are looking at taking in 10 000 in each of the three years starting in the current financial year,” Mohlala-Mulaudzi said.

She added that, on the programme, the board has already partnered with the Services Seta on at least 1 000 placements to assist with stipends, while the Gauteng provincial government, Vodacom and FNB are among those who have also come to the party and opted to partner the initiative. Other partnerships are in the pipeline. The partners were approached in a bid to break down the biggest barriers to entry, which remain access to markets and funding.

“The other issue is that people are saying through the programme we are expecting them to train their competition and that is their argument.

“That is why we decided to approach media houses to open up their advertising so that we put their adverts there and if you take our interns, you get such platforms also,” she said.

Another initiative set to be a game changer is the establishment of a transformation fund which would have some funds allocated to it from the Fidelity Fund.

“That is a huge step in the right direction because people don’t put money where their mouths are. Most importantly, each property practitioner will have to present a BEE certificate when registering, which means even your small family business will have to show us that they have a plan to have black participation or already have black participation,” Mohlala-Mulaudzi said. She added that, when the president signs the act into law, all practitioners will have to re-register.

The youth understand how to unlock economic value and it’s not just the sale of a house
Mamodupi Mohlala-Mulaudzi, The Estate Agency Affairs Board, chief executive.

She said there was definitely an appetite among the youth to take up the positions and, because of the concentration of properties, most placements will probably be in the country’s main metropolises.

“The youth understand how to unlock economic value and it’s not just the sale of a house. The unfortunate reality for this initiative is that most of the estate agents putting up their hands are in Gauteng, the Western Cape and KwaZulu-Natal, because of the economies in those provinces. But we are also in talks with provincial governments and even municipalities,” she said.

Although Limpopo does not have many black estate agents, the provincial government there has indicated an appetite to support the initiative.

Another major programme the board will be embarking on is the establishment of 25 broad-based consortiums, seed-funded at R2 million each, as part of a small and medium enterprises (SMEs) development programme.

“The board has set aside R50 million from the Fidelity Fund that will be used to stimulate SME development, and the business plan has already been approved. We are going to create 25 small companies throughout the country. The money will not be a grant but partly an interest-free loan that needs to be repaid,” Mohlala-Mulaudzi said.

The companies will be assisted to access markets and the first targeted clients will be government and state-owned enterprises.

The companies, which will be made up of groups of property practitioners, will also have to employ trainees from the internship programme, ensuring the trained youth do not end up in the unemployment queue.

“The selection of the companies will be an open process to whoever can present viable proposals, because we have no limit on the number of directors.

“We are looking at a combination of skills needed in the value chain and empowerment credentials. We will have assessors and we will back them when going to the banks and they will have the R2 million in seed funding, which is not much but at least we will also be putting equity on the table on their behalf,” she said. The board will monitor the companies for at least two years. They should be up and running by next March.

“Though the money will come from the Fidelity Fund, once the repayments are made, it should be able to fund itself annually,” she said.

Mohlala-Mulaudzi pointed out that the deals with the companies will be structured in a way that it would not be possible to sell out to major corporate competitors as soon as they were well established.

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Among the markets Mohlala-Mulaudzi – who is a former chairperson of the Housing Tribunal – hopes to unlock is the administration and management of RDP houses which have become an unnecessary headache for government.

Under the new act, property practitioners are defined as almost everyone along the property value chain, excluding some finance and legal professionals.

According to Mohlala-Mulaudzi, in addition to the property charter and transformation fund, as well as a research centre to generate reports on the state of the sector, the property sector is headed for a transformative overhaul.

“A lot of black estate agents feel like step-children in this sector and we need to stop that because each must have an equal footing with the regulator,” she said.

She explained that even though there would be resistance here and there, some of the biggest estate agents in the country have publicly endorsed the transformation path.

She also said there are plans to lessen the regulatory red tape involved with compliance in the sector, including an exemption application option for previously disadvantaged individuals.

Mohlala-Mulaudzi believes that, as with all well-meaning laws, the proof will be in the implementation of the legislation after government has set up the regulations for the act. “I always believe that the effectiveness of a piece of legislation depends on how you implement it.”

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February 23 2020