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Prop. developers face new hurdles

Prop. developers face new hurdles

Property developers are up in arms because they were not consulted about the new National Home Builders Registration Council's (NHBRC) code of conduct, which appears to target them.

NHBRC is the council set up by government to protect the interest of housing consumers, and to regulate the home building industry, has a new code of conduct that appears to heavily favour property consumers.

The South African Property Owners Association (SAPOA) which represents the commercial and industrial property industry has step in to speak out for its members. SAPOA CEO Neil Gopal says that "the code of conduct has widespread repercussions for our industry and will affect all residential property developers and consumers.

Some of the changes made by the NHBRC that affect the members of SAPOA included:
• that a homebuilder shall not demand payment from a housing consumer of more than 10% of the contract price of a fixed cost building contract and may in terms of clause 5.5 also not demand a deposit of more 10% of the contract price.
• that any deposit paid may only be used for payment of labour and materials with the result that if the consumer defaults in some way, the homebuilder's remedy of using the deposit to cover their damages has been negated.
• that a homebuilder must give a consumer 30 calendar days to examine a contract before requiring them to sign- effectively giving a consumer a 30 day option in respect of the purchase of a property.

These are just some of the changes to the code of conduct that impacts on SAPOA's some 860 members which consists of property owners, property developers, property managers, large institutions, banks and other property sector stakeholders.

Gopal says that "we are concerned that the vast majority of comments submitted to the NHBRC with regard the code of conduct have not been taken into consideration"

He adds that SAPOA cannot accept the far-reaching changes that the NHBRC are putting in place, which effectively override certain existing legislation governing the industry.

One such legislation is the Alienation of Land Act which provides what is required in a contract relating to the sale of immovable property. What the code of conduct proposes is its own minimum clauses that must be contained in a contract- this conflicts with the Alienation of Land Act.

This code also provides that the homebuilder must specify an item for item amount (incl) VAT of the materials to be installed and the contract sums for specific works by persons other than the homebuilder which not really possible considering that there is a fixed cost selling price.

SAPOA has requested an urgent meeting with the NHBRC regarding the code of conduct.


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