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PROPERTY SOUTH AFRICAN June 2020 REVIEW The voice for the industry COVID-19 How it is affecting the industry New appointments Joanne Solomon Lisa Reynolds Vuyiswa Mutshekwane Legal update The Property Practitioners Act 22 of 2019 Death of the office What’s the point of them, anyway?
from the CEO
A vaccine is not a treatment
for Bankruptcies
Without a treatment or a vaccine, or even an understanding of how many people are
immune due to a lack of testing, social distancing is here to stay
T he coronavirus pandemic has forced
thousands of retail stores to close for
weeks on end, which is kicking off a
goods after weeks of suspending those
purchases under quarantine. Many non-
essential retailers will have to decide to what
downward spiral for department stores that degree they will reopen. When they do so,
could result in a surge of bankruptcies and many will have to add safety measures, such
permanent store closings. Companies as restricted entry, one-way aisles and
are not built to have their stores closed Plexiglass barriers for cashiers.
for extended periods of time. Engage your tenants about the concept of
With the likelihood of more Buy Online, Pick Up In Store (BOPIS), which is
bankruptcies on the way, there is deep a win-win for the customer and the retailer.
uncertainty about when the pandemic With curbside pickup, customers can obtain
will end and what the world will look like their order (often more quickly than with
after the crisis is over. This is not a problem shipment to their home) without having to
however, that a vaccine can solve. enter any crowded store. As the option is
The pandemic has trapped consumers at increasingly adopted by more retailers, it
home for weeks on end, forcing them to could easily become a fulfilment staple as the
adopt new shopping habits, which could coronavirus curve flattens.
alter the retail landscape for years to come.
Consumers have shifted spending towards Second, for essential retailers such as
SAPOA CEO Neil Gopal necessities because of the lockdown grocery stores, a surge in demand for these
regulations but also because of the economic essentials, with adequate safety measures in
shocks. These shifts in consumer behaviour place, will bode well.
could last 12 months – or several years.
This move away from discretionary Third, expect a proliferation of requirements
“It is with sadness that we announce purchases is likely to persist into the to limit the number of people in a store,
foreseeable future. It will take some time for creating wide enough spaces for consumers
that this edition of the SA Property
consumers to get over the shock to the to pass one another in accordance with
Review will be the last for the system that the coronavirus has brought, and social distancing, the wearing of masks in
foreseeable future. Given the drop in are ready – both emotionally and financially stores, the need for some retailers to
advertising revenue as a result of the – to indulge again in discretionary spending. perform daily deep-cleaning, potential
The anxiety created by this virus will not temperature checks for employees and
impact of Covid19, we are no longer
subside any time soon. Prepare for the way customers before entering stores, higher
able to subsidise the cost of the we live and the way we shop. demand for contactless commerce,
magazine in its current form. sustained use (at least in the short term) of
First, immediately after the retail shutdown home delivery or curbside pickup, more
We trust that the Industry has
ends, we could see initial shopper caution – security at shopping centres and stores to
enjoyed this publication which has over both the risk of contagion when visiting deal with crowd control, and enforcement
been in circulation for a few decades”. physical stores, and in terms of spending big of who can and cannot enter.
after such a profound economic and cultural Shift work and revolving staff are also
shock. Shoppers may also start devoting a issues we need to consider. In China, retailers
smaller fraction of their budget to discretionary started to institute controlled shifts so that
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 3
from the CEO contents
they don’t mix different workers on different
shifts. That way, if one shift is exposed, it does
not require potentially shutting down the
entire store.
Fourth, e-commerce will see some gains as
sales transfer from closed stores – but with
depressed demand, do not anticipate online
sales to be anywhere close to the value of in-
store sales, and expect that most store-based
discretionary sales will be lost or postponed.
Even when stay-at-home regulations are 14
lifted, it is unlikely that customers will rush
back to buy non-essential goods. Legal update
It’s all about the
“The COVID-19 pandemic Editor in Chief Neil Gopal
content of the lease
is accelerating the inevitable digital Editorial Adviser Jane Padayachee
disruption of commerce. Editor Mark Pettipher
Copy Editor Ania Rokita Taylor
Commerce will emerge from Public Relations Officer Maud Nale
the pandemic a vibrant and Production Manager Axsella Barry
critical part of consumer life.” Designer Eugene Jonck
Jason Goldberg, Forbes contributor Sales Pieter Schoeman: pieter@mpdps.com
Finance Susan du Toit
With the sudden growth in customers
Contributors Anthony Chapman, Catherine Nixey,
internationally relying on e-commerce, it is Craig Laskey, Dr Nan Liu, Dr Robert Duncan,
more important than ever to be able to assist John Loos, Jonathan Gratch, Lavashnee Mandry,
customers as they research and buy online. Maud Nale, Rael Levitt, Ridwaan Loonat,
Shaheen Adams, Tom Jackson
With people spending less time in store
and more time online, there will be more
opportunities to capture website visitors –
FOR EDITORIAL ENQUIRIES email
mark@mpdps.com
16
especially new customers – while they are
searching for and purchasing products. Published by SAPOA, Paddock View, Hunt’s End Legal update
Office Park, 36 Wierda Road West,
Fifth, non-essential retailers will have to Wierda Valley, Sandton The missing link of property
follow and learn from grocery stores and transactions under Alert Level 4
pharmacies with regards to how best to PO Box 78544, Sandton 2146
t: +27 (0)11 883 0679 f: +27 (0)11 883 0684
organise their store, checkout points and
queues, and how they put precautions in
place for store personnel and customers.
Off the wall
Worries over illness will likely linger, and
Smart home unfolds and folds in minutes,
consumers who shifted more of their
whenever and wherever you need it
spending online during lockdown may
continue to use that channel instead of 66
visiting stores.
Landlords and retailers must adapt to the
above – the quicker, the better.
DISCLAIMER:
The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding
Best regards, any goods or services advertised within this edition. Copyright South African Property Owners’ Association (SAPOA).
All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from SAPOA.
Neil Gopal, CEO The publishers are not responsible for any unsolicited material.
4 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020
PROPERTY
SOUTH AFRICAN
REVIEW
ON THE COVER
COVID-19 continues to play havoc with
South Africa's economy, we bring you insights
24 and opinions of it's affect on the property industry
3 From the CEO
COVID-19: industry view 6 Letter to Johannesburg Municipality
8 From the Editor’s desk
The COVID-19 pandemic and 10 Legal update
its effect on the commercial ➀ The Property Practitioners Act 22 of 2019:
property sector Comments on the Draft Regulations
➁ It’s all about the content of the lease
➂ The missing link of property transactions under Alert Level 4
18 Education
➀ Leadership in a COVID environment
➁ Impact of school closures on education outcomes in South Africa
24 COVID-19: industry view The COVID-19 pandemic and its effect
on the commercial property sector
34 Health and Safety COVID-19 shines a spotlight on health
and safety in construction
36 Opinion - Retail Collaboration between landlords and tenants key
to the continuation of South Africa’s retail property sector
34 38 Tech
➀ Why there are opportunities in a crisis for entrepreneurs
➁ Will blockchain technology disrupt the real estate sector?
Health and Safety
42 Market Report Widespread implications for South Africa’s real
COVID-19 shines a spotlight estate market following COVID-19
on health and safety 44 Opinion
in construction ➀ A commercial real estate tsunami…Now, for the aftershocks
➁ Property sectors likely to experience most severe pressure from
economic recession
➂ Death of the office
56 Entrepreneur Opinion Can protecting residential landlords
help provide affordable housing?
60 New Appointment
➀ Stepping up to the mark: SA REIT appoints Joanne Solomon as CEO
➁ Reynolds takes on GBCSA top job
63 Living with technology Perfecting the art of video conferencing
64 COVID Tech
➀ Building “sanitation gates”that disinfect and check temperature
➁ How safe is your trolley?
66 Off the Wall Smart home unfolds and folds in minutes, whenever
Designed, written and produced for SAPOA by MPDPS (PTY) Ltd - e: mark@mpdps.com and wherever you need it
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 5
letter to Johannesburg Municipality
City of Johannesburg Metropolitan Municipality
158 Civic Boulevard
Braamfontein URGENT
Johannesburg
Dear Sir/Madam
Re: Urgent Plea to the City of Johannesburg re. 2020-2021 Draft Budget
1. We refer to our letter of 28 April 2020. We note that we have yet not received any response from you.
2. In paragraph 10 of our letter, we stated that the City should look back to previous years when its total rates revenue
increased as a result of better-than-expected General Valuation results.
3. We have now done further calculations based on the figures in your proposed budget for 2020/2021, as well as prior
budgets, and have prepared the following table:
City of Johannesburg: Property Rates Revenues R’000 Increase % Increase Notes
2016/2017 Audited Outcome 7 912 381
2017/2018 Original Budget 9 005 517
Adjusted Budget 9 005 517
Audited Outcome 9 110 560 1 198 179 15.1% 1
2018/2019 Original Budget 10 098 983
Adjusted Budget 11 002 419
Audited Outcome 12 372 032 3 261 472 35.8% 1, 3 & 4
2019/2020 Original Budget 12 292,550
Adjusted Budget 12 292 550 2 193 567 21.7% 2
2020/2021 Proposed Budget 13 358 276 1 065 726 8.7% 2
Notes:
1. Increase over Audited Outcome of previous year (Original Budget figure not available)
2. Increase over Original Budget of previous year
3. New General Valuation implemented
4. Increase over amount originally budgeted for 2018/2019 is 2 273 049 22.5%
6 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020
letter to Johannesburg Municipality
4. You will note from the table that increases in Property Rates Revenues over the past few years are unacceptably high.
In particular, the increase in 2018/2019 was a staggering 37.4%. An amount of R2.27-billion more than the originally
budgeted figure for that year was collected. That represents an increase of 22.5% over the amount originally
25 May
budgeted 25for2020
May 2020
that year.
5. We are aware that guidelines from the National Treasury stipulate that municipalities should strive to keep
Cityincreases
annual of Johannesburg
City ofwithin Metropolitan
Johannesburg
inflation. Municipality
Metropolitan
The inflation Municipality
rate for 2018/2019 was between 4% and 5%. Your increase
158 Civic
158 Boulevard
Civic Boulevard
for that period was more than seven times that.
Braamfontein
Braamfontein
Johannesburg
Johannesburg
6. We are aware URGENT
that the General Valuation, which was implemented in 2018/2019, may well have been the primary UR
cause of the exorbitant increase that year. However, that does not excuse the situation. The guidelines from the
By e-mail:
By e-mail:
idpinput@joburg.org.za
idpinput@joburg.org.za
National Treasury still apply, and municipalities are required to adjust rates tariffs to offset gains from increased
executivemayor@joburg.org.za
executivemayor@joburg.org.za
property values.
manenzhem@joburg.org.za
manenzhem@joburg.org.za
citymanager@joburg.org.za
citymanager@joburg.org.za
7. We are
aware that a small percentage of the increases may represent new property developments or
also
improvements
DearDear that
Sir/Madam have come on stream during each of the years in question. However, these would only
Sir/Madam
represent a very small percentage of the overall increases. The bulk of the increases are simply imposed
as anRe:Re:
UrgentUrgent
additional Plea to
burden onthe
Plea
City properties.
existing ofto
Johannesburg
the City re. of2020-21
Johannesburg
Draft Budget re. 2020-21 Draft Bu
8. The above figures demonstrate that the City of Johannesburg has clearly been abusing its ratepayers over
1. 1.
the past few We refer
years. It We
to our
appearsrefer
letter of
to28our
that, when
th
April,
surplus letter
2020. We
property of note
28
rates arethat
th
April,
we have
collected, 2020.
yet not
instead We
received
of carryingnote
any
such that we have
surpluses
response
forward to the next year from
responseyou.to reduce
in order from you.
future rates increases, the City simply piles additional rates increases
on top of previous, unacceptably high increases.
2. 2. In paragraph 10 of our letter 10
In paragraph we stated
of ourthat letter
the City should look backthat
we stated to previous years should loo
the City
9. This situation cannot be allowed to continue unchecked. It is our firm resolve to raise this matter at the
highest levelwhen itswhen
in order total
to rates
ensureitsrevenue
thattotal increased
rates
it is properly revenue
as a result ofincreased
addressed. better than expected
as aGeneral
result Valuation
of better tha
results. results.
10. We are aware that, in the past, the City simply ignored complaints and carried on regardless. This will continue
to have a significantly
3. 3. We have We negative
nowhave
donebearing
further
now oncalculations
future
done investment
baseddrives
further on thein figures
the City,in
calculations and lower
your the appetite
proposed
based onforthe
budget for figures in
new developments.
2020/21,
2020/21,
as well as prior
asbudgets,
well asand prior
have prepared
budgets,
the following
and table:
have prepared the follo
11. We wish to engage with you regarding this matter, and would be grateful to receive an urgent response from
you, with a view to ascertaining whether it might be possible to resolve this unsatisfactory situation amicably.
Yours sincerely,
Chief Executive Officer
SOUTH
SOUTH AFRICAN
AFRICAN
PROPERTY
PROPERTY
OWNERS ASSOCIATION
OWNERS – NPCASSOCIATION
– REG NO 1966/008959/08
– NPC – REG NO 1966/008959/0
Board
Board of Directors
of Directors
D Green (President),
D GreenA (President),
König (President Elect),
A König
I Mkhari(President
(Immediate PastElect),
President),I NMkhari
Gopal (Chief
(Immediate
Executive Officer),
Past P Levett,
President),
V Hako, M Kekana,
N Gopal (Chief Executive Officer), P
ZZ Malinga,
Malinga, N Mashaba,
N Mashaba,
K Matsau, MK Hamman
Matsau, M Hamman
National Councillors:
National D Green (President),
Councillors: D Green N Gopal (Chief Executive
(President), N Officer),
GopalS (Chief
Ainsworth,Executive
L Barnard, R Bennet, Z Marinakos,
Officer), M Meyer, L Mthembu,
S Ainsworth, W Mulder,
L Barnard, R Bennet, Z Marinakos, M Meyer, L M
MM Ngcobo,
Ngcobo, E Wilson,
E Wilson,
N Baumgarten,
N Baumgarten,
J Burger, M Bakker,JS Burger,
Nicks, P Altenroxel,
M Bakker,
B Khumalo,
S Nicks,
D Todd P Altenroxel, B Khumalo, D Todd
Head
Head Office:
Office:
Gauteng – Hunt’s End–Office
Gauteng Hunt’s
Park •End
Paddock
Office
View Building
Park• •36Paddock
Wierda Road View
West • Wierda
Building
Valley •• Sandton
36 Wierda Road West • Wierda Valley • Sand
PO
PO Box
Box78544
78544
• Sandton
• Sandton
• 2146 • Tel: +27
• 2146
11 883•0679
Tel:• Fax:
+27 +2711
11 883
8830684
0679
• Email:
• Fax:
reception@sapoa.org.za
+27 11 883• 0684 Website:•www.sapoa.org.za
Email: reception@sapoa.org.za • Web
East
East London
London KwaZulu Natal KwaZulu Limpopo
Natal Mpumalanga
Limpopo Port ElizabethMpumalanga Western Cape Port Elizabeth
10
10 Beacon
Beacon Park Park PO Box 288 PO Box 288 30 Robusta Avenue 30Kiepersol
Robusta Security Complex
Avenue PO Box 1940 Kiepersol Security Complex
6 Pieterse Close, Retreat PO Box 1940
21 Pell
21 PellStreet
Street Hillcrest 3650 Hillcrest 3650
Acacia Estate 55 TubaEstate
Acacia Crescent Street Govan Mbeki 55 Tuba Crescent
Avenue Street
Sasmere Estate Govan Mbeki A
Beacon
Beacon BayBay5241 5241 Cell: 082 873 0090
Cell: 082 873
Bendor0090 Nelspruit,
Bendor Mpumalanga Port Nelspruit,
Elizabeth, 6000 Mpumalanga
Cape Town, 7945 Port Elizabeth
Tel:
Tel: 043
043748748
1156 1156 Fax: 086 231 2068
Fax: 086 231
Polokwane
2068 0699 Cell: 071 485 3836
Polokwane 0699 Cell: 082 341 Cell:
3280 071 485 3836
Tel: 071 740 3732 Cell: 082 341 3
Fax:
Fax: 043
043748 748
1156 1156sapoa.kzn@sapoa.org.za Cell: 072 282 0580
sapoa.kzn@sapoa.org.za Fax:072
Cell: 013 741 13050580
282 Fax: 013
sapoa.pe@sapoa.org.za 741 1305
Fax: 086 602 1095 sapoa.pe@sap
sapoa.el@sapoa.org.za
sapoa.el@sapoa.org.za lowveld@sapoa.org.za
sapoa.limpopo@sapoa.org.zasapoa.limpopo@sapoa.org.za lowveld@sapoa.org.za
wc.sapoa@sapoa.org.za
from the Editor's desk
…and it’s good night from him!
After a little over seven years under MPDPS’s stewardship, this edition
of the South African Property Review will be its last – a casualty of the
pre-COVID-19 economic downturn, and a direct result of the pandemic
W
hat can I say? At a time when the industry. Thank you to Growthpoint,
the property industry as a whole Redefine, Liberty Two Degrees, ALT Capital
is counting its cents, it simply Partners and the Dipula Income Fund for
doesn’t make sustainable sense to their feedback – and thanks to Business
continue to publish the South African Day TV, who have placed their interviews
Property Review – a decision that the on YouTube. We have enhanced the
SAPOA management has not taken overview article by embedding some of
lightly. Therefore it falls to me as the those insightful broadcast discussions.
editor and publisher to say farewell In addition we have an opinion piece
and thank you to our loyal followers. from FNB economist John Loos, as well as
Over the past seven years, the commentary on social housing from our
SAPOA editorial team has brought regular columnist and property entrepreneur
the magazine from near-disaster to Shaheen Adams. Fintech start-up Peach
being a well-respected, widely read, fully Payments founder Rahul Jain tells us all
integrated international digital publication. about the accelerated adoption of digital
What started as a one-year contract turned commerce; Lavashnee Mandry, a senior
into a relationship that has seen a great associate at Adams & Adams, comments
deal of trust being forged between us, the on the plight of estate agents; and Ben
SAPOA management and its membership. Groot, Director at GVS Law, offers his
Editor and Publisher Mark Pettipher Property Review has been welcomed by recommendations on lease agreements
many of the industry’s leaders. It has and alternative dispute resolution options.
adorned many an office coffee table, and The “magic” of Zoom, TeamViewer and
taken up residence in cyberspace. a plethora of other online communication
I’m privileged to have been part of an tools has meant, even before lockdown,
industry so rich in interesting characters. that we were able to remotely talk to
I have interviewed association presidents, members in the various provinces in which
captains of industry, sector influencers and SAPOA operates. With this in mind, we
up-and-coming entrepreneurs. echo the sentiment that the workplace will
Modern trends have seen us move away be forever changed. But as we learn to
from printing the magazine, something we adapt to the “new” norm and emerge from
did just over two years ago. We were one the pandemic, we need to be mindful that
of the first property sector magazines to the South African economy was not in
explore the digital realm – and the relaunch great shape before the virus struck. In the
edition of May/June 2013 can still be viewed March/April edition, we featured economists’
on issuu.com. warnings about South Africa’s dangerous
Not accepting an easy answer – that slide towards another Moody’s downgrade
is, a direct PDF upload to issuu.com – we (bit.ly/3c8PbVw). Hopefully we can bounce
developed and hosted the magazine on back from that too…
our own server. We took control of the Now, in the words of British comedians
ability to analyse our readership data, and Ronnie Barker and Ronnie Corbett “…it’s
delivered embedded rich media. good night from him!” Until we meet again,
To keep this edition topical, we contacted enjoy the read, take care – and stay safe.
various market players to get an overview
of the ways in which COVID-19 has affected Mark Pettipher, Editor and Publisher
8 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020
LOOKING AHEAD TO A
THRIVING TOMORROW
144 Oxford, Sandton
legal
The Property Practitioners Act 22 of 2019:
Comments on the Draft Regulations
The President signed into Law the Property Practitioners Bill on 2 October 2019,
to replace the 43-year old Estate Agency Affairs Act of 1976. The Act will come
into operation on a date fixed by the President by proclamation in the Gazette.
Before the Act can be implemented, the relevant regulations must be in place
T he Regulations to the Act were published
under Section 70 of the Property
Practitioners Act on 6 March 2020, for the
A property practitioner is required under
the Act to obtain a certificate issued by the
Fidelity Fund on an annual basis. Without a
public and the industry to submit comments valid certificate, a property practitioner may
within 60 days. On 5 May 2020, the Department not render services or receive fees.
of Human Settlements advised the public The Property Practitioners Regulatory
and the industry that a new date for the Authority, which will replace the Estate
submission of comments and a revised Agency Affairs Board, will be the new regulatory
information sessions schedule would be body of property practitioners, and will be
communicated once clear directives have governed by and act through the Board of the
been issued by Cabinet regarding the Authority. Among other things, the Authority
COVID-19 pandemic, especially the will be required to ensure compliance with
regulations pertaining to public gatherings. the Act, regulate the conduct of property
The Act uses the description “property practitioners, implement measures to transform
In order to achieve transformation practitioner”, a broad term that encompasses the property sector, conduct campaigns to
a wide spectrum. It defines a property educate property professionals and consumers,
in the property sector, the authority
practitioner as a person who, for the and serve a dispute resolution function.
is required to implement and assess acquisition of gain, directly or indirectly, on In order to achieve transformation in the
measures to promote an inclusive the instructions or on behalf of another: property sector, the authority is required to
and integrated sector; implement sells, purchases, manages or publicly exhibits implement and assess measures to promote
for sale any property or business undertaking; an inclusive and integrated sector; implement
appropriate measures and assess leases or hires or publicly exhibits for hire appropriate measures and assess the state of
the state of transformation any property or business undertaking; transformation within the property sector;
within the property sector; collects or receives money payable for a create such mechanisms for the continuous
lease; provides, procures, facilitates, secures monitoring and evaluation of the sector’s
create such mechanisms for
or otherwise obtains or markets financing performance on the transformation
the continuous monitoring for or in connection with the management, imperatives and granting of incentives as
and evaluation of the sector’s sale or lease of a property or business may be prescribed; and introduce measures
performance on the transformation undertaking; and/or renders services as an to be implemented, which may include
intermediary to effect the conclusion of an incubation and capacity-building programmes
imperatives and granting of agreement to sell or let a property or business to redress the imbalances of the past.
incentives as may be prescribed; undertaking, except where this is not done in The Authority must establish a Property
and introduce measures to be the ordinary course of the person’s business; Sector Transformation Fund, which applies
where it is done by a natural person in their to all property practitioners and which is to
implemented, which may include
personal capacity, or where the person is an be used for the Principalisation Programme,
incubation and capacity-building attorney, candidate attorney or a sheriff. to promote black-owned firms and principals;
programmes to redress the It is possible to apply for exemption Regularisation Programme, to promote and
imbalances of the past. from the application of the Act in terms of encourage participation of the historically
Section 4. disadvantaged due to non-compliance;
10 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020legal
Consumer Awareness Programme, to promote materially and adversely affected by the We are of the opinion
awareness of property transactions and decision be allowed to request an appeal. that should the Authority
business undertaking; and Work Readiness Section 4(10) provides that the Authority wish to withdraw an exemption,
Programme, to promote and enhance the may on good grounds amend, suspend, or
the considerations set out
participation of the historically disadvantaged withdraw an exemption. We are of the
in the property sector. The Act further opinion that should the Authority wish to in Section 4(5) should
prescribes that the government must utilise withdraw an exemption, the considerations be reconsidered.
the services of property practitioners set out in section 4(5) should be reconsidered,
who comply with the broad-based black and such withdrawal must be preceded by
economic empowerment and employment an appropriate notice period. The withdrawal
equity legislation and policies. of an exemption should also be accompanied
SAPOA’s comments on the Draft Regulations by an appropriate transition period, during
to the Property Practitioners Act are as follows. which the affected persons can take the
necessary measures to ensure compliance
SECTION 1: DEFINITIONS with the Act at that point in time when the
1.9. Code of conduct exemption is lifted (for example, applying
We would like to be part of providing input for Fidelity Fund certificates and opening
on the code as it might create a greater trust accounts).
burden and unintended consequences that
will be detrimental to the property industry. SECTION 7(1) AND 7(2):
COMPOSITION AND
SECTION 2: APPOINTMENT OF BOARD
EXEMPTION FROM THE ACT We recommend that one or two members
Section 2 of the Regulations makes provision have 10 years’ experience in the property
for any person to apply to be exempted from sector, to deal with the concern about
compliance with any specific provision of maintaining experience in the Authority .
the Act. While the inclusion of the section Sufficient representation by experienced
(Section 4 of the Act) is commendable, we property practitioners is essential to ensure
recommend that provision be made to group that cognisance is taken of the practical
exemptions that could apply to a specified effects of decisions taken by the Board.
class of persons. This will lessen the burden Furthermore, given the fact that the
placed on the Authority to consider multiple residential property industry and commercial
applications from the same industry players property industry operate in a vastly different
who are facing the same issues. manner, representation from both those
Section 4(9)(a) provides that any person sectors must be ensured. Nominations that
may at any time, in writing, request the are made should reflect the views of the
Minister to review an exemption granted in majority within the industry.
terms of this section. We are of the opinion
that this section should be amended so as to SECTION 20: PROPERTY
allow an appeal to be requested in respect of SECTOR TRANSFORMATION
any decision taken in terms of this Section 4, We believe that all government departments
thereby also covering a decision to reject tend to work in silos. It Is imperative that
the exemption application, or to withdraw, government departments work with the
suspend or amend an existing exemption. authority to not only ensure that the property
Furthermore, we do not think it will be practitioner complies with BBBEE, but that
appropriate to simply allow any person to the government departments themselves do
request the Minister to review an exemption not cripple the objectives of transformation.
that has been granted or a decision that has In their policies, the Department of Public
been taken. This may give rise to frivolous Works and other government departments
or vexatious requests. We recommend that are crippling BBBEE property practitioners in
only those persons whose rights have been that they are reducing lease terms, and so on.
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 11legal
The Authority needs to How does this assist with transforming the SECTION 29(3): MEDIATION
ensure that upskilling is done property industry? In terms of Section 29(3), the mediator must
hear the matter within 30 days of receipt
in a structured and efficient manner
SECTION 21: PROPERTY of the allocation – but Section 29(3)(b) does
through recognised and accredited SECTOR TRANSFORMATION not stipulate a time period within which the
institutions. If SETAs are going to be We recommend that the Authority use an matter should be allocated to a mediator.
used, this needs to be addressed, and independent institution to manage the We recommend that such a time period be
Fidelity Fund. Before funds are moved to stipulated so as to prevent delays in the
proper SLAs must be in place. assist recipients, the Authority needs to commencement of the mediation process.
conduct scientific research into historical The mediator should be required to
claims (and how, where and to whom they submit a report to the Ombud informing
were paid), and look at the projected claim him or her of the outcome of the mediation,
figures before deciding on the percentage that both in instances where mediation has been
will be used for transforming the industry. successful and where it has failed. The
The Authority needs to ensure that remainder of the requirements as set out
upskilling is done in a structured and efficient Section 29(5) should only be required to be
manner through recognised and accredited disclosed in the report in instances where
institutions. If SETAs are going to be used, mediation has failed and the matter is going
this needs to be addressed, and proper SLAs to be referred to adjudication.
must be in place. We suggest that a time period within
which the certificate should be issued should
SECTION 24: be stipulated. We recommend that the time
APPOINTMENT OF INSPECTORS periods coincide: i.e. the certificate should be
Similar to what has been provided for in issued at the same time as the report dealing
respect of searches conducted pursuant to with the outcome of the mediation.
a warrant, immediately before commencing a
warrantless inspection, the inspector should SECTION 30(3): ADJUDICATION
be compelled to provide identification and a We recommend that a time period within
copy of the warrant to the owner or person in which the Ombud must allocate the matter
control of the premises to be searched. The to adjudication should be stipulated so as to
person’s right to dignity, freedom and privacy prevent delays in the commencement of the
must be included in the code of conduct. adjudication process.
SECTION 28(1): SECTION 38:
LODGING OF COMPLAINTS PAYMENTS FROM THE FUND
We also recommend that alternative dispute- We note that Section 38(2) empowers the
resolution processes be extended to cover Minister, in consultation with the Board, to
complaints against the Authority. Property limit the amount that may be paid from
practitioners may disagree with certain the Fund in respect of any category of
decisions taken by the Authority (such as the claims to R2 000 000. We are of the view
removal of a Fidelity Fund certificate) or the that such a limitation is unjustified and
failure to act (such as the failure to issue a may very well lead to a loss of confidence
new Fidelity Fund certificate timeously), which on the part of the public when dealing with
decisions or omissions have far-reaching property practitioners.
consequences for the property practitioners
concerned. In the absence of these alternative SECTION 52:
dispute-resolution mechanisms, the relevant WITHDRAWAL OR LAPSE OF
property practitioner’s only means of FIDELITY FUND CERTIFICATE
challenging a decision would be to approach We note that the Authority is exempted
the courts to have the decision reviewed, from any liability whatsoever in respect of
which is neither time- nor cost-efficient. the withdrawal of a Fidelity Fund certificate.
12 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020legal
If a property practitioner’s Fidelity Fund
certificate is withdrawn by the Authority
erroneously, that property practitioner will
be prevented from carrying on their business
and incur severe losses. The exemption from
liability is unjustified in instances where
that erroneous withdrawal is as a result of
negligence on the part of the Authority.
The withdrawal of a Fidelity Fund
certificate must be preceded by written
notice coupled with adequate reasons.
SECTION 54: TRUST ACCOUNT
We are of the view that for every property
practitioner to operate and keep a trust
account goes against the objectives of
transformation. This creates an unnecessary
financial burden on PDIs who enter the
field. Exclusions – and not exemptions –
should be granted for such individuals for
a determined number of years, provided they
meet certain criteria.
SECTION 55: DUTY OF
PROPERTY PRACTITIONER TO
KEEP ACCOUNTING RECORDS
AND OTHER DOCUMENTS
We are of the view that it will be impractical
to require property practitioners to retain the
advertising or marketing material related to
the carrying on of the business of a property
practitioner for a period of 10 years. This
should be limited to a sample thereof.
SECTION 60:
CODE OF CONDUCT FOR
PROPERTY PRACTITIONERS
The adoption of the code of conduct and
advertising standards should be subject to
prior consultation with property practitioners
within the industry.
We are looking forward to participating in
the information sessions that the Department
of Human Settlements will be arranging, and
also to being involved in the continuing
consultative process of the Regulations. We
wish to clarify key operational aspects of this
Act, specifically as it relates to its very wide
definitions and onerous expectations on
agencies, so as to ensure that the interests
of the industry are taken care of.
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 13legal update
It’s all about the content of the lease
In April, SAPOA held a series of webinars on lease agreements, with Ben Groot,
Director at GVS Law, as the convener. We spoke to him after the series
W ith the global pandemic impacting
many industries in South Africa,
and the country’s resulting lockdown,
a party will be excused from performing
in terms of an agreement.
Casus fortuitus – which is an incidence
many tenants are finding it difficult to of vis major – is defined as an exceptional
trade, and are consequently seeking relief or extraordinary occurrence that was
from their landlords. not reasonably foreseeable. It has been
While the lease agreement webinars’ held that plague is an example of casus
aim was to provide advice to landlords, fortuitus – and in Groot’s view, the
the content also applied to tenants, with present COVID-19 outbreak is analogous,
discussion centred around relevant lease with the resulting government bans
clauses and the general principles of the constituting vis major.
law of contracts. Where a tenant wishes to rely on vis
Ben Groot, Director at GVS Law major or casus fortuitus as a reason to
The general principle be excused from having to perform in
of the law of contracts terms of an agreement, that tenant bears
Groot outlined the principles of the law the onus to prove that it did not have
of contracts as it relates to the COVID-19 beneficial occupation of the leased
government-imposed lockdown that’s premises for the duration of the non-
currently in place. payment period.
In general, whenever there is a case Furthermore, the tenant has to prove
of supervening impossibility, a party to that the occurrence was unforeseen and
a contract who is negatively impacted uncontrollable, and that it was the direct
Under the present as a result of that impossibility may be cause of its inability to perform. If the
excused from performing in terms of circumstances ought to have been
circumstances, traditional
that contract. In cases where a vis major foreseeable, in the specific circumstances
court litigation might not (a superior power or force that cannot of the specific tenant, no remission of
be resisted or controlled) is involved, rent will be granted.
necessarily be the answer
to resolving disputes.
Watch Ben Groot discuss
supervening impossibility.
14 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020legal update
It is important to note that the tenant’s Commercial disputes are not included This tends to make arbitration more
failure to have beneficial occupation of in the specified list of urgent matters. expensive than court litigation. The
leased premises must be the direct and b) Only once the state of disaster parties will likely share the initial costs of
immediate result of the casus fortuitus. comes to an end will the courts return arbitration equally, with the arbitrator
Therefore, a tenant will only be to their usual way of functioning. This eventually making an award as to costs,
entitled to claim a loss of beneficial may take some time – and even once usually in favour of the successful party.
occupation of leased premises due to it happens, Groot anticipates that the As a result, the successful party will be
casus fortuitus if the outbreak of disease courts will be chaotic, with hearings able to recover the costs it had already
itself led to the closure of business. to catch up on, actions that have piled paid from the losing party.
As an example, it has been held that up to be instituted, and everyone What the parties lose in monetary
a tenant who conducted a stationery trying to get their case heard as soon terms, however, they gain in terms of
business was not allowed a rent as possible. time. Arbitration can usually take place
remission where war had caused a drop c) Litigation itself is generally a slow much faster than litigation as the parties
in trade, but that it would have been and expensive process. It can be may agree on shorter time periods, and
so entitled if war had prevented the accepted that, if action is instituted because the allocation of hearing dates
customers from dealing with the tenant. against these tenants, the matters will is not contingent on a court diary. In
be defended – and it can then take addition, interlocutory matters are often
Alternative way to settle between 18 months and two years for dealt with via conference calls and/or
When it comes to lease agreements, the matters to be finalised. after hours, in order to save further costs
Groot has suggested that during the and time. And many arbitration clauses
time of lockdown, it may be prudent to A better way? provide for the prompt resolution of the
re-examine various clauses. As an alternative to the above, Groot matter at hand: some of these clauses
To put the situation into context, suggests that serious consideration be include the words “as expeditiously as
landlords are currently faced with many given to referring the present disputes possible”, while others require the
tenants already having refused – or to arbitration. process to be completed within a period
having indicated that they intend to It is important to note that a matter of between 21 and 30 days.
refuse – to make payment of rent and/ can only be referred to arbitration by Arbitration awards do not set
or other lease charges specifically for agreement between the parties involved. precedents, the way that judgments of
April 2020, in light of the allegation that In general, lease agreements contain the High Court do. Thus one arbitrator is
they have been deprived of beneficial arbitration clauses which state that all not bound by the decision of another,
occupation of their leased premises due (or certain) disputes will be referred to although any prior awards may have
to vis major and/or force majeure. arbitration – but that in the absence persuasive power.
It is important to note that few of thereof, the parties may agree to refer When the arbitrator issues an award,
these tenants’ lease agreements contain a specific dispute to arbitration, once that award is binding on the parties –
a clause allowing them to suspend their such a dispute has arisen. and, unless the parties have agreed
lease obligations due to force majeure. In arbitration, the parties may choose otherwise, there is no right of appeal.
In Groot’s view, this failure to pay their presiding officer – the arbitrator. If the losing party does not comply
constitutes a breach of contract – and Generally speaking, the lease agreement with the order resulting from the
such a breach entitles the landlord to will specify the arbitrator’s qualifications; arbitration, the winning party has to
take the necessary legal action for the these usually include that he or she must apply to court to make that award an
recovery of the amounts it believes are be an attorney, an advocate or a senior order of court, whereafter normal
due and owing by the tenant. advocate with a certain number of years execution steps may follow. This is
Under the present circumstances, of experience. usually not a long process.
traditional court litigation might not The arbitrator usually has wide powers
necessarily be the answer to resolving as to the conduct of the matter, and most
these disputes. Some of the reasons often the agreement will state that the
include the following: arbitrator will have the same powers as
a) The courts are currently also in a judge of the High Court.
lockdown, and only certain specified Whereas our taxes generally pay for
urgent matters are being dealt with. the court buildings as well as the judges’
These include family violence, the salaries, in arbitration the parties pay the e: ben@gvs.law
rights of children and bail applications. arbitrator’s fee and other related costs. w: gvs.law
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 15legal opinion
The missing link of property
transactions under Alert Level 4
Despite being a vital link in the value chain of the property sector, real estate
agencies were not permitted to operate under the government’s regulations during
Alert Level 4. For this reason, real estate agencies have called for the government
to reconsider and amend the regulations. Submissions were made by real estate
sector heads and the National Property Practitioners Council to motivate for the
re-opening of the real estate sector
By Lavashnee Mandry, Senior Associate at Adams & Adams
A ccording to the draft framework of
the government’s risk-adjusted strategy
dated 25 April 2020, the real estate sector is
banks, valuers, mortgage originators and
conveyancers. As such, there should be an
alignment that allows real estate to support
considered a service provider under Alert other Alert Level 4 essential and professional
Level 2, and real estate practitioners services that are permitted to operate.
can only perform their full function at Without estate agents, these industries and
that stage. Commercial real estate is organisations risk coming to a standstill.
permitted at Alert Level 3. There will undoubtedly be a knock-on effect,
At the moment, any activity in which will be detrimental to the South
the real estate sector is restricted to African economy, should the regulations
operating via telephone calls and in not be amended.
the virtual space, which is unsatisfactory During the Level 5 lockdown period,
to sellers and prospective buyers alike. almost no property transactions were
Since buying a home is one of the biggest concluded. The property sector came to a
commitments an individual is likely to make standstill. As it stands, it is anticipated that
in their life, it is natural that they will first there will be a decline in the number of real
want to physically view the property before estate transactions because of COVID-19.
making an offer. But real estate agents are The fact that estate agents are unable to
Adams & Adams Senior Associate not permitted to take potential buyers facilitate property transactions during
Lavashnee Mandry to physically view a property during Alert lockdown worsens the industry’s position.
Level 4. As mentioned, estate agents are essential to
It has been proposed by estate agents the operation of the rest of the value chain
and property councils that the government in the property.
reconsider and amend the regulations to In terms of the regulations issued under
allow estate agents to perform (or at least Alert Level 4, Deeds Offices were permitted
support) essential services in line with to resume operations since 1 May 2020.
the opening of Deeds Offices countrywide Professional services such as conveyancers
under Alert Level 4. This not only affects the and the banking environment are also
thousands of people employed in the real allowed to operate in support of Alert Level
estate sector, but also has an impact on the 4 essential services. Deeds Offices opening
economy as a whole. countrywide on 13 May 2020 brings positive
The real estate sector feeds the property news for homeowners who have concluded
market; by doing so, it stimulates many property transactions prior to the lockdown
other industries and businesses, including as these transactions can now be registered
16 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020legal opinion
Construction sector
at the Deeds Office. Sellers will receive
payment of the proceeds of these sales, and
estate agents will earn commission.
The regulations under Alert Level 4 do
not explicitly state that estate agents are
welcomes easing of
allowed to carry out inspections, but some
have interpreted it to mean that agents may lockdown under Level 3
perform inspections for outgoing tenants
as it is essential to refund deposits. This The construction industry welcomes President
interpretation has seen estate agencies Cyril Ramaphosa’s announcement of the country
registering themselves at CIPC as essential moving to Level 3 as from 1 June 2020. The sector
services to perform this specific duty. has been calling for an immediate re-activation of
The National Property Practitioners live construction sites that were at various stages
Council has made recommendations on
of completion when the lockdown came into effect
how the real estate sector could implement
various safety measures to reduce the risk of
on 27 March 2020
spreading the virus. The real estate sector
can operate with a very low risk of spreading
COVID-19. Estate agencies can ensure that
their workplaces have the required protocols
C hair of the Construction COVID-19 Rapid Response Task Team John
Matthews acknowledged that the easing of the lockdown meant
many construction companies on the verge of collapse could be saved.
in place to ensure strict compliance with the “We are optimistic that allowing the construction sector to resume full
regulations by adhering to temperature operations will salvage what is left of the sector,” he said. “We are pleased
screening, wearing of facemasks, sanitising that the government gave consideration to the concerns we had raised,
and social distancing. and agreed to a full re-activation of the sector under Alert Level 3.
Furthermore, estate agents have not Continued restraints on construction activity were leading us towards
received income for some time. They only a situation where there was little hope of recovery for many companies
receive commission once a transaction has in the industry.”
been registered, which takes approximately With regards to implementing measures to contain the spread of the
three months from the date of conclusion of coronavirus on construction sites, he noted that there was a need for
the sale. The regulation to only allow estate companies to adhere to the strict health-and-safety protocols that were
agents to operate fully in Alert Level 2 will already in place, to ensure the protection of employees. He highlighted
no doubt have dire financial consequences the need for self-regulation by all employers in the industry, emphasising
for them. They also do not qualify to receive President Ramaphosa assertion that combating the spread of the disease
UIF, as their income is commission-based. was in everyone’s hands.
Should the government agree to the “It is not up to the government to monitor every office and construction
amendment of the regulations under Alert site – each employer has an individual responsibility to ensure that the
Level 4 to permit the real estate sector to health and safety of all employees is guaranteed,” said Matthews. “The
operate as an essential service, then the industry already has stringent health-and-safety protocols in place, and
regulations should include the provision any employer in the sector who needs assistance should contact their
for estate agencies to register themselves association for guidance and support.”
as essential service providers with CIPC and Because the construction sector is one of the major contributors to the
obtain permits to operate. Each agency GDP – and because construction work is labour-intensive – the industry
should then provide permits to its estate has been touted as one of the sectors the government should prioritise
agents to perform their functions. to increase work opportunities and revive the South African economy.
President Ramaphosa addressed the The Construction COVID-19 Rapid Response Task Team is an industry
nation on 13 May 2020 and announced that grouping that was convened specifically to charter a recovery plan for
business activity will be expanded allowing the construction sector. It incorporates the entire construction value
certain changes to Alert Level 4 regulations. chain, which includes suppliers, manufacturers, property developers,
We wait in anticipation for a ray of hope that built environment professionals, and various contractors (main contractors
due consideration will be given to the real and subcontractors).
estate industry to commence business.
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 17education
Leadership in a COVID environment
With massive uncertainty around how quickly the economy will recover, we
are trying to get a handle on the scenario in which we find ourselves. Added to
this is the health of our country and our planet. Being a large, medium or small
enterprise has become difficult, and there is huge pressure on organisations
to continue operating in this environment so as to minimise the impact on our
economy. The post-pandemic world will place a huge amount of responsibility
on our leaders…
Compiled by Maud Nale
I t is with these comments that Mike
Saunders, CEO of DigitLab, introduced
delegates to the subject of leadership in
The idea of thinking
hard and moving swiftly
In any crisis, our natural tendency makes it
a COVID environment. He went on to difficult to think clearly about anything that
share the insights that have helped him is happening. Added to this is the leadership
understand how to tackle leadership anxiety – the awareness that the decisions
within the COVID experience, and to we make will affect many people across the
understand the difference between globe. To make things even more chaotic,
leading in a crisis (such as the one we do not have a benchmark against which
we find ourselves in) and leading in to compare ourselves in this crisis. We do not
an opportunistic environment (similar to know whether we are dealing with it well, or
the one we’ve been living in for the past if our business is doing well in comparison
few years). to other businesses or people who have
experienced similar crises. We do not have
As leaders, we need a benchmark to understand whether we are
to support the bigger picture doing well or not, if what we have done can
DigitLab CEO Mike Saunders The government is dealing with issues of a be expected or whether we need to be doing
massive scale and international consequence. more. All this tallies up and starts to play
As a country, we are not in this big picture on our mind, creating massive amounts of
on our own and in isolation. The fact remains anxiety and turning our mind away from the
that we need to deal with the virus in the big picture.
“Once we have given ourselves most responsible way, a way that’s strong As leaders, we must find ways to be able to
the gap to think hard, we need to and powerful and that solves the problem pull ourselves out of that, said Saunders. “We
move swiftly and with confidence in the long run. Organisations that ‘’buck’’ need to gather as much wisdom as possible,
and break the system down by doing things but we need time to think and deliberate to
– because we do not have time to
out of desperation will be the ones to bring the best of ourselves to that fore. We
waste. We must solve the health, become detrimental to the rebuilding of need to force ourselves to work out of our
economic and societal issues, our economy. Understanding how we fit considered mind-set rather than our urgent
into the bigger picture both nationally and ‘crisis’ mind-set.
because the economy will not
internationally, helping to rebuild and being “Once we have given ourselves the gap to
survive in its current state for long. compassionate are all important pieces of think hard, we need to move swiftly and with
Things must develop faster.” our leadership responsibility. confidence – because we do not have time to
18 SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020education
“As leaders, we need to create order
so that our employees can find a
sense of growth through this crisis,
instead of anxiety and panic.”
waste. We must solve the health, economic the landscape continues to change daily.
and societal issues, because the economy “Your vision for your business does not need
will not survive in its current state for long. to die because of COVID,” he said. “You do not
Things must develop faster. We can do that need to push yourself so far into an essentially
in confidence because in a space of anxiety- driven mind-set that you give up on your
driven people, confident leadership will stand ideas. Your vision is one of the few things that
out. People will look to that and will walk might be able to create stability in your team.
with us on this road.” Keeping in line with that vision and making
decisions that will enable us to execute on
The balancing act that vision has helped us create an incredibly
and creating order solid team who are achieving things that
“As leaders, we spend a lot of our time most businesses are currently not achieving.
‘stripping people out of their comfort zone’, So keep your vision alive during this process;
and into a space that is a little more chaotic do not let it die. Assess your business strategy,
and uneasy,” said Saunders. “But we know that goals and tactics on a day-to-day basis in line
if you have one foot in an orderly environment with that vision. Do not let your vision die.
and one in a chaotic environment – the point “During this time, people are struggling
at which you are stretched – it results in a to hold on to hope. Your vision as a business
balance, where people find the greatest sense might be the only one that they have in their
of happiness. Our job, then, is to find a space world right now. It could be one of the most
in which our employees and team have one compassionate things you could do for some
foot in each of these environment scenarios of the people on your team, because it will
and are comfortably balanced within them. give them a reason to wake up in the morning
“If we push them too far into the chaotic and to carry on with the things that matter.”
environment, they become anxious, start
acting in an irrational manner, and stop Priority transformation
moving and growing. As leaders, we need to As things change, Saunders says that we
create order so that our employees can find will see a need for a certain set of priorities
a sense of growth through this crisis, instead to come into business. He coined the term
of anxiety and panic.” “priority transformation”, a process where
leaders could be focusing their energy in
Keep our vision alive more of an operational mind-set around the
Saunders reiterated that the world is changing transformation that is necessary to start
fast, and that we need to reasses the issues the survival process of coming through this
continuously to keep our vision alive, because economic environment.
SOUTH AFRICAN PROPERTY REVIEW – JUNE 2020 19You can also read
