State Blinks on PPRA’s BEE Rule. Court Will Decide What Stands

Sakeliga’s case gathers pace as Ministers step aside and the industry asks what comes next

A year of regulatory whiplash in the property sector has come to a head. Lobby group Sakeliga says Trade, Industry and Competition Minister Parks Tau has withdrawn his opposition to its court bid against the Property Practitioners Regulatory Authority. Human Settlements has already indicated it will abide by the court’s decision. That leaves the PPRA exposed in a case that could reset how transformation rules interact with licensing in real estate.

At stake is a simple but high impact question. Can the regulator refuse an estate agent’s Fidelity Fund Certificate because the business does not meet a minimum BEE level. Without an FFC you cannot legally trade. There are roughly 40 000 FFCs in the market, most of them small agencies that live month to month.

What changed this week

Sakeliga confirmed on Tuesday that Minister Tau has withdrawn his opposition. The case still proceeds in the North Gauteng High Court, but without two heavyweight ministries pushing back. For Sakeliga, this is momentum. For the PPRA, it is a lonely road to convincing a judge that its earlier stance was lawful.

How we got here

• March 2024
  The PPRA warned that failure to comply with BEE could block new or renewed FFCs. In a webinar, officials said applications would need a BEE certificate at level 8 or better.

• Pushback and August reversal
  After sustained industry pressure, the PPRA chair wrote to REBOSA indicating the regulator would no longer require a level 8 BEE certificate with FFC applications. Sakeliga called this a tactical retreat, not a resolution.

• January 2025
  Sakeliga filed its court papers against the PPRA and the relevant ministers and made them public.

• Now
  Trade and Human Settlements step back. The court will still hear the matter and decide on legality and limits.

What the PwC-style argument is not, and what Sakeliga says it is

This is not a case against transformation in principle. It is a challenge to a licensing gate that, in Sakeliga’s view, had no legal basis. The group argues there is no rational link between qualifying for an FFC and holding a BEE certificate. It highlights a practical absurdity too. Micro firms below turnover thresholds that do not participate in BEE were still told to pay about R10 000 each year for a certificate that would be stamped non compliant just to file an FFC application.

Sakeliga is also asking the court to curb what it calls an overreach in the PPRA’s expanded definition of property practitioner. That definition now ropes in developers, HOAs, administrators, auctioneers, bond originators and even marketing firms. In one sweep, thousands of additional businesses and billions in turnover fell under PPRA oversight.

Industry reaction and street level impact

On WhatsApp groups and X, small agencies cheered the Ministers’ retreat. The mood is practical rather than ideological. Owners talk about cash flow, renewals and audit costs in a slow market. One principal put it plainly. Pay for the audit, pay for the certificate, then still wait for an FFC. Another asked why licensing was being used to police BEE when verification already exists through other channels.

Larger groups are more measured. They support transformation targets but worry about regulatory certainty. If rules swing from webinar to letter to court order, planning and compliance budgets become guesswork.

The policy backdrop many missed

BEE and sector charters sit with Trade and the codes, not with licensing bodies that were created to protect consumers, manage trust accounts and keep a clean register of practitioners. That history matters. When a regulator uses the FFC as leverage for unrelated policy goals, it risks overstepping its legislative mandate. That is the crux of the court fight.

Why this matters beyond estate agents

Linking operating licences to external scorecards sets a template other regulators could copy. If the court finds the PPRA acted outside its powers, it will send a clear message about the limits of administrative coercion. If the PPRA prevails, expect more agencies across the economy to test similar levers.

What Sakeliga still wants from the court

1. A declaration that the PPRA cannot tie FFCs to a minimum BEE level.

2. An order rolling back the expanded property practitioner definition that pulled 12 new categories into the net.

3. Costs and clarity to stop a repeat of last year’s on and off notices.

Sakeliga says its replying affidavit is being finalised. After filing, the parties will await a hearing date.

What to watch next

• Whether the PPRA defends the old position or formalises the August backtrack in a way the court can bless.

• How the court treats the delegated powers in the Property Practitioners Act.

• The knock on for small firms. A final order that removes BEE as an FFC gate will cut red tape and costs for the smallest players while leaving national transformation policy to operate through its intended instruments.

For now, the politics have cooled and the law will speak. Whatever the outcome, the property sector needs a rulebook that is clear, proportionate and lawful. Compliance should be predictable. Transformation should be targeted. Licensing should do what it was created to do. Nothing more and nothing less.

{Source: Moneyweb}

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