.Za-Uploads-Files-July 2011 Agent Magazine PDF

Professionalism
Through Workplace
skills development
Exemptions For
Real Estate Agents
Are you struggling

to complete your
portfolio of evidence?
10
04
CONTENTS
NEW MUNICIPAL PROPERTY RATES AMENDMENT BILL
02
PROFESSIONAL DESIGNATION EXAMINATION (PDE) 4 & 5
04
PDE WORKSHOPS & DVD SUMMIT TV
06
EAAB GRANTS EXTENSION FOR ESTATE AGENTS TO COMPLY

WITH EDUCATION REQUIREMENTS
07
POLICY FOR THE GRANTING OF EXEMPTION FOR PRACTICING

ESTATE AGENTS WHO ARE 60 YEARS OR OLDER
08
SAPOA COMMERCIAL PROPERTY AWARDS
10
THE ESTATE AGENCY AFFAIRS BOARD

ESCALATES ITS INSPECTION PROGRAMME
13
NEW RECRUITS
15
SOUTH AFRICAN PROPERTY MARKET CORRECTIONS
16
ESTATE AGENTS PERSPECTIVES OF RPL
19
STIMULATION OF THE PROPERTY SECTOR IS THE KEY

TO ACHIEVING SIGNIFICANT ECONOMIC GROWTH
20
COMMERCIAL PROPERTY CAPE TOWN, KWAZULU NATAL & GAUTENG
22
BANK WARY ABOUT HIKING INTEREST RATES
25
WINNERS (AFRICA) AND LOSERS (SOUTH AFRICA)
26
ESTATE AGENCY AFFAIRS BOARD EXTENDS THE

AMNESTY PERIOD FOR A FURTHER THREE MONTHS
28
THE NEW COMPANIES ACT 2008
30
CAPE TOWN MARKET PROVING POPULAR

WITH FOREIGN PROPERTY BUYERS
CLEARANCE CERTIFICATE BACKLOG IN JOHANNESBURG
RESULTS IN COURT ACTION
Front cover photo supplied by SAPOA
BUYING PROPERTY FROM A NON-RESIDENT

PUBLISHER
Estate Agency Affairs Board (EAAB)
PROJECT MANAGER
Margie Campbell
EAAB Marketing Communications
DESIGN & PRINT
Bhubezi Printers
Estate Agency Affairs Board

Dunkeld Crescent
Cnr Jan Smuts Avenue & Albury Road
Hyde Park
Tel: 011 731 5600
Fax: 086 540 9487
Email: eab@eaab.org.za
www.eaab.org.za
The EAAB publication has won the Printing Industries Federation

of South Africa (Northern Chamber) 2010 Gold Award for best design.
07
32
34
35
02
New Municipal Property Rates

Amendment Bill
The Municipal Property Rates Amendment Bill currently before Parliament
sets out to charge people who own more
than one residential property commercial
rates on the additional homes.
eople who own more than one residential property will be

forced to pay commercial rates on the homes in terms of
the Property Rates Amendment Bill. This means that anyone with a holiday home or who owns an investment property
that is being rented would see property rates on those properties
double and they would also lose any municipal rebates on those
properties as well.
In terms of the new Bill, the denition of residential property
has been changed, and now only the home that the owner is living in is deemed residential and classied as the primary property. The other properties are dened as commercial properties
in terms of the Bill.
02 | AGENT
Moreover, local residents associations, estate

agents and other investors have just one week to
lodge their objections to the proposed national
legislation that will affect rates levied by all municipalities throughout the country.
Lilian Develing, chairman of the Combined Ratepayers Association in Durban says that the legislation will have a serious impact
on the property market and that the letting business will be severely impacted because rentals will rise sharply. She says that
at the moment the residential rate is 0,907% while the commercial property rate is more than double at 2,057%. This means that
for properties that are not deemed to be the primary property
the rates would more than double.
The Democratic Alliances councillor and eThekwini caucus
chief whip Dean Macpherson warns that the bill will lead to
a collapse in property investments. According to attorney Maria
Davey from Meumann White, owners of investment properties
were already forced to pay additional capital gains tax and also
had to pay income tax on the rental received. Now they will have
to also pay higher rates bills.
She says that many people had provided for their retirement by
buying a second property that was initially rented to tenants but in
later years, would be used by them as a retirement home. Davey
says that if the legislation is passed in its current form then it may
prevent people from making these sorts of provisions.
The DA has attacked another change contained in the Bill that
would see the current valuations by municipalities being extended from ve to seven years. In practice this means that if property
values decline, rates would remain unchanged at the higher level
until another valuation was done, even though the value of the
home had fallen.
Comment from AfriForum
It appears that the redenition of residential rental property as
commercial property will amount to a form of income tax, which
will be a violation of... the Constitution, said AfriForum head of
community affairs Cornelius Jansen van Rensburg. The Municipal Property Rates Amendment Bill proposes that people who
own more than one residential property will be forced to pay

more expensive commercial rates on additional properties. Up
until now, property tax has been based on the status of a property under municipal zoning. If the amendments are approved,
the focus will shift to whether or not income is generated from a
property, said Jansen van Rensburg.
The Constitution calls for the state to create an environment in
which property is accessible to all inhabitants of the country and
enshrines the right of access to housing, AfriForum said. Given
the economic impact of the proposed amendments, only the super-rich and the state will be able to enter the property market
due to higher administrative costs of property ownership, said
Jansen van Rensburg. Rental properties will become unaffordable for people who do not qualify for mortgages, thereby increasing peoples reliance on the state for housing. He said the
proposals appear to come down to another form of nationalisation through taxation.
The proposed amendments are likely to drastically limit property
ownership among the middle class. The deadline for public submissions on the bill is Friday, July 22.
Source: Timeslive & Property 24
AGENT | 03
PROFESSIONAL DESIGNATION
EXAMINATION (PDE) 4 & 5
04 | AGENT
The countdown has begun ... with the rst Professional Designation
Examinations (PDE) only few weeks away, it is critical that you as a
Estate Agent (Principal or Non-Principal) start preparing accordingly
in order to make it in the upcoming examinations
WHY THE PROFESSIONAL DESIGNATION EXAMINATION (PDE)?
The Professional Designation Examination (PDE) is an integrated test of knowledge for estate agents contemplated in regulation of the
Education Regulations promulgated under Government Notice R.633 on 04 June 2008. In terms of regulations 4(3) no persons may be
registered by the EAAB as a full status agent unless that person has successfully completed the Professional Designation Examination (PDE). The PDE is entirely distinct from the old EAAB Board examination and focuses on the new education curriculum that was
introduced in 2008.
Eligibility Criteria: Only Estate Agents who have:
a) been certied as having successfully completed the relevant qualication will be eligible to write the exam;
b) been certied exempted in line with the EAAB Equivalency Matrices.
Exam Dates
Target Audience
Title of
NQF
Content to be
Assessed
Availability of
Material
18 AUGUST
2011
Non-Principals
NQF 4
EAAB NQF 4
learning material
Study material and preparation

workshops will be provided
18 AUGUST
2011
Principals
NQF 5
EAAB NQF 5
learning material

10 NOVEMBER
2011
Non-Principals
NQF 4
EAAB NQF 4
learning material

10 NOVEMBER
2011
Principals
NQF 5
EAAB NQF 5
learning material

EXAMINATION PREPARATORY WORKSHOPS
FEES AND PAYMENT PROCESS
Workshops to assist all applicants to prepare for the rst PDE

Exam set for the 18th of August will take place from 2nd 05th
August 2011. Applicants are encouraged to book their space accordingly to avoid disappointment.
Registration fee for the exams has been reduced by 70%

This fee includes free study material plus a DVD:
THE PDE APPLICATION PROCESS

L`]H<=oaddaf[gjhgjYl]cfgod]\_][gehgf]flYko]ddYkl`]
application or case study component;
9hhda[YflkoaddZ]j]imaj]\lgY[à]n]Yfgn]jYdd.-hYkkaf_
mark for the exam in order to be certied;
Gfdq]klYl]Y_]flkl`Yl`Yn]Ydj]Y\qimYda]\gjZ]]f]p]ehl%
ed for the NQF 4 (Non-Principals) and NQF 5 (Principals) should
apply to write the PDE;
L`]H<=Yhhda[Ylagfhjg[]kkoaddZ]YnYadYZd]^jge*(Bmdq*())
from which date examination registrations and venues, as
well as all preparatory workshops, will be listed on the EAABs
website home page which may be accessed at
www.eaab.org.za
PLEASE NOTE: ALL AGENTS/PRINCIPALS THAT HAVE ALREADY
RECEIVED THE PDE EXEMPTION NEED NOT APPLY
9^]]g^J--(&((akhYqYZd]^gjH<=,afgj\]j^gjl`]Yhhda[Ylagf
to be processed;
9^]]g^J/-(&((akhYqYZd]^gjH<=-afgj\]j^gjl`]Yhhda[Ylagf
to be processed;
Gfdq ]d][ljgfa[ hYqe]flk oadd Z] h]jeall]\& HYqe]fl k`gmd\
only be made to the EAAB conrming the Payment Reference
Number that will be communicated upon submission and processing of your online application.
Banking details:
Bank Name: ABSA Bank
Account No: 4052033310
Branch Code: 632005
Branch Name: Protea Park
A/C Name: Estate Agency Affairs Board
For further information and assistance regarding registering
for the exam on 18 August 2011, please contact
molly@eaab.org.za; audrey@eaab.org.za
AGENT | 05
PDE 4 & 5 PRE -EXAM WORKSHOPS

02 03 AUGUST 2011 - PDE 4
04 05 AUGUST 2011 - PDE 5
Time:
Venue:
JOHANNEBSURG
09h30 16h00
Cedar Park Hotel, 120 Western Service Road, Woodmead, Sandton
Time:
Venue:
PRETORIA
09h30 16h00
Pembi Conference Centre, (Pretoria East), 148 Boendoe Road, O Garsfontein Drive, Pretoria
Time:
Venue:
CAPE TOWN
09h30 16h00
The River Club, Liesbeek Parkway, Observatory, Cape Town
Time:
Venue:
DURBAN
09h30 16h00
Durban Spa Conference Centre, 57 Marine Parade, Durban
Time:
Venue:
PORT ELIZABETH
09h30 16h00
Pine Lodge Resort, Marine Drive, Summerstrand, Port Elizabeth
Time:
Venue:
EAST LONDON
09h30 16h00
Premier Hotel King David, Cnr Currie Street & Inverleith Terrace, Quigney, East London
Summit TV will air The Real Estate Professionals

series in the lead-up to the exams. Starting on
Monday 25th July with the first episode, three
episodes will flight each week in sequential order
every Monday, Wednesday and Thursday.
The ighting times are as follows:
Mondays at 10h00;
Wednesdays at 13h00;
Thursdays at 23h30
Summit TV, on DStv 412, is South Africas essential local

business TV channel, offering business viewers a range
of programming, from daily news and markets analysis to
information-driven shows such as those aimed at entrepreneurs wanting to start their own business. For more
information on programming visit www.summit.co.za and
for advertising or sponsorship opportunities email
sales@summit.co.za
EAAB GRANTS EXTENSION FOR ESTATE

AGENTS TO COMPLY WITH EDUCATION
REQUIREMENTS
he Estate Agency Affairs Board (EAAB), acting in terms

of the Education Regulations, has resolved to grant a twoyear extension to all estate agents who were registered
on 15 July 2008 and who were, thus, required to be certicated
against the relevant estate agency qualications by 31 December
2011. Such estate agents will now have until 31 December 2013
for this purpose.
This extension is pivotal for those affected estate agents who
have yet to be certicated as required by the Education Regulations, says Thami Bolani Chairman of the EAAB. While the new
educational dispensation, which aims at professionalising estate
agents, continues to receive widespread support from estate
agents and consumers alike, the EAAB now believes that it was
over-optimistic in anticipating that some 37 000 estate agents
would be able to upgrade their qualications in a period of only
three years.
More than 12 000 practicing estate agents have already either

been certicated against the required real estate qualication or
have been exempted therefrom on the basis of previous tertiary
qualications obtained from South African institutions of higher
learning.
The numbers of estate agents approaching accredited education
providers for training is growing all the time as the reality of the
new professional estate agency environment is acknowledged.
Bolani expressed his condence that, By granting this extension, it is likely that all estate agency practitioners who wish to
remain in the real estate sector can be accommodated.
AGENT | 07
Policy for the granting of exemption for practicing

estate agents who are 60 years or older
The application
Administration
Y[]jla]\[ghqg^l`]Yhhda[Yflka\]flalq
document;
his policy applies to Estate Agents (principals and nonprincipals) who are 60 years and older and who applies for
exemption from completing the NQF 4 and or NQF 5 Qualications in Real Estates.
This policy also applies to Estate Agents (principals and nonprincipals) who are 60 years and older and who applies for exemption from completing the Professional Designation Examination (PDE) against the NQF 4 and or NQF 5 Qualications in Real
Estates.
Qualifying candidates must apply to the EAAB for the grant of
an exemption. Applicants must provide acceptable proof both of
their age and of the fact that they have held a valid delity fund
certicate issued by the EAAB for a continuous period of at least
ve (5) years. Candidates must, in addition, hold a valid delity
fund certicate for the current year.
Upon receipt of applications the EAAB will investigate the position to ensure that candidates are estate agents in good standing
and that they have no previous criminal convictions or convictions for any estate agency related offences. Applications for the
exemption submitted to the EAAB must be accompanied by the
fee prescribed by the EAAB from time to time for the exemption.
Compilation of a portfolio of naturally occurring evidence
A list of the naturally occurring evidence requirements to be supplied by applicants for the exemption will be sent to all qualifying
candidates. Candidates must ensure that the required evidence
is properly collected and duly collated into a Portfolio of Evidence
(PoE) for submission to the EAAB. The PoE must include the
following sections, namely:
Y []jla]\ [ghq g^ Yfq []jla[Yl]k g^ Y[à]n]e]fl l`Yl `Yn]

been awarded to the applicant; and
Y[]jla]\[ghqg^Yfq[]jla[Yl]kg^[geh]l]f[] km[`Yk$^gj
instance, a matriculation certicate or certicates received in
respect of courses and/or seminars and/or workshops that
may have been attended) that may be relevant to the assessment of the application.
Workplace evidence
Each applicant will be required, based on at least one property
that has recently been marketed for sale, and sold, and at least
one property that has recently been let, to provide the following
information, namely:
=na\]f[] Yk lg `go l`] Yhhda[Yfl _g]k YZgml [YfnYkkaf_ ^gj
properties to market for sale or to let including, for example,
examples of canvassing letters, pamphlets and advertisements, photographs of bill boards used and so forth.
=na\]f[] af\a[Ylaf_ l`] hjg[]\mj] Y\ghl]\ Zq l`] Yhhda[Yfl
when determining an initial sales, or rental, price for the property such as, for instance, the use of a comparative marketing
analysis, references to recent sales of similar properties in the
area, property inspections and so forth.
=na\]f[] g^ l`] oYq af oà[` l`] kar] g^ hjgh]jla]k ak \]l]j%
mined to be accompanied by a oor plan of a recently marketed property, whether an architectural plan or a hand drawn one.
=na\]f[]k`goaf_l`]eYff]jafoà[`l`]Yhhda[Yfl[geem%
nicates with clients, whether sellers and/or landlords.
08 | AGENT
9[ghqg^l`]kgd]eYf\Yl]k]ddaf_Yf\d]llaf_\g[me]flmk]\
by the applicant and recently signed by a seller and /or landlord
is required.
9 [ghq g^ l`] eYjc]laf_ hdYf l`Yl ak mkmYddq mk]\ Zq l`]
applicant is required. This plan should indicate, amongst
others, how show days are to be scheduled and held, what advertisement will be placed for the property in question and
which media will be used, interactions with the client and so
forth.
=na\]f[]Yklgl`]oYqafoà[`Yhjgh]jlql`YloYkj][]fldq
sold or let by the applicant was actually marketed such as, for
example, by the use of newspaper advertisements, marketing
pamphlets and yers, business cards and so forth.
L`] Yhhda[Yfl ak j]imaj]\ lg ^mjfak` Y [gehj]`]fkan] j]hgjl
on the applicants daily work activities including attending
meetings, canvassing, listing properties, marketing properties
for sale and/or to let and on the interactions that the applicants
has with members of the public, consumers and stakeholders.
L`]Yhhda[Yflemkl^mjfak`Yj]hgjlgff]_glaYlaf_kljYl]_a]k
adopted with clients, consumers and stakeholders. How are
problems resolved and how is consensus sought and obtained?
9[ghqg^Yld]Ykll`j]]Y[lmYd[gfljY[lk[gehd]l]\Zql`]Yhh%
licants and signed by the parties, including all documentation
relevant to the contracts in question, is required. At least one
such contract must be in respect of a lease agreement concluded.
L`] Yhhda[Yfl emkl kmZeal Y go \aY_jYe af\a[Ylaf_ Ydd Y[%
tivities undertaken from the time a contract of sale is concluded between the parties until the property is registered into the
name of the purchaser. All documentation relevant to the process must be indicated and a copy of each such document
must also be provided.
L`] Yhhda[Yfl emkl af\a[Yl]$ af Y ka_f]\ klYl]e]fl$ l`Yl l`]
applicant has read and fully understands the Code of Conduct
for Estate Agents and that the applicant will abide by the provisions of the Code of Conduct. (Applicants will be questioned as
to their understanding of certain provisions of the Code of
Conduct).
L`]Yhhda[Yflemklhjgna\]YkmeeYjqg^l`]eYafd]_akdYlan]
acts that the applicant believes that estate agents must be
aware and, in addition, provide an indication of the implication
of the relevant legislation on estate agents. (Applicants will be
questioned regarding their choice of legislation while questions will also be posed on other legislation that may, perhaps,
have been omitted by applicants).
Once the required PoE has been submitted to the EAAB it will be
reviewed using a standard checklist. The interview panel will also
compile relevant questions to be posed to the applicant during
the required personal interview.
Conducting the interview
Possible matters that could be discussed during the interview
would, for instance, include:
L`]hj]k]flYlagflgl`]Yhhda[Yflg^YggjhdYfg^Yhjgh]jlq
to enable the applicant to calculate the area of a given room(s)
and to enable the applicant to explain how that calculation was

performed.
L`] ]^^][lan] mk] Zq l`] Yhhda[Yfl g^ YhhjghjaYl] hja[af_ Yf\
negotiating techniques.
L`]]^^][lan]mk]g^Y\n]jlak]e]flkYf\j]Y[àf_l`]afl]f\]\
target market.
>Y[lgjkl`Ylk`gmd\Z]Zgjf]afeaf\o`]fk]ddaf_gjd]llaf_
immovable property.
E]l`g\kl`Yl[YfZ]mk]\lg]da[alaf^gjeYlagfj]_Yj\af_Yfq
potential hidden defects in the property from the seller.
<]Ydaf_ oal` hgkl%kYd] hjgZd]ek km[` Yk$ ^gj afklYf[]$ o`Yl
the applicant might do if approached by the buyer after the rst
heavy rains of the season and informed that the roof of the
property purchased leaks.
9hhjghjaYl] \]Ydaf_ oal` Yfgl`]j ]klYl] Y_]fl o`g af^jaf_]k
on a sole mandate.
;gfka\]jaf_l`]im]klagfg^hjY]\aYdYf\h]jkgfYdk]jnalm\]k
and their impact when marketing a property for sale.
=phdYafaf_ l`] \a^^]j]f[] Z]lo]]f kmkh]fkan] Yf\ j]kgdmlan]
conditions in a sales contract as well as the essentials that
must be contained in both a contract of sale and lease.
Dggcaf_Yll`]aehY[lg^l`]ZjgY\]jfYlagfYd][gfgeqgf]k%
tate agency in general and on the particular area of estate
agency operations of the applicant in particular.
;gfka\]jaf_l`]>A;9[l$]phdYafaf_l`][gf[]hlg^Yfla%egf]q
laundering and examining the requirements for compliance
with the FIV Act by estate agents.
;gfka\]jaf_ >9AK Yf\ `go làk d]_akdYlagf [gmd\ hgkkaZdq ae%
pact on estate agents.
;gfka\]jaf_ ]là[Yd k[]fYjagk Yf\ l`] [gehdaYf[] hgo]jk g^
the Estate Agency Affairs Board.
9\ak[mkkagfg^Yfqgl`]jYhhda[YZd]d]_akdYlagfYf\l`]aehY[l
that such legislation has on the estate agency sector in general
and estate agents in particular.
L`]im]klagfkl`YloaddZ]hgk]\lgYhhda[YflkYf\l`]\ak[mk%
sions that will be engaged in depend, to a large extent, on the
evidence that will have been provided by the particular applicants.
The interviewing panel
The interviewing panel will comprise at least three competent
members to be appointed by the Board. In addition to Board
members the panel could conceivably comprise practicing principal estate agents having at least 5 (ve) years experience as
principals in the estate agency sector. Members of the interview
panel must be empathetic and patient and will be required to
sign a condentiality agreement. It should be noted that, depending on the number of applications that are received, the interview process could well become both time-consuming and expensive.
Contact margie@eaab.org.za for more information.
AGENT | 09
SAPOA COMMERCIAL PROPERTY AWARDS

SAs world-class property developments
lauded at prestigious SAPOA Excellence
Awards
he stylishly distinctive abstract chequered 15 Alice Lane

Towers in Sandton Central has scooped top honours at the
South African Property Owners Association (SAPOA) Innovative Excellence in Property Development Awards 2011, sponsored by Nedbank Corporate Property Finance.
The awards acknowledge quality, excellence in design and innovation all essential to the ever-evolving art of property development, says Neil Gopal, CEO of SAPOA. They epitomise the ability
of South Africas property developers to nd exciting solutions for
clients requirements and stay on the forefront of global trends.
Alice Lane
10 | AGENT
Nedbank Phase II
Frank Berkeley, managing executive of Nedbank Corporate Property Finance is passionate about furthering excellence in property development. Nedbanks commitment to the highest quality property development extends beyond its sponsorship of the
Awards, to its own development as demonstrated in Nedbank
Phase II which won the SAPOA Excellence Award for overall
green development.
SAPOA Awards Committee Chairman John Truter notes: The

recognition that these awards provide, both locally and internationally, has led to an exceptional quality and scope of entries
received. Were delighted at the continued enthusiastic response
from the property sector and the esteem which they have bestowed on the awards.
Source: SAPOA
We are pleased to contribute to furthering the highest standards

of property development in South Africa. The excellence that has
been achieved in 2011 is something that the sector can be exceptionally proud of, says Berkeley.
AGENT | 11
THE ESTATE AGENCY AFFAIRS BOARD

ESCALATES ITS INSPECTION PROGRAMME
More than 300 inspections conducted

from 1 April to 30 June 2011
he Estate Agency Affairs Board (EAAB) has conducted more

than three hundred inspections of estate agency enterprises, both registered and unregistered, during the period 1
April to 30 June 2011. It is anticipated that a similar number of
additional inspections will also be undertaken during the forthcoming quarter.
In line with regulatory benchmarking and best practices, the
EAABs revised inspection policy requires it to inspect at least
50% of all estate agency undertakings, throughout the country, over a revolving ve year period. In pursuance of this policy
the EAAB is presently conducting both routine inspections - to
ensure strict compliance by estate agencies with the provisions
of the Estate Agency Affairs Act and the Financial Intelligence
Centre Act as well as all other applicable legislation - as well as
red ag inspections in cases where there a reasonable suspicion of non-compliant activities taking place exists. Many of such
red ag inspections have been the direct result of protected
disclosures received by the EAAB through its whistle blowing
hotline.
The preliminary evidence resulting from the inspection programme is rather disconcerting. The empirical results of the inspections that have thus far been undertaken suggest that many
estate agency rms are still not complying with the peremptory
provisions of both the Estate Agency Affairs Act and the Financial
Intelligence Centre Act. It is particularly alarming that the provisions of the Estate Agency Affairs Act relating particularly to
the opening, maintenance and administration of trust accounts
are being disregarded by many estate agency rms. This is an
aspect that will necessarily come under the increasing scrutiny
of the EAAB. Another common nding is that many principals
are taking persons into their service as estate agents while not
ensuring that such persons have been issued with valid delity
fund certicates. This practice constitutes not only a contravention of the Estate Agency Affairs Act but also a criminal offence.
As and when matters of this nature are drawn to the attention
of the EAAB by its inspectors they will, as a matter of course, be
referred to the SAPS for further investigation.
The increased rate of inspections allows the EAAB to play a far

more proactive role in the area of enforcement and also enables
it to assess industry compliance. The conducting of inspections,
moreover, affords the EAAB the opportunity of interacting with
estate agency enterprises on a one-on-one basis and of offering
guidance and assistance to ensure compliance.
It seems, also, that many franchisors are persisting in selling

estate agency franchises to unqualied franchisees. A number
of such franchisees were found to be operating illegally in that
they were not qualied to be registered by the EAAB as principal estate agents. In some cases the franchisees concerned
were found, in addition, to have misappropriated trust moneys.
This is a serious matter which will also have to receive the future attention of the EAAB. As a result of information that has
been gathered by the inspectors, a signicant number of prosecutions and special investigations resulting from identied instances of non-compliance by estate agents are currently being
undertaken.
As at the end of June 2011, 120 inspections were conducted and

nalised at agency enterprises in Gauteng while a further 103
inspections occurred in the Western Cape. 88 estate agency rms
were also inspected in Kwazulu-Natal.
The increase in inspections has been welcomed and widely supported by both estate agency practitioners and consumers alike
as constituting a positive step in enhancing industry professionalism and protecting the interests of consumers.
AGENT | 13
INTERNSHIP FASTTRACK
CPT 021 763 3360

Region
JHB 011 484 5494
Selection &
Orientation
Study Unit 1:
Legislation
Study Unit 2:
Finance
Study Unit 3:
Functional
Feedback &
Remediation
1 day
3 days
3 days
3 days
1/2 day
Port Elizabeth
15 Apr 11
4-6 May 11
1-3 June 11
5-7 July 11
18 Aug 11
Cape Town
18 Apr 11
10-12 May 11
7-9 June 11
12-14 July 11
25 Aug 11
Johannesburg
19 Apr 11
17-19 May 11
21-23 June 11
19-21 July 11
1 Sept 11
Durban
20 Apr 11
24-26 May 11
28-30 June 11
26-28 July 11
8 Sept 11
Contact your local MNA ofce for a quotation for group or individual prices, Cash or Debit Order (T&Cs)
New Recruits
Principals and decision makers need to do their home-work when
deciding on how to deal with the regulations and New Recruits. In
the current economy, with the requirement for New Entrants to
self fund the compulsory qualication for entry into the industry,
the cheapest option is very tempting, but may be an expensive
mistake! Take the time to investigate your options, including:
The Service Providers
- Accreditation status with the EAAB, Services SETA and registration with the Department of Education
- Past experience in learnership, internship and RPL provision
- Completion rates and statistics (what are the attrition or drop
out rates?)
- External moderation by the regulating authorities and degree of
remediation the provider has to do BEFORE learners can be
certicated
- The availability and technical accuracy of marketing information.
- Learner Proling and Access process to ensure applicants are
correctly registered on to the most suitable programme, i.e.
RPL, internship or learnership
- Credentials, Experience, Qualications and Registrations of
Trainers
- Workplace support for compulsory Mentors and workplace
readiness
- Project management experience in similar projects
- The period of time that company has been in existence.
The Project Plan
- Correspondence vs Contact Training or Blended Methodologies
(correspondence has statistical pass average between 30% & 40%)
- Preparation for implementation, including learner orientation
and induction
- The number of days in training (for a learnership, it has to be
30% of 1500 hours)
- The portfolio building support days
- The quality of the learning materials, assessment and portfolios
of evidence
- The methodology used by the provider and if electronic systems

are incorporated
It stands to reason that the cheaper the programme is, the more
corners that have been cut. That is still reasonably acceptable if
this is communicated up front. However, Service Provider marketing, although glossy and appealing, is often misleading or vague
on the technicalities.
THE SOLUTION
In my last article, three methods of achieving the compulsory
qualication during the one year registered internship with the
EAAB were identied:
1. Learnership a one year occupational learning programme
which is governed by the Sectoral Determination, requiring 30%
structured learning and 70% workplace learning. Ideal for the new
entrant to the world of work with no experience in real estate or
any other industry. This is a good vehicle for transformation, as it
incorporates a learner stipend or basic allowance of R1500 per
month, if funded by the Services SETA.
2. Internship a blend of training and RPL, shorter in duration,
targeted at the mature entrant who has some relevant work experience, preferably from a similar industry, including banking,
insurance, para-legal, marketing, sales, etc. This is an ideal option for the majority of the New Recruits who are generally experienced in other industries, but new to real estate.
3. RPL designed for experienced agents but can be applied to
New Entrants, however, with real risks attached. Candidates can
opt for RPL in spite of being proled for an internship or learnership, however, they do this at their own risk. Individual gap training
could push the price up over that of an internship, where group
gap training is structured.
Applicants need to ensure that their money is well spent and that
their qualications are assured, by selecting a reputable provider
that will get them safely across the nish line, competently!
For more information contact the writer, Margaret Nicol, CEO: MNA on 021 763 3360 or one of the three ofces in Durban,
Johannesburg or Cape Town. Alternatively, go to www.in-recognition.co.za
AGENT | 15
South African Property

Market Corrections
Not as painful as the USA property market
outh Africa is experiencing a property market correction.

The question is whether it is or has been on the same scale
as has been experienced in the USA during the last 3 years.
The American dream has in some states unfortunately changed
into an American nightmare. Only a certain sector of the South
African property market is experiencing a correction akin to the
American nightmare of a devaluation of property value up to
50% and has predominantly been visible on two fronts.
The rst area is in the buy-to-let market section and more specically in areas with an average to low rental demand. This generalised statement needs however to be qualied even further to
pinpoint complexes with a below par managing agent and/or a
Body Corporate who has allowed a bad rental mix to develop over
the last 4 years. Complexes where the house rules do not control the quality and the average rental income for the units, have
been experiencing sheriff auctions which culminated in a drop of
value of between 45% to 60% below present CMA (comparative
market analysis) values.
The second area has developed around the affordability of credit/
cost of servicing bonds, resulting in a high level of household
debt to disposable income (due to high unemployment levels etc.)
This buyers market environment in the abovementioned rst
front, came about due to new property investors who did not do
their homework properly during the 2004/2006 boom, creating
a distressed sales market scenario with an oversupply of stock
16 | AGENT
A nominal house price growth closer to the

historical 10% per annum average could
therefore only become visible again when
the oversupply has been dealt with...
which will take some time to clear out. With e.g. South Africas
biggest bank and bond provider, ABSA, indicating that their bad
debt book is at present about 18%, a change in stock levels (due
to an oversupply of certain property types) before 2014/15 is highly
unlikely - despite a growing black middle class and savvy property investors buying up rental stock which is delivering the sought
after 1% per month returns. A nominal house price growth closer
to the historical 10% per annum average could therefore only become visible again when the oversupply has been dealt with, potentially initiating another so-called 23 year property cycle with
a positive capital growth cycle in nominal as well as real terms.
In total, approximately 11% of all homes in the United States are
currently standing empty. No comparative residential market gures are available for South Africa - but given the huge demand
experienced for rental homes, it is highly improbable that there
is such a problem at all in the suburbs of the metropolitan areas.
According to property economist Rode & Associates, apartment
vacancy rate across South Africa has dropped from a peak of
around 6% in fourth quarter 2009 to the current 4%.
The following correction symptoms are present:

1. High percentage of distress sales
The large percentage of distress sales in the property market has
increased in the rst quarter of 2011 to 22% of total sales - up
from 17% in the last quarter of 2010. A high percentage of sellers are therefore forced to downscale due to nancial stress. In
2010 sales of previously existing homes in the United States were
at their lowest level in 13 years, whilst 26% of all the homes sold
in the United States were foreclosures or short sales. A similar
percentage of property owners in both countries are therefore
experiencing severe nancial stress and are being forced to sell
their properties below market values.
2. Availability of credit (bonds or mortgages) limited
Housing price deation is being fuelled by banks that are constantly reassessing their exposure to the home loans market and
being cautious in granting new bonds.
Banks in South Africa have only during

the last few months been starting to relax
and were previously as tight as was last
experienced in the early 1980s.
According to OOBA, their March 2011 levels of bond approvals
only equate to 36% of the levels achieved during the top end of
the property boom in April / May 2007. It is however their highest levels since October 2008, showing that there is a gradual
but positive movement in the SA property market. Only 44,7% of
Oobas bond applications are at present initially declined by the
banks - which is an -8,1% improvement in the decline ratio. The
effective approval rate has improved from 58,9% in March 2010 to
64,5% in March 2011.
the year. Severe mortgage stress (4 months behind in bond payments) has catapulted from 8 000 in the second quarter of 2008
to over 35 000 in the last quarter of 2008. According to the USA
Mortgage Bankers Association, at least 8 million Americans are
at least one month behind on their mortgage payments.
4. Low sales volumes
Mike Schussler (Economist.co.za) indicated that although 16,8%
more transactions (9506) registered in South Africa in the Deeds
Ofce during January 2011 than in January 2010, it is still 40%
below the average transaction volumes of the SA property market during the last decade - i.e. about 16 000 transactions per
month (or 192 000 p.a.).
In January 2009, 9190 transactions had been registered in the
Deeds Ofce - showing an increase of 3,5% in registered transactions between January 2009 and January 2011. If the above 22%
of distressed sales can be applied to the monthly registrations
during the rst quarter of 2011, it means that about 2100 property
transactions per month are at present transacted nationally under distressed conditions. This is up from 1200 per month as has
been estimated by Auction Alliance during the beginning of 2009.
Another dampening inuence on sale volumes in South Africa
has been the relative low levels of buy-to-rent investors - who at
the moment comprise only some 7% of the total property buying
market, down from about 22% during the property boom period.
Sales of previously occupied homes in the USA were about 5.36
million in 2010, which is still far below the estimated 6 million
homes a year (or 500 000 per month) needed to maintain a
healthy property market. New home sales in the United States in
January were 11.2% lower than they were in December. The new
home sales number for January 2011 was 18.6% lower than the
number for January 2010. New home sales in the United States
are now down 80% from the peak in July 2005.
5. Below historical levels price growth
The implementation of the NCA (National Credit Act) has redened a borrower in South Africa. A large percentage of borrowers have been classied as a credit risk based on e.g. a few
missed credit payments. Until the banks will operate on a more
discerning basis, evaluating the long term reliability of the applicant as evidenced by his job record and possibly testimonials
from his work superiors and bank manager, home ownership in
the entry level property market will remain a problem. Deposit
requirements remains a stumbling block for especially buyers
who wants to buy into the affordable housing markets in townships. According to OOBA the average deposit as a percentage of
purchase price fell 23.9% year-on-year to R134 519, equivalent to
an average deposit of 15.6% of the purchase price of the average
home in SA of R860 492.
3. High bond or mortgage stress levels
According to Rael Levitt (CEO of Auction Alliance), South African
house price deation is reected in negative housing equity to
most probably 1 in 15 (about 6,66%) of all South African homes.
This is however in comparison to the USA still at a fairly low level.
As of the end of 2010, 23% of all U.S. homeowners with a mortgage owed more on their homes than their homes were worth.
It is estimated that there are about 5 million homeowners in the
United States whom are at least two months behind on their
mortgages. In SA mortgage stress has sharply increased from 75
000 in the third quarter of 2008 to 130 000 in the last quarter of
Besides debt, the rest of the 5-D property market stimuli (death /
divorce/downscale/depart) have been strong enough to keep the
price growth in South Africa relatively intact - varying between
-10% to just over 0% during the last 3 years - quite contrary to
the America experience. This relatively stable market conditions
has re-instilled relative condence in the South African property market. According to the FNB Estate Agent Survey, there is
already evidence of an improved supply of stock coming to the
market from sellers selling for non-negative reasons. Sellers
condence in their ability to get their price has during the last few
months improved with an increased number of aspirant sellers
who are putting their property on the market due to the other 4
(non-debt related) of the 5-D property market stimuli.
Nominal price growth of between 1% and 1,5% is currently forecasted by ABSA for the South African property market in 2011.
Based on this forecast and a projected average consumer price
ination rate of 5% this year, house prices are set to decline by
more than 3% in real terms this year in South Africa. The March
oobarometer price index reveals that the average house price
rose 1.1% year-on-year to R860 492 from R850 864 in 2010.
According to CoreLogic, home prices in the United States declined by 5.7 percent between January 2010 and January 2011.
Excluding distressed sales, year-over-year prices declined by 0.1
% in February 2011 compared to February 2010 and by 1.4 % in
January 2011 compared to January 2010. National home prices,
AGENT | 17
including distressed sales, declined by 6.7 percent in February

2011 compared to February 2010.
When you remove distressed properties from the equation, CoreLogic is seeing a signicantly reduced pace of depreciation and
greater stability in many markets in the USA. Price declines are
increasingly isolated to the distressed segment of the market as
the stock of foreclosures is slowly cleared.
6. Uncertainty about market values of SA property
Despite a 421% increase in price between 1997 and 2011, even
the Economist (of 3 March 2011) did not or could not determine
in their global house price index whether South African property
are in fact overvalued - relative to 20 other countries. In theory,
the price of a home should reect the value of the services it
provides. People who choose to rent their homes buy those services on a monthly basis. Home prices should therefore reect
the rents that tenants pay.
Only in Hong Kong, Singapore and Switzerland is the property
market according to the Economist more overvalued than it was
before the global economic downturn began in the third quarter
of 2007. In every other market the ratio of prices to rents has
fallen over that period. In America, prices may have overshot a
little. Using the Case-Shiller index of prices, the USA property
market looks to be undervalued by almost 8%.
An open question since the 2007 turning point - i,e the top end
of the price growth cycle, is whether the capital growth gains
in house market values created a property market bubble and
stands to be corrected by a dramatic price decrease. This question has also played a role in undermining buyer condence, as
some buyers view the extraordinary growth of 421% achieved in
18 | AGENT
the SA property market in the last 14 years at an average of 30%

per year, as a market which stands to be corrected not only in
nominal price terms but also by about 50% in real price terms.
In the 1980s however high levels of ination created a scenario
where nominal prices of houses kept growing due to a devaluation of the Rand - preventing a bust scenario as the price growth
pattern remained on a plateau for about 6 years to 1997, before
nominal prices of the average house experience another rapid
growth phase between R194 435 (1997) to R930 332 (2007) - that
is a growth of 378% in 10 years or 37,8% p.a. In comparison average nominal house prices grew from R29 281 in 1979 to about
R132 032 in 1991 - that is a growth of 351% in 12 years or 29% p.a.
The South Africa property market has during the last 50 years
reacted differently from the boom-bust scenarios experienced
elsewhere in the world. The 2010s property plateau will most
probably be longer than the 6 year span experienced during the
1990s and its run will be determined by the ination rate and logically its effect on our currency. The biggest difference however
between the plateaus of the 1990s and the 2010s is the remedial
effect the growing black middle class will have on the property
market.
To expect a 50% doom and gloom correction in the SA property
market simply because the forces of the property market in the
USA or even Australia necessitate it there locally, is to ignore the
huge historical difference between the countries. The South Africa
property market has potentially amongst the highest percentage
of rst time buyers (or upgrading buyers) in the world amongst
the emerging black middle class - most of them eager to commit
the moment credit will become more readily available.
Source: Real Estate Web
ESTATE AGENTS PERSPECTIVES OF RPL

In 2008 it became law for existing estate agents to become professionally qualied by 2013. Practitioners have to obtain the FETC
Real Estate NQF Level 4 and Principal Agents the NC Real Estate
NQF Level 5. Apart from a few individuals with equivalent or higher
relevant qualications all estate agents are required to prove their
competence by obtaining the above qualications regardless of their
success in the business, length of service or age. Since existing estate agents were already practising they were given the opportunity
to qualify by proving their competence through the recognition of
their prior learning (RPL). The initial reaction to the new legislation
and RPL was mixed and questions and statements along these lines
were often heard:
A `Yn] lo]flq q]Yjk ]ph]ja]f[] Zml fg ]\m[Ylagf lg kh]Yc g^&
I am very worried. I could lose my livelihood.
Alk YZgml lae] l`]q kgjl]\ gml làk Zmkaf]kk Yf\ _gl ja\ g^ l`]
rats and mice. Im all for it, when can I start?
A `Yn] Y eYkl]jk \]_j]] af J]fYakkYf[] Klm\a]k& A j]k]fl `Yn%
ing to do this RPL when I have a superior qualication.
A k]dd `gmk]k$ kg o`q Zgl`]j e] oal` Ydd làk gl`]j klm^^7 Alk
irrelevant. RPL me only on selling houses.
Ogmd\ :add ?Yl]k Yf\ 9dYf Km_Yj `Yn] lg imYda^q af o`Yl l`]q
do? RPL youre red! Industry leaders should be exempt.
L`]q emkl Z] fmlk& FgZg\q oadd oYfl lg Z][ge] Yf ]klYl]
agent. These qualications are far too difcult.
Now RPL has been going a while, reactions have mellowed somewhat. This is what is heard today:
A `Y\ eak_anaf_k lg Z]_af oal` Zml A _gl klm[c af Yf\ ^gmf\
I really enjoyed doing RPL.
Al`YklYc]fe]ZY[clgZYka[kYf\Ae_dY\&Af]]\]\al&AoYkjmklq&
A hjg\m[]\ ]p[]dd]fl ]na\]f[] g^ [geh]l]f[] gn]j Yf\ YZgn]
that required. Nevertheless, I am just regarded as one of a herd
competent. I believe I should have received more recognition
for the quality of my portfolio.
A o]fl oal` l`] go Yf\ imYda]\& Al oYk Y oYkl] g^ lae] Yf\
interfered with my earnings. Thank goodness its over!
Ae]lkge]_j]Ylh]ghd]Yf\An]eY\]Ydglg^^ja]f\k&
A j]Yddq ]fbgq]\ Zmad\af_ eq hgjl^gdag& Fgo A `Yn] [gehd]l]\ al$
theres a gap. I shall miss the interest it gave me.
Al eY\] e] [gfka\]j l`] Zmkaf]kk Yf\ eq da^] j]][lan]dq&
I would like to take this further and do something else that will
show me how to broaden my outlook and earn respect.
Bottom line, like it or lump it, if one doesnt complete the RPL one
cannot legally continue as an estate agent. It is anticipated that many
will drop out when the cut-off dates arrive. Most of those who have
qualied will leave it at that. There may be a few who would like the
opportunity to use their qualication as a platform to advance more
broadly, academically and intellectually. The David Ricardo School of
Business at the European-American University is there for the few.
Stimulation of the
property sector is
the key to achieving
signicant economic
growth
here is, says Tony Clarke, Managing Director of Rawson

Properties, the real estate group which is now operating on
a national footprint, a wide variety of opinions out there
on how the global economy will perform in 2011. South African
property marketers, he says, have to be aware of these opinions
and form their own assessment so that they have a realistic plan
for the coming year.
Those to whom I have talked are, by and large, in two camps,
says Clarke. The rst group sees the world economy as being
over the worst and set for a slow, albeit unspectacular, recovery. The second group believes that this could take ve to eight
years.
Accepting that 80% of new businesses do not survive their rst

two years but that the remaining 20% do make a big difference
to any economy, the funding agencies for new enterprise have
to nd means of backing and encouraging innovative entrepreneurs.
The factors which, says Clarke, most commentators agree will

inuence the future are:
Regrettably at the moment development

funding worldwide, but particularly in Third
World, is severely lacking.
the economic crises being experienced in the less successful

Eurozone countries. Requiring massive bail-outs, in some
cases these, he says, could retard the entire European economic performance.
the possible political unrest in China as an increasingly afuent society begins to resist authoritarian state control. This,
says Clarke, could be coupled to excessive consumerism in the
Chinese market and difculties experienced by the regional
authorities to repay the central banks for the massive upgrade
and improvement infrastructural programmes which they have
been obliged to implement as part of Chinese economic policy.
the USAs apparent reluctance to deal with its hugely excessive debt and a growing belief that they probably never will.
This, says Clarke, will inevitably weaken their economy, which,
in turn, will impact on the entire global economy, especially the
Third World suppliers, such as South Africa, which are the
major providers of primary minerals and materials.
the international energy crisis. The shortages and high prices
of fuel in todays market could, Clarke believes, hold back a
true economic revival.
water and food shortages coupled to oods, droughts and increasing desertication, all problems related to global warming and international weather changes. These, says Clarke,
could be especially severe in the countries fed by the Himalayas where the melting ice and snowcaps have traditionally supplied one-third of the worlds population with water.
poor education in much of the Third World, especially in Africa.
a lack of nance for new enterprises, particularly those in the
Third World, which are essential for a global recovery.
20 | AGENT
South Africa, says Clarke, is not immune to many of the problems

outlined above, but, as a result of its conservative scal policies,
has proved fairly resilient in the face of the global recession. This,
he says, is impressing international economists and investors.
Now, however, he says, the question is what steps should be
taken to stimulate real economic growth to an acceptable degree
and the answer, in my opinion, is boost the property sector.
This, says Clarke, could take two forms: making home acquisition easier and increasing the delivery rate of subsidised state
homes.
On the rst issue, the credit criteria of banks are so strict that
in recent months only 55% of bond applications have been successful. While it is true that this is 5% up on the previous rate, it
is far below a situation in which homeownership growth will help
seriously improve the economic recovery. Older people, trying
to survive on increasingly inadequate state and private pensions,
says Clarke, and young people with limited funds and no credit
records to be consulted have been especially hard hit by the strict
lending criteria.
There is, he believes, a need for a range of alternative home
funding schemes, many of which are already used in developed
countries. Among those are rent-to-buy (in which a portion of the
renting period is converted into a deposit to facilitate an acquisition), instalment paying (in which a deal is struck between the
GET YOUR
REAL ESTATE
QUALIFICATION NOW!
homeowner and the buyer who goes ahead without the assistance of a bond), private syndicate funding (again, a direct deal
between the syndicate and the buyer) and staircase funding (in
which the monthly bond repayments start low but increase later
as the homeowners salary improves).
Many in the property sector believe, says Clarke, that they must
now link-up with consumer bodies on behalf of aspirant buyers to
put pressure on banks to ease up on their lending criteria. Right
now, he says, highly reputable bond applicants who have often
been in the same job for many years and have conscientiously
paid their debts over a long period are sometimes disqualied
from getting bonds on grounds that appear to an outsider to be
illogical. In some cases so many guarantees are required that
the bond is, in fact, secured one and a half times over. In view
of the very high interest rates charged by South African banks (in
relation to international rates), this cautious approach does not
appear to be justied.
Delivery of state housing, says Clarke, could improve if more
land was made available and reputable private sector developers were allowed to initiate projects on these. Again, he believes,
the banks should agree to come in as partners, the guarantees
in this case, coming from the government. Clarke says that the
situation in the housing market is reasonably satisfactory and he
himself is predicting 3% to 3,5% real growth, i.e. above the ination rate, for house prices in 2011.
Clarke stresses that in addition to its economic benets, homeownership, or even simple home occupation, can have great human advantages. They increase self-respect, stimulate ambition
and create social stability. The provision of satisfactory housing
should, therefore, be a high priority of every government, says
Clarke, and should be seen by banks as one of their primary responsibilities. It is time they found ways of doing this to a greater
degree.
Principals - E
ZEY&>
D
Agents &d
ZEY&>
D
Interns - dW
dZW>
D
W
CPD t
Exemptions for NQF Level 4 & 5
CONTACT US ON:
082 294 1755

Our National Footprint:
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<E'&Êt
www.propertyacademy.co.za
Assessment College Group
Certication No: LS 2949
(2283)
(2010/FE07/048)
COMMERCIAL PROPERTY
pportunistic and doom-laden commercial property investors, who were waiting for the market to collapse like the
beleaguered residential development sector, have been
disappointed, says Auction Alliance CEO Rael Levitt. Commercial property has held up well but investors are tending to focus
on safer assets in good positions, which includes nodes such as
Sandton, Tyger Valley or Umhlanga Ridge. There has simply been
no one cashing in on prime, distressed commercial real estate.
The properties that have come under the hammer have tended
to be problematic assets that investors would have steered clear
off, even in the best of times, says Levitt. The best distressed assets that have come to the market have arisen from failed investor schemes, where the underlying asset was strong but the investment vehicle was either fraudulent or over-geared. In reality
we have seen lots of failed developments under the liquidation
hammer, but there has not been one property fund that has put
its best properties to the market. Commercial property, which
was not at the heart of the property crisis, has in fact held up
surprisingly well in South Africa, probably off the back of a strong
listed property sector, explains Levitt.
South African investors, operating with interest rate at 37-year
lows, have a growing interest in commercial property, but they
are only looking for deals in the best locations with the strongest
tenants. We have seen that low interest rates make the yields on
offer from commercial property look more attractive than ever,
and there is strong demand for reliable rentals, Levitt adds. The
cash ow from tenants is more stable than that from equities and
offshore currency. For those investors who are concerned that ination may rear its head again, commercial property has always
been a useful hedge against ination because lease agreements
can be renegotiated with tenants to reect rising prices. Levitt
22 | AGENT
says investing in commercial property has paid off handsomely

for many investors after the 2008 crisis, particularly with stellar
results from the listed sector up to the end of 2010. We have been
saying for some time that good commercial property is really
good and poor property is really poor, and this two-tier market
is growing wider in 2011. Prime locations are where prices have
remained annoyingly strong for those in search of a bargain. In
SA, where the bubble in commercial property was less dangerous
than residential property, there may have been too much development and some over-supply in certain sectors.
When banks were giving 80% commercial property loans it drove
up demand and reduced yields. Certain banks fuelled this boom
by getting involved in equity participation models and giving 100%
funding to developers. Rapid rental growth also fuelled developments, particularly in nodes out of traditional urban zones. Now
demand for developments has slowed down as banks are shying away from new funding and there is less development in the
pipeline. The chance of a surge in new development activity is
slight and debt nancing, which lenders class as risky, remains
tight. That may cause a further surge of demand for strong cashyielding properties and result in negligible demand for marginal
commercial assets in poor locations.
It is believed that the growth in commercial property will be conned to trophy assets in prime locations, which are either well
let or can easily be tenanted with long leases. For ofces, that
means buildings in prime nodes such as Sandton, Tyger Valley
or Umhlanga Ridge. For retail centres, it means properties in upmarket suburbs or busy trafc nodes. For the industrial sector,
it means single-tenanted buildings, with long leases near busy
transportation nodes. In the 2004-08 commercial property-boom,
bidders at auctions would not differentiate between top-quality
trophy assets and secondary ones. Bidders chased commercial

property of all sorts, closing the yield gap between the best and
the rest. This however, is no longer the case. Investors are now
generally a lot more prudent, largely because funding isnt that
freely available and they have a lot more of their own cash in the
deal. That points to prime properties in prime locations, where
demand for high-quality tenants prevails. Those investors who
were planning to buy distressed assets are focusing on safer assets in good positions. The concern however, is that the gap between good and bad is widening. This makes the job even more
challenging, to dispose of the properties that are distressed and
coming to auction from banks and liquidators.
started with the IRT bus route which runs through the V&A Waterfront, providing easy public access. The developed property
boasts a well-established and mature portfolio of properties
across the retail, ofce, hotel and industrial sectors, with attractive rentals, rental escalations and lease expiry proles.
Key KZN commercial market on the up

While trading conditions remain challenging, albeit gradual,
the various sectors of the commercial property market in key
business nodes in KwaZulu-Natal are experiencing improving
market sentiment.
The V & A Waterfront, Cape Town

will get a R500m revamp
The Government Employees Pension Fund (GEPF), represented
by the Public Investment Corporation Limited (PIC), together
with Growthpoint Properties Limited have announced that their
purchase, in equal proportions, of South Africas landmark V&A
Waterfront is now complete and all conditions have been fullled.
The new owners have wasted no time conrming their commitment to the ongoing development of V& A Waterfront. They announced the R500-million redevelopment of the landmark Clock
Tower precinct over the next four years, one of the biggest business developments since the inception of the V&A Waterfront almost 22 years ago. Development has already commenced.
The V&A Waterfront transaction represents South Africas biggest single property transaction to date with the new owners paying a combined investment of some R9,7 billion for South Africas
most popular tourist destination, which is widely recognised as
one of the nest waterfront developments in the world. Located
around the historic Victoria and Alfred Basins which formed Cape
Towns original harbour, the V&A Waterfront is a mixed-use property development and a South African showpiece. The V&A Waterfront acquisition has ensured that the ownership of one of the
most prestigious properties in South Africa is again vested in the
hands of South Africans and specically the South African worker
base, in the form of 1.2 million public servants, who are members
of the GEPF. The purchase of the V&A Waterfront meets objectives of a sound investment, while effectively contributing to the
sustainable economic development of South Africa.
The V&A Waterfront is a historic landmark and desirable location
on a vibrant working harbour, which is an important international
trading route for South Africa. While the future development of
the V&A Waterfront remains exible, it will be sensitive to the
needs of Cape Town and integrate with the city. This has already
Below: The V & A Waterfront, Cape Town.
Above: Gateway Mall, KwaZulu Natal.
From a retail perspective and in regard to centres, it appears stable or up on last year, with traditionally strong shopping centres
trading well and with tenancies having proven resilient in tough
trading conditions. Managed retail centres remain well tenanted
and have very few vacancies, with rental levels and growth remaining intact. Its positive to note that there is a high demand
for retail space in the Durban CBD, with very few vacancies. The
Berea/Morningside area is also experiencing a good demand,
with little space available, while in the precinct around Gateway
(ie not including Gateway shopping centre) tenanting is generally
good but with pockets of vacancies. Rentals vary signicantly, depending on size and location.
In the ofce sector it is noted to have a slightly more positive
sentiment in the market with lease renewals and new lets continuing. While interest remains focused mainly in the areas north
of Durban, the centrally and conveniently located area of Morningside sees an ongoing, steady demand due to its position and
thriving business component. Westville, with its easy access to
the city centre and all major routes, is starting to see an increase
in demand. There is no doubt that the development of thousands
of square metres of commercial space in Umhlanga Ridge and
La Lucia Ridge, as well as in Westville over the past ve to 10
years has had a signicant impact on leasing in the Durban CBD.
These new developments are attractive, well designed, easily
accessible, situated in secure, landscaped and well managed
precincts and accordingly, are extremely appealing to corporate
tenants. The opening of the new King Shaka International Airport
at La Mercy has undoubtedly also had a positive impact on development to the north of Durban. In the Umhlanga Ridge precinct
the current demand is mainly for smaller units in the region of
80-200sqm, with asking rentals ranging from R90 to R120 per
square metre per month.
AGENT | 23
The stronger demand is for space in La Lucia Ridge, where developments are tenant driven, with most enquiries for smaller units
which, attract rentals to a maximum of R135 per square metre. In
prestigious Umhlanga Ridgeside, presently under development,
there is a strong demand for ofce rentals at R150 per square
metre. Closer to Durban in the Durban North area, where asking
rentals tend to be close to the levels sought in nearby Umhlanga
and La Lucia, there is an ongoing trend towards rental space com-
Left: Umhlanga Ridge, KwaZulu Natal. Above: Melrose Arch, Johannesburg.

Below: Stimela Square Development, Johannesburg.
Johannesburg inner city improvements

facilitate further new development
prising mostly houses which have been converted into ofce accommodation. In busy Morningside pockets of ofce space are
available with asking rentals mainly in the region of R85-R100 per
square metre and parking bays at R350 for covered parking and
R250 for open bays. In Westville, where there has been an oversupply of stock, demand is starting to increase, with available
space comprising units between 100 and 800 square metres at
asking rentals of R85-R100 per square metre. Slightly further inland in Hillcrest, it is reported that enquiries are also picking up
with asking rentals from R95-R120 per square metre and parking
bays at R450 for covered and R300 for open bays.
Melrose Arch, Johannesburg

Melrose Arch needs no introduction as a hot spot for Johannesburgs fashionistas and foodies. Perhaps a lesser-known fact
is that the precinct is fast becoming the poster child for SAs
sustainable development movement. With only 60% of the property developed to date, another 160000m of retail, ofce, hotel and
residential space will be added to Melrose Arch over the next
ve years.
The plan is to position Melrose Arch as South Africas foremost
example of new urbanism, the idea that neighbourhoods should
have a mix of easily accessible places to work, play and live in.
Sustainable development and new urbanism design principles
have real, practical implications and address many of the critical issues of our time, rapidly rising electricity and fuel costs,
urban decay, trafc congestion and crime. Energy consumption
will become increasingly important in the South African property
development context. What one can expect to pay for electricity
and water will in future play a fundamental role in the buying and
renting of residential and commercial property in South Africa.
So how do South African developers introduce new urbanism and
sustainable development principles to built environments? In essence, its about connection and integration, creating an environment where people can live, work and play within safe walking
distance, yet still have easy access to transport nodes. It does
away with over-reliance on motor vehicles. At the same time,
it creates a sense of community, allowing people more time to
engage with one another face to face.
24 | AGENT
Johannesburg CBD continues to undergo a metamorphosis in

order to meet the needs of a rapidly evolving, major economic
and metropolitan hub. Since the citys turnaround strategy was
adopted in the early 2000s, Rea Vaya BRT (Bus Rapid Transit),
properly tarred roads, new taxi ranks and more affordable residential accommodation are some of the positive infrastructural
changes being implemented, providing a catalyst for further improvements and increased condence in the inner city.
Good news for the city is that planning is currently in progress
for an impressive new mixed-used development to be known as
Stimela Square, situated at the corner of Sauer and Hall Streets
on the southern fringe of Johannesburg CBD, with good access
to major transport routes. This landmark project creates a city
in one block, comprising ofces, retail and a hotel in one consolidated development. Located on part of the historic Ferreiras
Camp (originally a mining camp), the development is arranged
around an attractive inner city garden square, created as the focal space of Stimela Square and a hive of retail and public activity. Centred around the square and with direct access will be 90
000sqm of high grade ofce space congured in six blocks. Designed to cater for tenant requirements these ofces will range
in size from 185-15 000sqm at a gross rental of R119.50 per
square metre.
Source: SA Commercial PropNews
Auction Alliance Group Property 24
BANK WARY ABOUT HIKING

INTEREST RATES
igher interest rates could threaten a recovery in company

borrowing, and worsen the creditworthiness of consumers,
the Reserve Bank said yesterday. In its biannual nancial
stability review, the Bank repeatedly warned of the weak state
of credit extension in SAs economy, despite an overall pick-up
in its pace of growth. It also highlighted the vulnerability of consumers, the economys main growth engine.
The Banks references to the chance of negative effects from any
interest rate increases suggests that it will keep rates steady
at 30-year lows for as long as possible. A possible return to a
higher interest rate environment, fuelled by increasing oil prices, still presents a threat to the recovery of credit extended to the
corporate sector, it said in the review.
Credit growth has gathered momentum but remains sluggish
this year, with borrowing by companies lagging well behind
credit extended to consumers. In February, credit extended to
the private sector rose by 5,4%, up from 5% in January. But while
credit for individuals rose 7%, lending to companies edged up by
2,7%. The Banks senior deputy governor, Xolile Guma, sounded
a note of caution in a speech to bankers at the release of the bulletin. In SA, despite positive signs of economic recovery, high
levels of unemployment continued to place a damper on activity
in the domestic nancial system, he said. Financial markets are
betting that the Bank will raise interest rates by November, and
say there is a 50% chance of a September hike.
The Bank said gures showing that voluntary company liquidations were well above involuntary liquidations last year could
be an indication that businesses were still struggling. It said a
decline in consumer condence in the rst quarter of this year,
was most likely due to uncertainty fanned by rising fuel and electricity costs, as well as a shaky employment outlook.
Consumers appear to be wary in their outlook, even though the
worst of the recession remains behind them, the Bank said. The
prole of credit-active consumers worsened slightly in the nal
quarter of last year, with the ratio of impaired consumers rising to 46,5% from 46,3% in the third quarter. The situation may
worsen further, should lending rates begin to increase, given
the still-high levels of household debt to disposable income,
the Bank said. Debt service costs for households have fallen to
about 7% from more than 12% when interest rates were at their
peak. However, the ratio of household debt to disposable income
remains high at about 78%. This burden as well as the rising cost
of fuel, food and electricity prices could curb consumer spending, which accounts for 60% of demand in the economy.
It could be argued that the easing of lending standards and lower
lending rates were unlikely to have a signicant effect on credit
extension to households in the short run. Tougher lending conditions stemming from the National Credit Act could have played a
role. The Bank also mentioned what it described as the pedestrian performance of the property market. This could continue
for some time as households remained concerned about their
nancial well- being and are unwilling to make long-term commitments, it said.
On a more upbeat note, the Bank noted that rising household
net wealth and falling debt service costs painted a slightly
more positive picture of household resilience to adverse nancial shocks. Mr Guma said the improved outlook for economic
growth could boost the condence level of consumers in SA.
The acceleration of the growth rate in the economy during the
fourth quarter of last year could indicate that SA is on a steady
path of economic recovery, although it is still not sufcient to
reduce the high level of unemployment, the Bank said.
Source: Business Day/The Banking Association of South Africa
AGENT | 25
Winners (Africa) and losers (South Africa)

Most African countries will grow strongly, but not
SA.
ost Sub-Saharan African countries have more or less re

covered from the nancial crisis and the Great Recession,
and they are poised to rack up some impressive growth
numbers over the next two years - according to the International
Monetary Funds (IMF) Regional Economic Outlook for Sub-Saharan Africa, the countries of Sub-Saharan Africa will grow by an
average of 5.5% this year, and 6% next year. South Africa, however, will not be among the fast-growing.
As Antoinette Monsio Sayeh, Director of the IMFs African Department, noted, Sub-Saharan Africas recovery from the crisisinduced slowdown is well under way, with growth in most countries now back fairly close to the high levels of the mid-2000s.
The recovery is near complete in most of the regions 29 lowincome countries and 7 oil exporters. But growth is recovering
more gradually in the regions middle-income countries, (especially) South Africa.
kets] have closed, there remains a nontrivial gap of some 3% in

South Africa this year and it is not expected to close until 2013 at
the earliest. In other words, while other emerging markets are
gearing up to go gangbusters, growth-wise, South Africa is still
struggling to bounce back from the downturn. Why?
The reason, in a nutshell, is consumers. Unlike many other
emerging markets, which tend to rely on external demand, South
Africa is heavily dependent on domestic demand. While countries like China focus on producing for export to the clamouring
consumers of the rich world, South Africa relies on home-grown
consumers for growth, and in this downturn, those consumers
have felt the pinch.
The South African growth conundrum
According to the IMF, there are three particular factors that have kept, and will
keep South African consumers wallets
closed and South Africas economy relatively stagnant.
According to the IMF, South Africas recovery from the global

nancial crisis is lagging behind that of its emerging markets
brethren. Whereas output gaps in most other [emerging mar-
1. High household indebtedness. Household debt as a share of

disposable income increased substantially in the pre-crisis period. Currently, at 79% of disposable income, household debt re-
26 | AGENT
mains high from a historical perspective, suggesting that banks

are likely to remain cautious in granting credit and mortgages to
households. Additionally, as interest rates rise over the medium
term, the associated increase in the debt-service cost will pose
an additional constraint to consumption.
2. Job loss and high unemployment. The massive job shedding
that during the recession occurred - equivalent to 8% of total
employment at end-2008 - is also going to constrain future consumption growth.
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3. Fragile consumer condence. The composite index of consumer condence showed a noticeable improvement in the rst
quarter of 2010. However, since then it has deteriorated and remained at a lower level compared with the level that prevailed in
the pre-crisis period.
Together, these factors are going to restrain South Africas growth for the foreseeable future. Elsewhere in Africa, however, things look more cheerful.
The rest of Africa
Sub-Saharan Africa, as a region, grew by 5% last year, and as
noted earlier, is set to grow at 5.5% this year and 6% next - decent numbers by any standard. Rising commodity prices have
supported growth in several nations, while improved policies and
better scal management have improved prospects in others.
African CEOs are certainly optimistic; according to the YPO Global Pulse Condence Index for Africa, African CEOs are an upbeat
bunch, with respect to their projections six months hence as well
as one year from now. Whats more, the IMF report shows that
capital inows - money being invested into African stocks and
bonds in particular - have started to pick up again after slowing
to a trickle during the crisis.
However, as always, there are some downside risks. Said Saleh,
Global [food and fuel] price shocks and

the regions fast recovery are likely to lead
to higher ination and, in a number of
fuel importers, to deteriorating current
account decits...
With strong growth and rising ination pressures, the broad direction of scal policy in most countries should be moving away
from the supportive stance of the last few years. Monetary policy
remains looser than desirable in many low income countries in
the region, even before the recent surge in food and fuel prices.
To counter incipient inationary pressures, monetary policy will
need to be tightened, particularly where growth has already regained pre-crisis levels. Nevertheless, strong growth in Africa
continues to represent an opportunity for slow-growing South
Africa, and for South Africas institutional and individual investors. If domestic growth is not forthcoming, South Africa could do
worse than look north of its borders for a jumpstart.
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ESTATE AGENCY AFFAIRS BOARD

EXTENDS THE AMNESTY PERIOD
FOR A FURTHER THREE MONTHS
28 | AGENT
ESTATE AGENCY AFFAIRS BOARD EXTENDS

THE AMNESTY PERIOD FOR A FURTHER
THREE MONTHS
he Estate Agency Affairs Board (EAAB) is offering illegally

operating estate agency practitioners an additional three
months to meet the requirements to become registered
and compliant agents.
The three-month Amnesty Period commenced on Friday, April 15, 2011 and has
been extended for three additional months
to become compliant. The new deadline is
Saturday, October 15, 2011.
Since the beginning of the amnesty period, the Amnesty Committee of the Estate Agency Affairs Board has considered and
granted a signicant amount of amnesty applicants. The Committee was especially gratied that, in granting a number of
these amnesty applications, subject to compliance by the applicant with certain necessary conditions, it was effectively able
to regularise the positions of hitherto illegally operating estate
agency practitioners, meaningfully contribute to their future employment prospects and, also, ensure that they were actively
brought into the regulatory fold of professional estate agents
said the Chairman of EAAB, Mr Thami Bolani.
The activities of all applicants who have been granted amnesty

will be closely supervised and monitored by the EAAB for a period
of at least six months to ensure that such persons are not only
competently and capably performing the functions, duties and
activities of estate agents but that they are also complying with
all applicable legislative requirements.
Professional EAAB staff will, during this period, also be continuously accessible to actively consult with, assist and guide successful applicants to ensure their continued progress, both economic and reputational, as practicing estate agents.
The application must be completed and sworn to/afrmed before
a commissioner of oaths such as, for instance, an attorney, bank
manager, post master or police ofcer. Each page of the application, including all annexures, must also be initialed by both the
applicant and the relevant commissioner of oaths.
The completed afdavit/solemn declaration must be returned to
the Estate Agency Affairs Board.
The application can be e-mailed to Ms. Nethenia Johaar at
Nethenia.Johaar@eaab.org.za or faxed to Ms. Johaar at 086 613
8765. The completed application can also be posted to the Estate
Agency Affairs Board, Private Bag X10, Benmore, 2010.
All completed amnesty applications must, however, reach the
EAAB on or before 15 October 2011. Please visit our website
www.eaab.org.za to download the Application Form.
The aim of this Amnesty Period is to create

an environment in which estate agents are
fully compliant for the protection of consumers. The Amnesty Committee has furthermore simplied the application form
in order to make it more user-friendly.
We therefore encourage unregistered practitioners to come forth
and legalize their activities by registering with the EAAB said
Bolani.
Persons who are, therefore, presently performing, or who have
previously performed, the functions, duties and activities of an
estate agent as dened in the Act without having applied for or
been issued with a valid delity fund certicate by the EAAB are
encouraged to apply to the EAAB for amnesty.
It should be noted that applicants are required to make full, honest, open and truthful disclosure of all facts and information
regarding their illegal activities as estate
agents.
Successful amnesty applicants will be granted a reasonable time
within which to get their estate agency affairs in order and to
comply with the Act. No internal disciplinary steps or measures
will be instituted by the EAAB in respect of the previous non-compliance by successful applicants with the provisions of the Act.
AGENT | 29
THE NEW COMPANIES ACT 2008

The new Companies Act 2008 came
into effect on 1 May 2011. There have
been delays and problems with the implementation of the Companies Act, but
it has commenced. The Act is going to
have a huge impact on virtually every
business in South Africa. It creates a
whole new regime for the regulation of
companies in South Africa. Heres a
heads up on some of the practical implications of this Act.
corporations (CC). So what regulates companies now? What are

the laws, rules, or documents that regulate companies now?
REGULATION OF COMPANIES IN SOUTH AFRICA
What is the timeline? Companies regulations?
What Regulates Companies?
There are a few things to bear in mind:

There are now nal Companies regulations for the new Companies Act. It is now possible to consider all the implications of
the Act and implement it.
South Africa has a new Companies Act, which is a total over haul
of the law regards companies. It also has a big impact on close
30 | AGENT
Most organisations and people are not well prepared and are
not up-to-speed with the most recent developments. For example, banks are ill-prepared for the new Companies Act. You cant
really blame them, the Companies Act was amended at the last
minute and nal regulations were only approved at the last minute.
This is referred to as the Companies Act or just the Act. Many
people still incorrectly refer to it as the Companies Bill rather
than as the Companies Act. A Bill is a draft Act that has not yet
been enacted. People often get confused between a Bill and an
Act. The life cycle of an Act of Parliament can be confusing and
people often do not know when they still have an opportunity to
inuence the legislation and when they need to start preparing to
comply with it.
The Companies Regulations (or Companies Act Regulations or

Company Regulations) have been signed and approved. They
come into effect on 1 May 2011, together with the Companies Act.
They are crucial to understanding and implementing the Companies Act. The nal Companies Regulations are 22 pages longer
and do differ in some respects from the draft.
The Regulations deal with the functions of:
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The draft Companies Regulations

The following is what previously appeared on the Department of
Trade & Industry website:
The Minister of Trade and Industry, Dr Rob Davies (MP), intends
to publish the Companies Regulations, 2011, after due consideration of stakeholder comments and inputs. The draft Regulations
are premised on the Companies Act, No. 71 of 2008 and the Companies Amendment Bill, 2010, as published in the Government
Gazette, No. 33695, dated 27 October 2010.
The draft Regulations deal with the functions of the Companies
Commission, the Takeover Regulation Panel and the Companies Tribunal, as well as other matters relating to the regulation
of companies, to take effect upon enactment of the Companies
Act, 2008.
The Companies Amendment Bill 40 of 2010 was passed by both
houses on 22 March 2011, and has been signed by the president.
A consolidated Companies Act (that includes the amendments)
is not yet available. The Department of Trade and Industry have
undertaken to provide one. Without a consolidated Act it is difcult to nd out what the Companies Act actually says.
prepare the documents you need to do this and help you with
the process.
6. From 1 May 2011 it is no longer possible to register a new close
corporation or CC. CCs will slowly become extinct and every
CC has to be converted into a company Pty Ltd. The conversion of close corporations to companies is governed by the
Companies Act and Companies Regulations. Every CC has to
convert eventually.
7. On 1 May 2013 shareholder agreements (or shareholders
agreements) will go from hero to zero. If there is a conict
between the shareholder agreement and any other document
that regulates the company, the other document will prevail.
From 1 May 2011 to 1 May 2013 the order of importance of documents is Shareholder Agreement (if signed before 1 May
2011), Memorandum, Companies Act. After 1 May 2013, the
order of importance is Companies Act, Memorandum, and
lastly Shareholder Agreement.
8. If you need a new shareholders agreement, it is no longer possible (from 1 May 2011) to adopt a shareholders agreement that
prevails over the Memorandum and Companies Act. You need
to amend the memorandum before adopting a shareholders
agreement.
Source: www.michalsons.co.za/companies-act/8837
The College of People

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When do you need to act?
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+LJKHU(GXFDWLRQ
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)(
The practical implications

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of the most important things:
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4. It denes the relationships between companies and their respective shareholders (or members) and directors.
5. On 1 May 2011 the Memorandum and Articles of Association
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AGENT | 31
V&A
C lift o n
Twelve Apost les
Cape Town Market proving popular

with foreign property buyers
he residential real estate market in Cape Town, South

Africa, is currently a classic buyers market in with properties taking 19 weeks on average to sell and then with
only 15 % of vendors achieving their asking price, a new report reveals. This is good news for foreign buyers who account
for almost 7% of total sales, by far the highest proportion of sales
in any South African city, with the British a prominent force,
according to the Cluttons South Africa rst quarter 2011 report.
It reports a lengthening in the average time homes spent on the
market before selling, from 15 weeks and six days in the fourth
quarter of 2010 to 19 weeks and one day. Nevertheless, in Cape
Town, the occasional big high price sale has supported condence, even through the markets toughest period.
Over 80% of properties in Cape Town sold for over R6 million were
to cash buyers. City Bowl and Atlantic Seaboard properties have
fetched biggest prices. Between June and December last year
the average price of apartments in the City Bowl, where 327
apartments were sold last year jumped 15,2% to R1.53 million.
The Cluttons South Africa report added that since the bottoming
out of the recession in 2009 when market values had dropped in
most areas by 12 to 15%, there has been a marked increase in
property transactions in the lower end of the market, R1 million to
R4 million and in the upper end where prices are R10 million plus.
It says that the lower end has beneted from the loosening of
banks lending criteria and the upper end records most sales as
32 | AGENT
cash sales. This is particularly true for British buyers, where cash
is used or borrowed from UK banks at interest rates far below
those currently available in South Africa.
British buyers can benet from substantial

discounts by shopping around. It is important to look for quality and prime locations,
said Jacques Ellis, managing director, Cluttons South Africa.
The prime areas in Cape Town are the Atlantic Seaboard and
the Constantia Valley. The Atlantic Seaboard includes the V & A
Waterfront, Green Point, Sea Point, Fresnaye, Bantry Bay, Clifton
and Camps Bay, the last four being the most prime and expensive
areas. Hot spots in these areas are Green point and Upper Sea
Point. Value can still be had in these areas with many properties
being fully renovated or demolished and rebuilt either as single
family homes or small blocks of apartments. In Constantia Valley,
the prime areas include Bishops Court, Constantia, Upper Constantia and Steenberg. All of these areas have potential and offer
larger homes with excellent views of False Bay. There is a large
number of estates around Steenberg that are near the best
schools.
The Cluttons South Africa report added that since the bottoming
Wat erf ront

Gree npoint
out of the recession in 2009 when market values had dropped

in most areas by 12 to 15%, there has been a marked increase in
property transactions in the lower end of the market, R1 million
to R4 million (90,000 to 365,000) and in the upper end where
prices are R10 million (900,000) plus.
It says that the lower end has beneted from the loosening of
banks lending criteria and the upper end records most sales as
cash sales. This is particularly true for British buyers, where cash
is used or borrowed from UK banks at interest rates far below
those currently available in South Africa.
In Constantia Valley, the prime areas include Bishops Court,
Constantia, Upper Constantia and Steenberg. All of these areas
have potential and offer larger homes with excellent views of
False Bay. There is a large number of estates around Steenberg
that are near the best schools, the report adds.
Most of the appeal for the British buyer is that English is the most
widely spoken language. The over-night ights to the city are
easy and have just a one hour time difference. Also, compared
to popular Mediterranean destinations, prices for similar properties are up to 50% less. The British have always been a prominent force in the purchasing of properties in the Cape region.
We have recently concluded a number of sales to British buyers
in the R5 million to R18 million range. We also feel that the bottom of the market has been reached and the middle and luxury
end of the market offers substantial opportunity for price increases over the next few years, explained Ellis.
Co nst antia Va lle y
You may borrow 50% of the purchase price in rand from a

local bank; the remainder needs to be brought in. There is no
restriction on taking funds out again or prot from a property
as long as all the forex rules are followed. There is capital
gains tax of 10% on property, quite low compared to other countries.
The report also points out that it is straightfoward for foreigners to buy in South Africa.
There are no restrictions. The property laws
are very strong and follow Roman Dutch
Law.
Most of the appeal for the British buyer is that English is the most
widely spoken language, the over-night ights to the city are easy
and have just a one hour time difference. Also, compared to popular Mediterranean destinations, prices for similar properties
are up to 50% less. The British have always been a prominent force
in the purchasing of properties in the Cape region. Recently the
number of sales concluded to British buyers has been in the
R5 million to R18 million. It is felt that the bottom of the market
has been reached and the middle and luxury end of the market
offers substantial opportunity for price increases over the next
few years.
Source: Property Wire
AGENT | 33
Clearance certicate backlog in

Johannesburg results in court action
Court orders municipality to provide
the clearance certicate within 14 days
ong delays in obtaining municipal clearance certicates for

property transfers in Johannesburg have become a huge
problem, which is impacting on the lives of thousands. The
problem has become so exasperating that a law rm in Gauteng
is seeking, and nding, solutions in the High Court.
After waiting for a clearance certicate for 11 months, during
which one of our attorneys personally visited the Johannesburg
Council ofces 40 times, we brought an urgent application to
the South Gauteng High Court, says Johan van Heerden, a senior partner of property sector-focused Dykes, van Heerden Inc.
After an unsuccessful defence of the action, the Municipality,
which was represented by an attorney and advocate, was ordered by the Court to provide the clearance certicate within 14
days, which it duly did, says van Heerden.
This was one of four actions that Dykes, van Heerden has so far
successfully brought against the Council recently to obtain longoutstanding clearance certicates. In one of the other cases,
in which we waited in vain for nine months, we received the
clearance gures within just two days of the Court ruling in our
favour!, says van Heerden. If the Council defends the action,
34 | AGENT
a legal process of this nature can cost between R40 000 and
R50 000. The irony is that, if the order is granted with costs
(which, is what happened in our applications) it is the ratepayers
that effectively foot the bill, he adds.
The transfer of ownership of a property cannot be done unless
the owner has a clearance certicate conrming that all municipal accounts (including water, electricity, refuse removal and
sewerage services) have been settled.
Just how big is the problem?

Recent media reports put the clearance certicate backlog in the
Johannesburg municipal area at about 45 000. The enormous
knock-on effects of a backlog of this magnitude are far-reaching. Sellers suffer interest losses; conveyancers waste valuable
time and money in following up what should have been a mere
formality; and buyers cant take transfer and become owners.
Furthermore, the impact on the cash ow of estate agents in
the Johannesburg area is severe. Where clearance certicates
are slow in coming, many agents are now waiting way beyond
the normal timeframe (three months) before their commissions
are paid. One can only hope that the authorities take note of, and
rectify, this clearly avoidable situation.
BUYING PROPERTY FROM A NON-RESIDENT

Capital Gains Tax is your responsibility
ny person buying a South African property valued at R2

million or more from a non-resident (i.e. a person who is
not an ordinary resident) must take note that in terms of
Section 35 (a) of the Income Tax Act he/she, the purchaser, carries full responsibility for seeing that a specied percentage of the
purchase price is withheld to cover the Capital Gains Tax on the
property. If this is not done, one or more of those involved in the
sale can be held responsible for the tax that is then outstanding.
This stipulation enables SARS to avoid the difculties of trying
to collect the CG taxation from non-residents - as well as companies and trusts. SARS want to ensure the payments due to
them without having to police and monitor the transactions of all
non-resident property sellers. SARS has experienced difculties
in extracting payments from non-resident sellers who are now
living out of the country.
The tax is a nal withholding tax i.e. it is payable in full, even if
the Capital Gains Tax is calculated later to be lower. However, this
need not apply if the seller or buyer has approached the South African Revenue Services Commissioner in advance for a directive
conrming that the Capital Gains Tax payable will be lower than
that of the statutory sum levied.
Capital Gains taxes are calculated at 5% for a natural person,
7,5% for a company or a close corporation and 10% for a trust.
The SARS ruling makes the purchaser responsible for the full
amount and this has to be paid within 14 days of the transaction
being registered. In practice the conveyancer attends to this on
behalf of the purchaser by deducting the amount due to SARS
from the proceeds of the sale - but the conveyancer himself might
just possibly not be aware of the sellers non-resident status. It
is therefore important to obtain an afdavit from the seller afrming his nationality and residency status. It may help to have a
photocopy of his passport. In some cases it will also be necessary
to get a letter from the home ofce of the sellers own country.
In terms of the SARS provision, the estate agent and conveyancer
attending to the sale are responsible for informing the purchaser
of the sellers non-resident status - and they can be held responsible for the SARS payment if they have failed to do this. However,
the amounts payable by them are limited to the fees that they
would have earned on the transaction. It is understandable that
mistakes occur here, because quite often the non-resident will
be spending a substantial amount of time in South Africa and
may not realise that he is still classied as a non-resident.
The SA tax laws stipulate that a person is a resident of South
Africa because he is ordinarily resident here in SA - and the
courts dene this as the place to which the person customarily
returns after his wanderings. If there is doubt on this matter, the
courts can apply for a days-spent-in-SA formula. Those unsure
of their situation should take legal advice.
Source: Gunstons Attorneys Real Estate Web
AGENT | 35
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Professionalism

Are you struggling

PROFESSIONAL DESIGNATION EXAMINATION (PDE) 4 & 5

PDE WORKSHOPS & DVD SUMMIT TV

EAAB GRANTS EXTENSION FOR ESTATE AGENTS TO COMPLY

POLICY FOR THE GRANTING OF EXEMPTION FOR PRACTICING

SAPOA COMMERCIAL PROPERTY AWARDS

THE ESTATE AGENCY AFFAIRS BOARD

SOUTH AFRICAN PROPERTY MARKET CORRECTIONS

ESTATE AGENTS PERSPECTIVES OF RPL

STIMULATION OF THE PROPERTY SECTOR IS THE KEY

COMMERCIAL PROPERTY CAPE TOWN, KWAZULU NATAL & GAUTENG

BANK WARY ABOUT HIKING INTEREST RATES

WINNERS (AFRICA) AND LOSERS (SOUTH AFRICA)

ESTATE AGENCY AFFAIRS BOARD EXTENDS THE

THE NEW COMPANIES ACT 2008

CAPE TOWN MARKET PROVING POPULAR

Front cover photo supplied by SAPOA

BUYING PROPERTY FROM A NON-RESIDENT

Estate Agency Affairs Board

The EAAB publication has won the Printing Industries Federation

New Municipal Property Rates

eople who own more than one residential property will be

Moreover, local residents associations, estate

own more than one residential property will be forced to pay

Study material and preparation

Study material and preparation

Study material and preparation

Study material and preparation

EXAMINATION PREPARATORY WORKSHOPS

FEES AND PAYMENT PROCESS

Workshops to assist all applicants to prepare for the rst PDE

Registration fee for the exams has been reduced by 70%

THE PDE APPLICATION PROCESS

PDE 4 & 5 PRE -EXAM WORKSHOPS

04 05 AUGUST 2011 - PDE 5

Summit TV will air The Real Estate Professionals

Summit TV, on DStv 412, is South Africas essential local

EAAB GRANTS EXTENSION FOR ESTATE

he Estate Agency Affairs Board (EAAB), acting in terms

More than 12 000 practicing estate agents have already either

Policy for the granting of exemption for practicing

Y []jla]\ [ghq g^ Yfq []jla[Yl]k g^ Y[`a]n]e]fl l`Yl `Yn]

and to enable the applicant to explain how that calculation was

SAPOA COMMERCIAL PROPERTY AWARDS

he stylishly distinctive abstract chequered 15 Alice Lane

SAPOA Awards Committee Chairman John Truter notes: The

We are pleased to contribute to furthering the highest standards

THE ESTATE AGENCY AFFAIRS BOARD

More than 300 inspections conducted

he Estate Agency Affairs Board (EAAB) has conducted more

The increased rate of inspections allows the EAAB to play a far

It seems, also, that many franchisors are persisting in selling

As at the end of June 2011, 120 inspections were conducted and

CPT 021 763 3360

JHB 011 484 5494

- The methodology used by the provider and if electronic systems

South African Property

outh Africa is experiencing a property market correction.

A nominal house price growth closer to the

The following correction symptoms are present:

Banks in South Africa have only during