IEASA National - News

Draft Legislation will place further tough watch dog roles on South African Estate Agents   Article Date :30 May 2006 Government places responsibilities on estate agents. The government, in its determination to see greater transparency and honesty in the business world, is loading one group, the estate agents, with immense responsibilities which will make their jobs “incredibly complex”, says Bill Rawson, President of the Institute of Estate Agents. “The checking and law enforcing responsibilities being placed on estate agents,” said Rawson, “are now greater than ever before - and the penalties are really intimidating. I am concerned that many agents may not have the skills to carry out these new duties.” Particularly onerous, said Rawson, is the new draft legislation proposing that it is the agent’s duty to investigate possible money laundering through property transactions, as, it is alleged, Brett Kebble did. Failure to do so, said Rawson, can result in a fine of up to R10 million or imprisonment. “The law sounds a good idea,” said Rawson, “but how does an agent go about uncovering the sources of a client’s cash? If, as required, he asks for proof, he could easily antagonise his client for life. Even if he gets the necessary evidence, how is he to know that it has not been doctored?” Agents, said Rawson, will now also be required to take responsibility for ensuring that foreign sellers pay the stipulated Capital Gains Tax. “Surely,” said Rawson, “the client’s tax affairs are not part of an estate agent’s responsibility? The right person to enforce this ruling is the conveyancing attorney who, apart from certain other factors in his favour, has the appropriate background and training for this work. "Estate agents in addition now have to ensure that buyers are up-to-date with their tax payments before purchasing a property and this could delay or even prevent them from taking transfer. “Again, on the face of it, this appears to be a sound idea,” said Rawson, “but as the agent is not entitled to client information from the Receiver of Revenue, it is impossible for him to know the truth until transfer is applied for - and at that point it will be the transfer office, liaising with SARS, that will blow the whistle.” Rawson pointed out that many innocent parties could suffer because of one buyer’s tax misdemeanours. “Often a transaction of this kind is one in a chain, all dependent on each other. The seller possibly plans to move onto another property purchase whose owner, in turn, has budgeted to spend his sale money elsewhere. All could be stymied by SARS punishing the one defaulter by refusing to allow transfer.” As these new procedures are already being implemented, said Rawson, it would be wise not to move out of any property, the sale of which is subject to a sale elsewhere, until that transfer has been registered. Equally problematic to the industry, said Rawson, is the fact that the proposed new National Credit Bill will make lending institutions responsible for ensuring that buyers can in fact afford the home loan for their new purchase. Agents may well be called on to help with this. “This legislation, although again in most respects commendable, will be an invasion of privacy,” said Rawson. “Potential borrowers will face a barrage of questions about their earnings, domestic budgets and other debits and commitments - and it can be assured most will resent this. I can see no way out of the problem at this stage - but SARS should note that people have an intense dislike of these “Big Brother” investigations and it would be a pity if agents are expected to act as informers.” The essential simplicity of the estate agent’s role, said Rawson, disappeared several years ago - and the new laws will make their lives still more complicated. “The only solution for most new agents will be to ensure that they attend many of the Institute's training programmes and keep up-to-date on legal and financial matters. “It could be argued that entry qualifications to being an agent, currently non-existent, are the answer - but I would prefer to see training become ongoing and taken more seriously, along with strict insistence on passing the Estate Agency Affairs Board examinations. “Estate agents will have to become slicker, cleverer and better informed. That may not be a bad thing - but its achievement will call for new efforts from all agency principals,” said Rawson. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE