The Property Practitioners Regulatory Authority fails to withdraw unlawful BEE policy

6 August 2024

Sakeliga has sent the Property Practitioners Regulatory Authority (PPRA) a final letter of demand to provide a written undertaking to withdraw and reverse its BEE policy.

Our letter follows reports in recent days that the PPRA has given assurances of a hold on its unlawful BEE policy, ‘for the time being’.

Under the unlawful policy, the PPRA has since at least April this year been refusing to issue property practitioners with Fidelity Fund Certificates (FFCs) based on their BEE status.

However, the PPRA has now confirmed to Sakeliga that it has not altered its official stance. Offering only the claim that its board is expected to deliberate on the matter, it neglects to provide any explicit undertaking to either suspend or withdraw the policy. Conspicuously, the PPRA also continues to ignore our demands that it should publicly withdraw the policy, communicate its decision to the industry, immediately reopen applications for those who have been denied an FFC and are thereby banned from trading, and undertake not to enforce any similar BEE policy.  

FFCs are significant, because the state prohibits estate agents, developers, management agents, auctioneers, and eight other industry categories deemed ‘property practitioners’ from doing business without an FFC, or else face prosecution.

While Sakeliga would welcome it if the PPRA were to cease its unlawful conduct, it would be imprudent to rely on statements which the PPRA is not itself willing to give or confirm. In fact, the PPRA’s continued refusal to provide the necessary undertakings to Sakeliga’s legal team, despite having been informed of our intention to litigate, must for now be taken as indicative of an intention within the PPRA to maintain its policy, to find less glaringly unlawful ways of applying it, and to defend it in court.

Sakeliga’s position remains that the demand for a BEE certificate and/or affidavit – regardless of the BEE level – is a crucial juncture for the industry, since the demand seeks to normalise unacceptable political interference. BEE has nothing to do with a candidate’s suitability to receive an FFC and be a ‘property practitioner’, and should therefore not be entertained as a requirement for FFCs.

The requirement of a BEE certificate and/or affidavit represents a Trojan horse by which the state is introducing political licensing for economic participation.  

Sakeliga recommends that businesspeople demand a minimum threshold for credible and meaningful undertakings by state entities like the PPRA. For undertakings to meet such a threshold, they would at least have to be in writing, explicit, given by the state entity itself, made public, and not be reversible on a whim.

We have therefore today informed the PPRA that we persist with our final letter of demand of 2 August 2024, which entails that the PPRA must, in writing, 

1.      Provide Sakeliga with all its policies regarding the matter.

2.      Confirm whether or not it has withdrawn its rule or policy regarding valid or alternatively minimum level 8 BEE certificates for issuing FFCs.

3.      Communicate to all property practitioners that they are no longer required to meet a minimum level 8 BEE certificate threshold.

4.      Communicate to all who have previously been refused an FFC due to this rule or policy that they may immediately reapply based on previously submitted documentation and that the PPRA will not require a minimum level 8 BEE certificate threshold.

5.      Undertake not to enforce any further rule or policy imposing minimum BEE thresholds or any similar race-based requirements for issuing FFCs. 

We have notified the PPRA that, should it fail to comply with this demand, we will proceed with further legal action. This will include, among other things, an application for judicial review of the PPRA’s decision, over and above any further constitutional or other challenges regarding the validity and constitutionality of the Property Practitioners Act.

Third Wave BEE

What is happening at the PPRA is now common among state entities set up to control economic sectors, in which BEE level requirements are rolled out in a two-phased approach:

First, by introducing BEE certificates as requirements without demanding any specific compliance level;

Second, by demanding higher and higher BEE levels once an industry has become accustomed to the BEE certification process.

Raising BEE to the level of licensing for economic participation is the key feature of the third wave of BEE.

For more on the three waves of BEE, and why it is harmful, click here.

Issued by Piet le Roux, Sakeliga, 6 August 2024