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‘Accreditation fees’ that are charged by some well- known estates have come under scrutiny by the Property Practitioners Regulatory Authority and other oversight bodies in the property industry, like the Community Schemes Ombud Service (CSOS), for being excessive and thereby excluding most estate agents from trading in estates.
In a statement issued on 23 March, 2023, the PPRA said that it had received several complaints from property practitioners alleging that they are required to pay “accreditation” fees to trade in certain residential estates. But are these fees legal and fair? Many claim they’re not, and here’s why.
What are accreditation fees?
Accreditation fees are fees charged to estate agents in exchange for training around the estate’s rules and regulations. Johlene Wasserman, the executive for licensing and registration for the PPRA, says these fees can range from R2,500 to R50,000. Wasserman refuses to name particular estates as the PPRA is engaging in an investigation, but there are claims that some well-known estates in Cape Town and Gauteng have charged these sorts of fees.
Wasserman acknowledges that training should be undertaken before any property practitioners sell homes on residential estates. This is because the rules and regulations can be quite complex and lengthy, and in some cases can even take the form of a book because they are so long and complicated.
Knowledge around how estates are managed, what their rules are, whether solar panels can be installed, what the construction restrictions are, and where the game can be kept, for example, can all be vital things that estate agents should learn before they can sell properties on residential estates. Not learning such essential rules could land them in hot water, especially if buyers are not properly informed of the rules. So while many agree that training is a must, it’s the high associated charges that bodies like the PPRA have an issue with.
Why are high charges such a problem?
Wasserman agrees that there should be a fee associated with training for some residential estates – particularly those that have a large rule book. But she highlights that these need to be fair. Fees that can go up to R50,000 result in several smaller estate agents and individuals, particularly formerly disadvantaged people, being prevented from having access to such estates and being able to sell properties in this lucrative industry.
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‘We can’t name the estates involved as we are investigating them, but I am in possession of some information that shows that some have charged as much as R50,000. We don’t want practitioners to be refused the right to operate on these residential estates because they can’t afford these fees. It’s only the big real estate agencies that can afford it, so the problem is that this will exclude the majority of agents.’
These fees also fly in the face of the Property Practitioners Act (PPA), particularly section 63 (1), read with Regulation 35.1, which highlights the undesirable practices that should be prohibited. The Act effectively says that no body corporate, homeowners association, or managing organisation should receive any money or other reward ‘in exchange for a benefit, advantage, or other forms of preferential treatment in respect of the marketing of properties in such a property development.’
Wasserman adds: ‘I understand that there are costs involved in training, with time and resources committed to it. I do think that estate agents need to understand and study the rules as they are important. However, we can’t professionalise and transform the property sector to be inclusive of all in the industry if we have such high fees.’
What will happen next?
The PPRA are keen to enforce compliance in line with the PPA. Wasserman says there will be a crackdown on these exorbitant fees following an investigation. At present, the PPRA is calling on estate agents to report transgressors to the PPRA so that it can investigate and prosecute offenders if necessary.
The PPRA says in its statement issued in March: ‘Property practitioners should complete the attached prescribed form to lodge a compilation and furnish supporting evidence of the illegal practices and email same to: up@theppra.org.za’.
