Comparison of Housing Consumer Protection Measures: Current Legislation vs Proposed Bill

The Housing Consumer Protection Bill (B10-2021) aims to repeal the National Housing Consumers Protection Measures Act of 1998 and introduces key changes, including expanded definitions of "Home" and "Home Builder," new definitions like "Build," clarification on definitions of terms like "MEC," and adjustments to exemptions and board composition. The comparison with the current legislation highlights the significant modifications proposed in the bill.

• Housing Consumer Protection
• Legislation Changes
• Home Builder Definitions
• Proposed Bill
• Housing Market

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1. HOUSING CONSUMER PROTECTION BILL [B10-2021] ACT V BILL CHANGES: MAY 2023

2. Background The Bill repeals the current Act (National Housing Consumers Protection Measures Act (Act 95 of 1998) (as Amended). The presentation set out the high level changes to the Housing Consumer Protection Bill in comparison to the current Act (Housing Consumers Protection Measures Act 95 of 1998).

3. Current Legislation v Proposed Bill (Chapter 1: Definitions) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Definition of Home excludes Boarding house, hostels, institutional facilities such as hospitals, prisons, orphanage, welfare accommodation and mix use developments constructed with less than 75% of the floor area designed for residential purposes Only New Homes (excl. repairs, alterations & extensions) Definition of Home expanded includes (Section 1&2): Boarding house, hostels, residence within institutional facilities such as hospitals, prisons, mixed use residence(com and res), timeshares and share blocks but exclude a hotel, motel, a shack and any dwelling unit without its own bathroom or kitchen Definition of Home Builder A person who carries on the business of a home builder which include building or undertaking to build a home or causing a home to be built for any person Include an owner builder who has not applied for exemption and a person building a for purposes of sale, leasing or renting out Provides for owner builder exemption New Definition - Build includes (Section 1 & 2) Repair, renovation, alteration and extension which necessitates submission of building plans & conversions (commercial to residential) Definition of Home Builder (Section 1) A person who builds or undertakes to build a home or cause a home to be built for any person Include a person who builds a home for himself or herself or for purposes of a sale, leasing or renting out No owner builder exemption Definition of MEC Act makes reference to MEC but there is no definition of same Definition of MEC, HOD, MM and MMC (Section 1, 32 & 33) Bill makes reference and defines MEC, HOD, MM, MMC and provides for their duties and

4. Current Legislation v Proposed Bill (Chapter 1: Definitions) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Definition of day No definition of day in the Act Day only defined in the regulations dealing with prosecution of home builders Definition of day (Section 1) Day means a Calendarday for purposes of claims (to make it easy to compute warranty period) and adjudication of disputes (to ensure speedy resolution) and it means business day in any other case, excluding the builders break (16 December to 15 January), Saturday, Sunday and a Public Holiday Exemptions Owner Builder exemptions (sec 10A read with sec 29) General exemptions Section 29 exemptions Exemptions (Section 2) Minister may exempt any person or homes in exceptional circumstances, in the public interest and if the exemption is not contrary to the objectives of the Act on certain conditions Composition of the Board No specific reference to town planning and property development Act specifies representation of certain national government departments Composition of the Board (Section 6) Bill specifies knowledge and experience required in the composition of the Board Bill no longer provides for representatives from certain national departments and government entities Persons with town planning and property development expertise have been added

5. Current Legislation v Proposed Bill (Chapter II: Name and Composition of Council) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Name of Council In terms of the Act, the Council is known as the National Home Builders Registration Council (NHBRC) The Act does not specifically make a distinction between Council as a juristic person and as an Executive Authority Name of Council (Section 4) Bill proposes the name: National Home Building Regulatory Council (NHBRC) The name emphasizes the Regulatory role of the NHBRC in the building industry The Bill specifically makes a distinction between Council as the juristic person and an Executive Authority, the latter being the oversight body (Board) Appointment of CEO and CFO Act makes provision for Council to appoint the CEO and for the latter to appoint all other members of staff, including the CFO Appointment of CEO and CFO (section 15) The Bill proposes the appointment of the CEO and CFO by the Board

6. Current Legislation v Proposed Bill (Chapter III: Registration of Home Builders) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Registration of home builder Expansion of the home builder data base (section 23 and 24) The Act makes provision for the Council to keep a register of home builders The Act makes no reference to an integrated database The Bill makes provision for an integrated database to ensure reliable information to facilitate management and policy decisions and assist housing consumers Registration to be linked with the grading requirements Registration of developer and enrolment of a home Registration of developer and enrolment of a home (section 25) Act requires registration of developer but not clear on responsibility regarding enrolment Bill makes it clear that the Bill apply to both the developer and the home builder and clarify the role of the developer in respect of enrolment

7. Current Legislation v Proposed Bill (Chapter V: Financial Matters) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Funds of Council Funds of Council (Section 34) Act makes no provision for appropriation of funds from Parliament Bill makes provision for money appropriated from Parliament in addition to existing revenue streams(Section 34(1)(d)) Bill makes provision for use of the surplus to the warranty fund towards developmental programs in the home building industry (Section 34(3))

8. Current Legislation v Proposed Bill (Chapter V: Financial Matters) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Warranty cover from date of occupation Warranty cover commencing from construction + warranty period (section 40 and 65) Increase protection of the housing consumer by affording early cover Easy access to the builder during construction as opposed to after occupation Lower cost of remedial works during construction stage Powers to extend the warranty period by the Minister, subject to actuarial assessment, feasibility studies Extension of the roof leak cover to 24 months: to consider undertaking appropriate assessments to confirm the viability of the proposal Act makes provision of home builder s liability for the costs of alternative accommodation for the housing consumer where required. (Section 48(3)) Minister may prescribe reimbursements to the housing consumer, for any losses suffered, which may be deducted from the administrative fine The Act makes provision for a fixed 5 years major structural defect and 12 months roof leak Act make no provision of home builder s liability for alternative accommodation for housing consumer where required DC may order that 80% of the fine should be paid to the housing consumer

9. Current Legislation v Proposed Bill (Chapter V: Financial Matters) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Minimum and Maximum amount payable from the warranty fund Minimum and Maximum amount payable from the warranty fund (section 43) The Act empowers the Minister to prescribe the above amounts The Bill retains the Minister s powers as per the Act Adjudication of contractual disputes between home builders and housing consumers Adjudication of Contractual Disputes between home builders and housing consumers (section 55, 56 and 57) Provision for referral of dispute to adjudication in terms of procedures prescribed by the Minister 45 days timeframe to finalize adjudication Council may prescribe conditions and monetary threshold for adjudication services at the cost of Council Makes provision for Council to assist in the resolution of dispute No prescribed dispensation to facilitate this process

10. Current Legislation v Proposed Bill (Chapter VII: Enforcement and ADR) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Appointment of Disciplinary Committee (DC) members Appointment of Compliance and Enforcement Committee (CEC) (Section 62(2); 63(5) ) In terms of the Act, the DC is a committee of Council and therefore, appointed as such The Bill makes provision for the Minister to appoint the CEC members Duties of inspectors relating to anti corruption, conflict of interest, using confidential information for personal benefit extended to CEC members Term of office of the DC Term of office of the CEC (Section 62(3) In practice the terms of the DC was linked to term of Council as it is treated in the current legislation as one of the committees of Council Bill prescribes a minimum period of 4 years

11. Housing Consumers Protection Measures Housing Consumers Protection Bill Current Legislation v Proposed Bill (Chapter VII: Enforcement & ADR) Act 95 of 1998 (Current Legislation) Enforcement penalties/fine for contravention of the Act (DC) Fines not exceeding R25 000.00 Warning Withdrawal of registration Enforcement penalties/fine for contravention of the Bill (CEC) (Section 65(2) and (5); 63(1)(e) ) 10% of the project value 100% of the remedial costs as expended; or A maximum fine of R1million The above penalties are a maximum the CEC may impose lower fines in this regard Impose suspension or cancellation of registration May also impose any alternative or other appropriate relief in line with the objectives of this Act Role of inspectors The Act only makes provision for appointment of inspectors, their power to enter and inspect premises and power to request specified documents Clarification of inspector s roles (Section 70, 71 & 72) Positive duties of inspectors to determine compliance with the Act and the Home Building Manual Provides clarity on inspector s functions, conflict of interest and addresses corruption related matters There is provision for criminal offences in respect of disclosure of unauthorised disclosure of personal or confidential information Duties of inspectors relating to anti corruption, conflict of interest, using confidential information for personal benefit extended to all employees Inspectors and investigators have been given powers of a peace officer in terms of the Criminal Procedure Act

12. Current Legislation v Proposed Bill (Chapter VII: Enforcement & ADR) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Interdicts Power to apply to Court for an order directing a home builder to comply with the Act or to stop construction Suspected Non-compliance (Section 62) Any person may report suspected non-compliance by any person to Council Council may apply to Court for an order directing the person to comply with the Act or to stop construction Non-compliance by Competent Person Defines and describe duties of competent persons Keeps a register of competent persons Requires competent persons to hold professional indemnity insurance No provision governing non- compliance by competent persons except for implied recourse through the PI Clarification of inspector s roles (Section 1, 14(1), 42, 42(4) and 64(1)(f) Defines and describe duties of competent persons Keeps a register of competent persons Requires competent persons to hold professional indemnity insurance Council may hold competent person liable for rectification or costs thereof Wilful or gross negligence by competent person which cause, or fails to prevent a major structural defect is now a substantive non-compliance which may trigger an administrative fine and other sanctions which may be imposed by the CEC

13. Current Legislation v Proposed Bill (Chapter VII: Enforcement & ADR) Housing Consumers Protection Measures Act 95 of 1998 (Current Legislation) Housing Consumers Protection Bill Obligations of Financial Institution, Conveyancers and MEC respectively Ensure a home builder is registered and the home is enrolled prior to approving a bond, registering a bond and approving a housing project, housing subsidy grant or payment to a home builder Duty of Financial Institution, Conveyancers, Property Practitioners, Registrar of Deeds, HOD and Manucipal Manager, MEC and MMC respectively (CEC) (Section 81, 82 and 83; 32 and 33) Duty to ascertain if a home is enrolled, not to approve or continue payments, register a bond, inform buyer (housing consumer) of consequences of non- enrolment and to report to Council if home is not enrolled Duty on Registrar of Deeds has been removed as the Deeds Office is concerned with registration of property and not necessarily the home HOD and MM have a duty not to release funds for housing project unless the project is enrolled Council must report failure (emphasises oversight) by MEC or MMC to appoint a registered home builder or to enrol a project/ home to the Minister of Human Settlements

14. THANK YOU