PPRA Reverse Strict BEE Compliance Rules for Property Sector

South African business advocacy group Sakeliga has announced a victory regarding the enforcement of high-level Broad-Based Black Economic Empowerment (B-BBEE) compliance requirements. The Property Practitioners Regulatory Authority (PPRA) has reversed its decision to require Level 8 BEE compliance certificates for property practitioners applying for Fidelity Fund Certificates (FFCs).

This decision marks a major shift in a policy that had caused concern across the industry, particularly among smaller property practitioners, and has been hailed as a win for businesses in the sector.

The Property Practitioners Act and BEE Compliance

The issue stemmed from a new policy set out by the PPRA, which regulates the property sector under the Property Practitioners Act. The policy stated that FFCs—required for property practitioners to operate—would be denied if applicants did not meet BEE compliance requirements. Until then, FFCs were issued based on the requirement of having a BEE certificate, not necessarily being BEE compliant.

Under the initial interpretation, property practitioners were required to achieve at least 40 points on the BEE scorecard—equivalent to a Level 8 compliance—to obtain a valid BEE certificate and continue their business operations.

The PPRA’s decision sparked widespread concern, particularly for small businesses, sole proprietors, and smaller property agencies, who felt that the stringent BEE compliance requirements were excessive and financially burdensome. These concerns prompted groups like Sakeliga to take action.

Sakeliga Contests BEE Compliance for Property Practioners

Sakeliga, which advocates for a more business-friendly regulatory environment, took swift action against the PPRA’s decision. The group argued that the requirements set forth by the Property Practitioners Act were being misinterpreted. Specifically, Sakeliga’s legal team argued that the Act’s reference to a “valid BEE certificate” did not necessarily mean one that complied with the rigid Level 8 requirement.

In response, Sakeliga sent letters of demand to the PPRA, contesting the imposition of BEE compliance as a barrier to obtaining FFCs. The group argued that the legislation should not be interpreted in a way that forced property practitioners to comply with BEE at such a high level, particularly given the financial strain it would impose on smaller players in the industry.

As a result, the PPRA has now walked back that change. In a letter sent to the Real Estate Business Owners of South Africa (Rebosa) in August 2024, the PPRA confirmed that it would no longer require Level 8 B-BBEE certificates with new FFC applications.

Ongoing Concerns for Property Practitioners

While Sakeliga has declared this victory, the group continues to voice concerns over other aspects of the regulatory environment for property practitioners. According to the advocacy group, although the most urgent aspect of the regulations has been walked back, two other problems remain:

1. 1. The PPRA still mandates that all property practitioners, not just estate agents, must possess a FFC. Sakeliga asserts that this should be reversed as it gives the PPRA reach over thousands of businesses, including property developers, landlords, auctioneers, and bond originators.
   2. The Property Practitioners Act still stipulates that FFCs may only be issued to applicants with a valid B-BBEE certificate, even though the requirement for BEE compliance at a specific level has been relaxed.

“At least for now, the PPRA is reverting back to accepting that ‘valid’ cannot be taken to mean ‘compliant’ with B-BBEE, yet the certification demand is itself an unjustified, costly, and harmful infringement on the freedom to do business and serve society,” the group said.