Anti-competitive behaviour within estates and complexes is raising alarm, with Homeowners Associations (HOAs) being cautioned about the potential harm to residents and the legality of such actions.
The Real Estate Business Owners of South Africa (Rebosa) has highlighted instances where certain HOAs are engaging in questionable profit-making practices by charging estate agents fees for property access.
Rebosa CEO Jan le Roux pointed out that some estates require agents to pay an “agreement” fee, which can range from R5,000 annually to 1% of the home’s selling price.
These fees are often justified as necessary for security checks, training on estate rules, and marketing access. However, they effectively limit market access for agents and create an unfair advantage for those who can afford to pay. This pay-to-access model is particularly challenging for new or smaller agents who may struggle with these high costs.
Such practices stifle competition by favouring established agents who can absorb the additional expenses, thereby reducing options for sellers. As a result, sellers might be forced to work with “accredited” agents who could pass these costs onto the seller or be less willing to negotiate their commissions.
Le Roux warned that this arrangement is illegal and advised agents to avoid participating in such schemes. These anti-competitive practices not only violate the rights of residents and sellers but also pose reputational and legal risks for the HOAs involved.
By restricting choices and implementing pay-to-access policies, HOAs undermine the inclusive, community-oriented nature of estates. As awareness of these practices grows, there are increasing calls for legislative reform.
Additionally, as reported by BusinessTech, HOAs and property management entities are engaging in exclusive deals that limit residents’ choices, particularly for essential services like internet connectivity and property sales.
This trend impacts the affordability and quality of services and raises legal concerns about monopolistic arrangements.
The Competition Commission, represented by spokesperson Siya Makunga, addressed this issue. The commission said it had received numerous complaints from residents about monopolies on internet service provision within estates. Many HOAs or body corporates have exclusive agreements with a single Internet Service Provider (ISP), depriving residents of the freedom to choose a provider that meets their needs and budget.
This restrictive arrangement raises significant concerns about fair access and market competition. In response, the Competition Commission launched an advocacy campaign to educate the public on the importance of competitive practices within estates and complexes.
Findings from this initiative revealed that exclusivity arrangements are common, particularly for fibre internet services, where a single provider is chosen, leaving residents with no alternatives.
This monopolistic model undermines consumer choice and often results in higher costs and potentially subpar services. For residents in such situations, legal recourse is currently the only option, but it is often costly and prohibitive.
South Africa’s National Integrated ICT Policy White Paper, released in 2016, stipulates that consumers should have a choice of ISPs. However, the policy has yet to be enacted into law, leaving a gap in enforcement and allowing estates to continue these monopolistic practices.
Internet access is not the only service affected by these restrictive practices. Similar monopolistic behaviours are observed in the sale of homes within estates and gated communities, complicating property transactions and further limiting choices for both sellers and agents.
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