Real estate closure ‘has wide impact on economy’

2020-05-06 14:00

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More than 40 000 estate agents have been left without income since the lockdown was instituted on March 26.

As they work on a commission basis, they have been unable to claim UIF, leaving them in a very vulnerable financial position.

Bruce Campbell, of Natal Property, said the strict government regulations on gatherings and the fact that only those deemed to be involved in essential services are allowed to work has effectively closed down the industry.

President Cyril Ramaphosa’s announcement that the country would be moving to lockdown phase four had raised hopes that the sector would be able to get back to work.

These hopes increased with the news that the deeds office and Msunduzi municipal rates office would reopen on May 4. Conveyancing firms also returned to work yesterday.

Dr Andrew Golding, chief executive of the Pam Golding Property group, said the deeds office reopening was positive news for homeowners, whose sales can now be processed.

The money released will offer a relief, especially to distressed sellers who remain indebted and under significant economic pressure from creditors who are similarly impacted by the constrained economic environment.

“The deeds office opening also means a short-term easing of cash flow for the largely commission-based real estate industry, potentially helping to save jobs, while providing much-needed revenue for government coffers,” Golding said.

“This is of course dependent on all deeds offices — which operate independently of one another — opening and returning to normal operating strength.

“While the current sales transactions and the backlog sitting in the deeds office will release cash flow and assist in the short term, it is hoped that this is a prelude to the real estate industry being granted permission to operate at full strength ...”

Golding also welcomed the news that conveyancers are back at work to help with the processing of property transfers and the issuing of rates clearance certificates. “For buyers it means that their property acquisitions can now reach final conclusion, although it remains to be seen when they will be able to move into their new homes, particularly as removal companies are not yet permitted to operate, and given the restrictions on the movement of individuals,” he added.

For individual estate agents, however, the outlook remains grim. Under the lockdown regulations they may have to wait until phase two before they can work.

This is unlikely to happen soon given that the government is estimating that the peak of the Covid-19 pandemic will probably only come in October.

“There are people who are unable to pay rent or bonds ... [and] even those people who have been able to get UIF payments are struggling because it’s not really a lot of money,” said Campbell.

The newly-formed National Property Practitioners Council (NPPC), which consists of various representative bodies from the real estate sector, is making its first order of business addressing the economic impact of Covid-19 on the sector and to help source relief measures.

They are appealing to government to relax lockdown restrictions to ensure the continuation of the sector’s economic supply chain; and have asked the industry regulator, the Estate Agency Affairs Board (EAAB), to waive some fees and penalties.

Collectively, the NPPC represents the interests of over 40 000 agents, brokers, professionals, consultants, developers, managing agents, and financing institutions.

In the meantime, property companies are encouraging house hunters to view potential new homes online.

Golding said: “What the lockdown has quickly demonstrated is that as a key priority, and without in any way precluding the invaluable expertise and negotiation skills of our agents who are all currently operating remotely on a decentralised basis, we need to rapidly re-engineer the real estate transaction process in order to be capable of transacting from A to Z online.”

The Rawson Property Group has also gone virtual, connecting buyers with sellers and landlords with tenants during lockdown and social distancing.

“There’s no doubt that we have needed to act quickly to continue to serve our customers in these challenging times,” Tony Clarke, managing director of the company, said.

“No matter what is happening in the world, people still need a roof over their heads, which will always mean that they need to be able to keep buying, selling and renting property.

“The value of virtual show houses at the moment is obvious. It’s going to be some time before any of us will feel comfortable having dozens of strangers visiting our homes, so enabling them to take a live, high-quality, virtual walk-through of our properties, and having an interactive experience with our agents in real time, is essential.”

Campbell said Natal Property had also seen a rise in the number of people viewing properties online, adding: “But most people don’t want to choose a house that way. They want to be able to view it properly.”

After hearing confirmation that it will not be reclassified to operate under level 4 of lockdown restrictions, the real estate industry has joined forces to implore government to reconsider, explaining that this decision affects not only those employed in the sector, but has a far reaching impact on the economy as a whole.

Regional director and CEO of RE/MAX of Southern Africa Adrian Goslett said real estate contributes about five percent of South Africa’s GDP, and about 42 000 people work in the residential real estate sector. In addition, “banks, originators, conveyancers, and many more feed off real estate”.

“Beyond this, the importance of the real estate industry in providing liquidity in the market cannot be over-emphasised. Property to the value of R20 billion [is registered] in the Deeds Office every month ...

“If people are unable to sell their property, then they cannot raise any capital. The number of distressed sellers is on a rapid rise,” Goslett said.

Goslett said business owners needing to sell property to save their businesses would also be impacted by the continued closure of the real estate sector. Real estate is currently in operation in most other countries, he pointed out.

“In my letter to Minister [Lindiwe] Sisulu at the Department of Human Settlements on 27 April, I outlined how real estate offers minimal threat ... I further outlined how the industry could be regulated to mitigate risk by implementing strict regulations at each level of easing lockdown restrictions. After the ministers have reviewed our submission, I feel frustrated to learn that even garden services are allowed to operate before real estate. These businesses bring crews of six-10 people at a time through your home, whereas real estate can be limited to one-one or even one-0 if agents are allowed access and are able to do virtual open houses using technology,” Goslett said. — WR.

Read more on:    pietermaritzburg  |  real estate

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