The Property Practitioners Regulatory Authority (PPRA) has mandated that all real estate agencies meet level 8 Broad-Based Black Economic Empowerment (B-BBEE) requirements, posing potential challenges for approximately 65% of the industry.
The newly enacted Property Practitioners Act, effective since February 2022, stipulates that no entity can function as a property practitioner without a valid Fidelity Fund Certificate (FFC), which, in turn, cannot be issued without a BEE certificate.
B-BBEE categories, including Exempt Micro Enterprise (EME), Qualifying Small Enterprise (QSE), and Generic, are determined based on annual turnover, with EMEs having the lowest turnover at less than R2.5 million and Generic businesses exceeding R35 million.
However, concerns have arisen regarding the PPRA's recent stance on BEE certificate requirements for the next round of FFCs in 2025.
Jan le Roux, the CEO of the Real Estate Business Owners of South Africa (Rebosa), noted a concerning shift in the PPRA’s requirements for the next round of FFCs for 2025, as reported by the City Press.
According to le Roux, while a valid BEE certificate was previously sufficient, the PPRA now demands a compliant BEE certificate with a minimum score of 40 points (equivalent to BEE Level 8) to accompany FFC applications.
This shift poses significant challenges, particularly for small businesses and sole proprietorships, which constitute over 50% black ownership in the industry. Many BEE certificates issued in the previous round of FFCs fell below the 40-point threshold, yet FFCs were still issued.
The implications of this change could be severe, affecting nearly two-thirds of real estate agencies, primarily comprised of small businesses and sole proprietorships. Despite potential non-compliance, affected agencies may continue trading beyond 2025.
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