A reader who has a small property portfolio questions whether his business will be affected by the new Property Practitioners Act.
He has built up his portfolio over the years, making an income from buying, renovating and selling properties and houses.
In addition, he manages property portfolios for a few people on an informal basis, but says he doesn’t view himself as a “practitioner”.
It should be noted that although the act is already signed into law it is not yet effective.
See the reader’s question here.
A number of structures are to be established under the act and it is expected that this will happen prior to it becoming effective.
The act does or will do a number of things. Primarily, and probably of interest to most, is that it repeals the Estate Agency Affairs Act.
The definition of property practitioner is fairly broad.
It includes any person or business where the acquisition of gain is for their own account.
It also covers a person or business undertaking that, directly or indirectly, on behalf of another person sells, manages or lets properties, or collects rentals and assists with financing.
Accordingly, it would seem the reader falls squarely within the concept based on the activities described.
The act provides that the reader must hold a Fidelity Fund certificate and pay the fees in respect thereof.
He may not practise as a property practitioner without holding such a certificate and to do so will constitute an offence.
Closely linked to that requirement is a trust account where the funds received must be held until transferred to a third party.
A code of conduct of property practitioners will be prepared and transgression of the provisions, together with other provisions specified in section 61 of the act, may warrant a sanction.
Sanctionable conduct may result in the practitioner losing his Fidelity Fund certificate, which will prevent him from practising as a practitioner.
Also important to note is that inspectors will be appointed to monitor and ensure compliance.
Those inspectors will have comprehensive powers to investigate the records of practitioners and to enforce compliance.
Consumer protection is also addressed, stating that a practitioner may not act for someone unless that person has signed a mandate authorising him or her to act.
The mandate must take a prescribed form. This would prohibit the casual helping of third parties in the managing of their property portfolios.
The act is only expected to come into effect during the course of next year and the reader should take appropriate steps to put his business in order.
Ask the YourProperty experts a question here.