The combination of the delayed reopening of the Deeds Office together with the announcement of a once off allowance for people to move to new homes, subject to certain restrictions, gave some relief but also left many people confused.
The intention of the allowance, published as Directions in terms of the Disaster Management Act on 7 May* (these Directions were revoked on 14 May 2020 with new Directions), was to bring relief to distressed tenants and home-owners who were prohibited during the lockdown period to move into their new homes. However, many landlords, tenants, buyers and estate agents have been left perplexed and confused by the restrictions surrounding the allowance.
Furthermore, when the government said that the deeds offices will reopen as part of the risk adjusted strategy to be implemented from 1 May during Alert Level 4 – it was expected that the offices will reopen on 4 May. However, there has been a delay in this process. The Department of Agriculture, Land Reform and Development has since explained this delay was necessary to ensure that the required measures were taken to protect officials from being exposed to unnecessary health risks due to the highly contagious coronavirus.
The department in a statement this Monday 11 May announced that all deeds offices would reopen on 13 May. According to the statement all services will be available and all lodgements received, but only conveyancers will be allowed to enter the buildings and then only by appointment.
Who may move?*
Donald Mokgehle, senior associate at Adams & Adams Attorneys, explains the people who are allowed to move in terms of the Directions (issued on 7 May 2020), are:
- Tenants who entered new lease agreements before or during the lockdown period from 27 March to 30 April
- Home buyers who completed the transfer of the property before the lockdown period began
The group who may move home will also be allowed to engage the services of a removal company to help them to do so, provided they have obtained the necessary permit to move from the police station nearest to the address from which they are moving (not the address that they are moving too). They must also have their signed lease agreement or the transfer documents. This is according to the Directions published on 7 May 2020 in the Government Gazette.
*ON 14 May the government published new Directions that removed the restriction that people had to move by 7 June. The new Directions are applicable during Alert Level 4 and no indication is given that this allowance to move house or business is only applicable to people who secured new lodgings/business premises during the lockdown period.
Lack of clarity whether estate agents may register as essential services
Initially estate agencies were left in the dark as to whether residential estate agents – who are still classified as only able to leave their homes for work purposes during level 2 – will be allowed to perform the handover of keys to new tenants as required in terms of the Rental Housing Act.
There still isn’t consensus on this matter. This week TPN Credit Bureau managing director Michelle Dickens said they received confirmation from Shane Brown, the Head of Disaster Management in Port Elizabeth, that estate agents can register as an essential service – this will be only in terms of this directive and for the sole purpose of the handover of keys as well as facilitating incoming and outgoing inspections up until 7 June 2020.
Dickens highlights that this is not back to work as normal as estate agents are still not classified as essential services in Alert Level 4. She recommends that the principal or head of the estate agency provide the estate agent with the permit to perform an essential service and that the permit should be stamped and signed by the principal or head of the business.
All essential service providers must register their business on CIPC and follow the COVID-19 Essential Services steps. Click here to download the: Permit to perform an essential or permitted service
However, others disagree. Mokgehle says although the statement from Dickens regarding the registration of estate agents as an essential service for a limited back to work functions does make sense, that is not his interpretation of the Directions. “Unfortunately I can only comment based on my interpretation of the Directions,” he says and that is that the Directions do not make provision for estate agents to register as essential services providers to facilitate the moving of persons until 7 June 2020.
In the midst of the confusion, some estate agencies are advising their agents rather not to register as essential services. Jacqui Savage, national rentals manager for the Rawson Property Group, says they “highly recommend where possible that inspections are to be conducted by the tenant and landlord via video / photographs etc, with the consent/agreement of the landlord. The reason we feel this is that every district police service has different interpretations of how to enforce the regulations and we don’t want anyone to get arrested”.
More questions than answers?
The once off move will at least bring some welcome relief. Berry Everitt, CEO of Chas Everitt International Property Group, says the allowance to move together with the reopening of the deeds offices and the news that certain banks may perform physical property valuations are at least small steps in the right direction towards hopefully the complete reopening of SA’s real estate industry.
“We will now at least be able to break a couple of logjams that have built-up since the start of the lockdown. For example, tenants who had given notice but were then not able to move at the end of March or April will now be able to do so, enabling their landlords to start collecting rent from them – and their old landlords to advertise and re-let their homes (after deep-cleaning and sanitizing of course),” explains Everitt.
Also those whose new homes were transferred into their names before 26 March will be able to move in now and start paying off their new bonds which will benefit the banks who will start getting some repayments on the home loans that were approved for these buyers.
However, this is also where many problems arise. Tony Clarke, managing director Rawson Property Group, in an open letter to the President, points out that there are buyers who can’t move into their new homes as the sellers of those homes could not find a property to move to with real estate activities still ‘locked down’. Similarly, current tenants are unable to secure new rentals, leaving new tenants unable to move.
Matseleng Mogodi, principal of Snooks Estates in Gauteng, says the conflicting statements about the property industry has caused big confusion. She asks what happens to the vacant properties after these tenants or buyers move out? Surely tenants should move in, but according to the issued directions people who entered new lease contracts after 30 April are not allowed to move now.
The Deeds Office may process property transfers, but most people still prefer to physically view their new property before making a final decision to buy what will probably be the biggest financial investment in their lifetime. Do sellers have any recourse if a buyer decides two or three months later, when lockdown restrictions allow physical viewing of property, that he doesn’t want the property? Should people desperate to move to a new home attempt to deal directly with sellers with estate agents still on ‘lockdown’?
“Too many questions from all angles,” says Mogodi.
“In short, the revision of the regulation allowing buyers and tenants a once off moving right, has little to no effect in itself, unless people can actively source a new property to move into,” says Clarke.
The real estate sector says they hope ‘these small steps’ will end up in the complete reopening of their sector, subject to the necessary health and safety precautions.
“There is only so much a real estate agent can do remotely if they are not allowed to access a home. If real estate services are not reclassified, very few new sales and rentals (if any at all) will be concluded over this time, leaving homeowners and landlords in very difficult financial positions,” explains Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
For thousands of estate agents, lack of sales translates into no income from commission. Goslett says that reclassifying real estate services as level 4 will not only save thousands of jobs in real estate but also help all South Africans access capital through the sale or letting of their property.
Government is yet to publish an official response to the submission made by the National Property Practitioners Council (NPPC) towards the reopening of the property sector. Property Professional have learned though that the Department of Human Settlements has apparently approached the CEO of the Estate Agency Affairs Board (EAAB) to advise them with regards to the submissions received to reopen the real estate sector.
Besides the NPPC the other representative bodies that have also made submissions with regards to the property sector include the Law Society of South Africa (LSSA), the Black Conveyancers Association (BCA), the Mortgage Origination Regulatory Council of SA (MORCSA) and the Banking Association of South Africa (BASA).