Property regulator says do BEE or close down your business

Full statement

Businesses classified by the state as “property practitioners” have been told to do BEE or stop operating.

On 13 March 2024, the Property Practitioners Regulatory Authority (PPRA) announced that it plans to refuse to issue or renew Fidelity Fund certificates for businesses with less than 40 points on a BEE scorecard.

Since the Property Practitioners Act (22 of 2019) prohibits doing business as a “property practitioner” without a Fidelity Fund certificate, this is an existential threat to businesses.

Sakeliga opposes the PPRA’s unlawful, unconstitutional, and harmful conduct. In a letter to industry role-players this week, we invite them to contact Sakeliga if they wish to support a comprehensive legal challenge to stop the PPRA and uphold their freedom to do business without political permission.

Despite there being nothing in the Constitution, the Broad-Based Economic Empowerment Act, or the Property Practitioners Act to make a minimum level of BEE compulsory for “property practitioners”, the PPRA has decided that BEE certificates must have at least 40 points to be valid.

According to the PPRA’s Acting Transformation Fund Manager in its 13 March industry webinar:

“if you score anything below 40 and if your BEE certificate is non-compliant, then we will not be able to issue you with a Fidelity Fund certificate.”

The PPRA’s announcement means that tens of thousands of property business are at risk of being prohibited from operating. Annually, more than 40 000 Fidelity Fund certificates are issued to not only estate agents, but also property developers, property administrators, landlords, direct property sellers, auctioneers, property advertisers, and more.

Fidelity Fund certificates are documents issued by the Property Practitioners Fidelity Fund. The Fund’s purpose is to ensure that payments held in trust by “property practitioners” remain safe and that clients can be compensated in case of theft. The Fund has nothing to do with BEE, yet it is now being abused for the illegitimate purpose of holding “property practitioners” ransom to political demands.

The PPRA is committing a vast and unlawful overreach.

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It is making the political instrument of BEE a precondition for participation in the economy. It is trying to force “property practitioners” to relinquish significant portions of their businesses under untenable terms. As such, it is a form of expropriation and one that sets a harmful and unacceptable precedent for state intervention in the economy.

While the current enforcement drive is aimed mostly at companies and ostensibly offers some leniency to natural persons or sole proprietors operating below certain turnover thresholds, we caution that this leniency is arbitrary, unreliable for planning and legal purposes, and undoubtedly temporary.

Ultimately, a B-BBEE certificate is a political instrument and unrelated to business – it can never be a valid precondition to participating in the economy, creating value, and serving customers and clients.

Third wave BEE

The latest developments at the PPRA form part of an insidious third wave of BEE.

The first wave happened in the 1990s, when business deals across racial divisions proliferated without statutory force. The second wave commenced in the early 2000s, when BEE took a statutory turn with the Broad-Based Black Economic Empowerment Act (2003) and the Preferential Procurement Policy Framework Act (2000). In this second wave, BEE was enforced whenever business was done with the state – a vertical application of BEE.

In the past five years, the third wave of BEE took off, in which the state attempts to make BEE compulsory not only for doing business with the state, but for doing any business at all and for obtaining a license to conduct a profession. In contrast to the vertical (i.e. business-to-state) application of BEE, this new horizontal (i.e. business-to-business) enforcement of BEE is intended to place all economic activity under political control – even business that has nothing to do with the state.

Sakeliga is currently investigating 10 government departments and 14 further state entities for attempts to make it illegal for businesses to operate unless they subject themselves to BEE.


For Sakeliga’s letter to industry role-players, click here.

For more information or to follow developments, visit our dedicated webpage.