PPA sets a change in competency of Property Risk management

The proclamation of the Property Practitioners Bill is a few months away and introduces a new regime of competency requirements.

The Bill have passed all hurdles in the legislative process and are just awaiting the signature of the State President, Cyril Ramaphosa. But the enactment may have dire consequences for the SA Institute of Occupational Safety & Health (Sasiosh). PropertyWeb spoke to Dr. Mario Steenkamp, Managing Director of PRISM, the Property Risk Management division of the Cygma Group about the changes and how it affects the Risk Managers in South Africa. Below is a transcript of the conversation:

How will the PPA affect Property Risk Managers in the future?

One of the biggest changes in the Bill is the definition of a Property Practitioner in Section 1 which now includes any person who assesses property to determine the defects, value for money and fit for use as part of the conclusion of an agreement to sell and purchase, or hire or let a property. This means that any person who is involved in Property Risk from an occupation risk, investment risk or conditional risk point of view would be deemed to be a Property Practitioner and would require registration with the Property Practitioners Board.

How does this affect PRISM and other companies like yours?

PRISM is mostly involved in Occupation Risk Assessments advising potential tenants of the risk associated with buying or leasing a property for commercial purposes. We look at the risk of complying with legal requirements applicable to the business and advise on the potential cost of compliance to ensure the premises meets the minimum standards in terms of illumination, ventilation, storage and stacking, ablution etc. From this we then draw a property risk profile for a client or tenant and advise them of the suitability of the premises for their own purposes.

Given the definition, we would fall solidly within that which means our Property Risk Assessors would be required to comply with the PPA.  In addition, we also provide this service to attorneys as part of their service to clients.

What criteria do you currently use to assess competency of your consultants?

When we engage a new consultant to provide Occupation Risk assessments we rely mostly on the South African Institute of Occupational Safety & Health(Saiosh) who assess and register persons at graduate level and issue them with a certificate based on the National Qualifications Framework. But this seem to have become useless under the PPA as no mention is made of such certification.

Our only option is to wait and see what the PPA and the PPB(Board) comes up with in terms of competency requirements for “property practitioners”. We have already informed our consultants that this change could affect their future employment.

Are there any specific competency requirements set in the Bill?

No, not directly. The Bill allows the Board to set standards of competency, in similar fashion as the Estate Agency Affairs Act allowed for the competency requirements of Real Estate Agents. We are thus not sure what these requirements will be as the Board is yet to be established. I am sure that the process will involve stakeholders such as us, but until then, we have no option but to issue a cautionary notice to our consultants.

Would Saiosh be allowed to participate in the competency assessment process?

I am sure they would be allowed. But the question you need to ask is do Saiosh have the competency to assess property practitioners? This is a greenfield, even for the Safety industry. In the past, part of a safety inspector’s job at the then Department of Manpower, was to assess the suitability of a building for use as a factory for registration purposes. Following the deregulation of businesses this process was abolished by the Department of Labour in 1994 when they scrapped the registration of factories.

Since Saiosh was established long after that, I doubt if they have the competency within themselves to provide any valuable input for the PPB to work with.

How does the PPA affect property managers like Growthpoint, Trafalgar and Old Mutual?

Interesting question. There are much speculation in the media about the affect of the PPA on developers and managing agents etc. Once again we need to look at the definition of a Property Practitioner. Here we need to look at part (b) and (c) of the definition.

Part (b) includes includes any person who sells, by auction or otherwise, or markets, promotes or advertises any part, unit or section of, or rights or shares, including time share and fractional ownership, in a property or property development.

This would include the companies you mentioned.

Part (c) however excludes managing agents as defined in section 1 of the
Community Schemes Ombud Service Act, 2011. This applies to any person who provides “management services” to a community scheme for reward. The management services is however not defined as such. A managing agent providing a risk assessment service would therefore not be required to comply with the PPA when it comes to community schemes. This includes any scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings, including but not limited to a sectional titles development scheme, a share block company, a home or property owner’s association, however constituted, established to administer a property development, a housing scheme for retired persons, and a housing co-operative as contemplated in the South African Co-operatives Act, 2005 (Act No. 14 of 2005).

We find that many industrial and commercial parks and even shopping malls fall within this definition. This means that the managing agent of these types of  properties would not need to comply with the PPA.