Sakeliga has secured a major court victory against BEE in the property sector. The Pretoria High Court has declared unconstitutional the requirement that estate agencies and other property businesses possess a BEE certificate to obtain permission to operate. Property practitioners can no longer be denied their operating licence, known as a Fidelity Fund Certificate.
The requirement emanates from Property Practitioners Act. This included a provision requiring a valid BEE certificate for practitioners to operate. In April 2024, the Property Practitioners Regulatory Authority operationalised this further. It warned that certificates would be denied unless applicants met a specific “accepted level of compliance”, 40 points or more, described at the time as “non-negotiable.”
The use of this requirement was challenged by Sakeliga in 2024 and it came to a finality in the gauteng High Court in September 2026. It argued that requiring a “valid” BEE certificate couldn’t reasonably be interpreted as requiring compliance at a specific level. The PPRA initially reversed course in August 2024, agreeing it would not withhold certificates on this basis but Sakeliga never left it there. Instead they ent ahead with a broader legal challenge targeting what it called an overly broad legal definition of a “property practitioner.”
In its judgement issued on 8 September, the court agreed with Sakeliga on both fronts. The court found that the rules requiring BEE compliance for a Fidelity Fund Certificate were invalid and that it unduly narrowed the legal definition of a “property practitioner.” As a result, private property owners, certain advertisers, and people dealing with specified property interests outside the ordinary course of business are no longer encumbered by the PPA Act at all.
The High Court struck down the statutory foundation of that requirement, section 50(a)(x) of the Property Practitioners Act.
From Sakeliga’s own statement, they consider the use of licensing for race-restrictive purposes an unacceptable barrier to and infringement on the freedom to trade. Ultimately, a B-BBEE certificate is a political instrument of the state, not a business requirement – it is not a valid precondition for economic participation or for serving customers, clients, and communities.
The court also partly agreed with Sakeliga that the definition of “property practitioner” in the Act is irrational and overbroad and declared certain elements of it unconstitutional. The constrained definition means that several categories of persons engaged in property-related business now justly enjoy freedom from the government’s overreach.
Sakeliga obtained significant relief against this overreach, but not the full narrowing of the definition sought.
The ruling includes findings of unconstitutionality. It will now be referred to the Constitutional Court for confirmation before it becomes final.
A previous article was written in 2024 discussing the basic criteria of the Property Sector Charter within the scope of the B-BBEE Act, Number 53 of 2003. The original charter was published on 01 June 2012 as Gazette Number 35400 and subsequently amended by Gazette 40910 on 09 June 2017. The amended charter is extensive in detail and contains criteria vastly different to that of other sector charters. The sector codes apply to all privately owned and public enterprises within the property sector.
In general, the scope is applicable to commercial activities in the following industries:
Residential property industry including:
- Houses
- Community Schemes
- Land zoned for development
- Commercial property industry including:
- Office property
- Industrial property
- Leisure property
- Retail property
- Land zoned for development
Other property services:
- Property Ownership
- Property Letting
- Property Management
- Property Sales
- Property Valuation
The Property Practitioners Act of 2019 (“PPA”) was signed into law by the President on 19 September 2019, with a recently defined commencement date of 01 February 2022. The PPA has as one of its main objectives the transformation of the property sector.
The Property Practitioner Act replaces the Estate Agency Affairs Act of 1976. Its main purpose is to establish the Property Practitioner Regulatory Authority, which replaces the Estate Agency Affairs Board; to regulate the affairs of all property practitioners; to allow for transformation in the property sector and to provide for consumer protection.
Part of the legal challenge raised by Sakeliga is based on the definition of who or what is a “Property Practitioner”?
The Act lists it as such:
“Any person (natural or legal) who in the ordinary course of business, for gain (i.e. against payment), holds out (i.e. this is his/her business), on behalf of another person:
- auctions; rents; sells or exhibits for sale or purchase, property or a business.
- manages property.
- negotiates such an agreement.
- canvasses for landlords/tenants/buyers or sellers of properties/businesses; or collects or receives rental on behalf of another person.
- acts as intermediary or facilitator in any of the above.
Intermediary: a person who acts as a link between people to try and bring about an agreement.
Facilitator: any activity that makes a social process easy or easier.
It is from this overly broad definition that the High Court partly agreed with Sakeliga that the definition of “property practitioner” in the Act is irrational and overbroad and declared certain elements of it unconstitutional.
The Act also includes a homeowner’s association which does any of the above, for gain; and anyone employed by a property practitioner to do any of these things on his/her behalf; and includes anyone who sells, or markets time share or fractional ownership; and includes:
- anyone who is employed to manage / supervise the day-to-day business operations of a property practitioner (office manager); and anyone who arranges:
- financing for a sale or lease.
- bridging finance (i.e. where a seller wants to take an advance against the proceeds of his sale) or,
- acts as a bond broker, (someone who helps a buyer apply for a loan with the banks) except if either of these, fall within the definition of a “financial institution” under the Financial Services Board Act.
It includes directors of companies; members of CC’s and trustees of trusts, if the entity does any of the above; and, any attorney or person employed by an attorney who renders these services except if that person must hold an FFC with the Attorneys’ Fidelity Fund, and if this work forms part of the attorney’s normal practice. Anyone may apply to the Minister for exemption (partially or entirely from the Act) for up to 3 years at a time.
Race-restrictive purposes invoked by the Act
Section 50 of the PPA Act states that a fidelity fund certificate may not be issued to a person or entity that is not in possession of a valid BEE certificate.
To qualify for a fidelity fund certificate (FCC), every property practitioner (meaning the firm), must be in possession of a BEE certificate. The PP (firm) must have undergone a verification process with a BEE auditing company. If you are certified, you can obtain an FFC. In terms of the Act the only time that a PP will have to have a certain level of BEE certification, is if the PP wishes to do business with an organ of state. The Act only requires that afirm is BEE compliant in such an instance.
What is an FFC?
An FFC is a certificate which is issued to every PP. Without an FFC, a PP may not trade or be paid for any work done. FFC’s are valid for 3 years, until 31 December of the year in which the FFC was approved. If the firm is a company, then all its directors must also have one; if it is a CC, then all its members; if a partnership, its partners; and if a Trust, all the Trustees.
What is the point of an FFC?
The point of an FFC is to provide the consumer with protection against theft of money that has been entrusted to a PP, such as money meant to buy a house, rental income or rental deposits. In terms of the new Act, once an FFC certificate is issued to a PP and should that PP then steal money which the PP held in trust then the consumer can claim this money back from the fidelity fund. All the consumer needs to do is lay a criminal charge and be sure that the PP had an FFC at the time of the theft.
In understanding the essence of the FCC, it is clear that the extension thereof to a BEE certificate requirement creates unnecessary confusion and additional hurdles to business. The FCC is there to protect the consumer and that in itself has nothing to do with a BEE certificate.
Without a FCC no-one may operate as a property practitioner. There is no need to conflate the use of a FCC with that of a BEE certificate. Creating additional red-tape only adds to frustration in running a business in a highly regulated and overly legislated country such as South Africa.
Consequences of not having an FFC
If an entity has just one PP in its employ who does not have an FFC then the entity may not trade, which means no other PP in its employ may work legally then either. If a PP was involved in a transaction and did not have a valid FFC at the time of the transaction, then he/she may not claim commission.
If the consumer finds out that the PP did not have an FFC at the time of the transaction, then the consumer has 3 years within which to claim it back and if the PP does not pay it back immediately, he/she will be guilty of a criminal offence.
The Act also states that if a PP does receive payment when he/she did not have an FFC, then the PP is required to pay the commission to the fidelity fund.
That in itself has sufficient regulation in an overly regulated business environment.
