BEE requirement for property practitioners struck down – for now

The Gauteng Division of the High Court has struck down the requirement for property practitioners to hold a Broad-Based Black Economic Empowerment (B-BEEE) compliance certificate in order to obtain a Fidelity Fund Certificate (FFC).

Since the Property Practitioners Act (PPA) came into effect, applicants for Fidelity Fund Certificates have been required to provide a B-BBEE certificate as contemplated in the Act.  

An FFC is required in order to practise as a property practitioner. Section 50(a)(x) of the Act specifically provides that the Property Practitioners Regulatory Authority (PPRA) may not issue an FFC to a person who is not in possession of a valid B-BBEE certificate.  

However, in a case brought by business organisation Sakeliga against the PPRA, the High Court ruled that the requirement is unconstitutional.  

Pending Constitutional Court confirmation of the ruling, the Court granted interim relief preventing the PPRA from refusing an FFC solely on the basis of section 50(a)(x). As a result, the PPRA has confirmed that it will no longer require a B-BBEE certificate to issue an FFC during the interim period.

BEE certificates in the property industry have been the subject of debate before. In 2024, the PPRA announced that property practitioners would need a minimum Level 8 BEE score to qualify for an FFC. However, after engagement with the industry, the PPRA subsequently confirmed that a valid B-BBEE certificate would be sufficient, without a minimum score requirement.

Not done yet

Because the High Court’s ruling found parts of an Act of Parliament unconstitutional, the matter has now been referred to the Constitutional Court for confirmation. The Constitutional Court could confirm the decision, in which case legislative amendments may be required, or they could overturn it.

The Constitutional Court's decision, and any subsequent legislative developments, will be closely watched by the property sector. The High Court's judgment appears to have centred largely on the drafting and legal certainty of the current provision, rather than on the broader transformation objectives reflected elsewhere in the Property Practitioners Act. The Act continues to contain a number of provisions aimed at promoting transformation within the property sector.

The Constitutional Court's decision, together with any future legislative amendments, will determine whether and how transformation-related requirements form part of the FFC framework in future.