The Housing Consumer Protection Act, 25 of 2024, is set to replace the existing Housing Consumer Protection Measures Act, 9 of 1998. While not yet in effect, the commencement of this new legislation is expected imminently, ushering in a more robust regulatory framework for the residential building industry in South Africa.
Broadening the scope of accountability
The Act introduces new obligations and responsibilities for builders, developers, property practitioners and conveyancers. It sets out clear consequences for non-compliance, aiming to ensure higher standards of conduct and protection for housing consumers. The National Home Builders Registration Council (NHBRC) remains central to this process, continuing its mandate to shield consumers from unscrupulous builders and substandard workmanship.
Application of the Act
The Act covers the construction of new homes as well as any additions, alterations, renovations or repairs to a home, provided that such work requires building plan approval by a municipality. It also applies to the conversion of commercial buildings into residential dwellings.
However, several exclusions apply. The Act does not apply to a dwelling unit that does not have its own bathroom or kitchen, any temporary building, a shack or caravan, any structure forming part of an informal settlement, a hotel or a motel.
Registration and enrolment of homebuilders
In terms of the new Act, registration with the NHBRC is mandatory for all developers and homebuilders before any construction can begin. Additionally, the new Act places an obligation on consumers in that no one may engage the services of or employ unregistered homebuilders or developers for homebuilding. The Act does also stipulate that despite non-registration of a builder or developer, they remain liable under the Act.
New homes must also be enrolled with the NHBRC at least 15 days prior to breaking ground. If the home is part of a development, each individual unit must be enrolled separately. Failure to enrol prior to construction necessitates an immediate halt to construction until the NHBRC grants permission to continue.
The Home Warranty Fund
The Home Warranty Fund serves as a safety net for consumers when builders or developers are unable or unwilling to meet their obligations under the Act. The warranty covers structural defects in the home for a period of five years from final construction, and roof leaks for two years from final construction.
Homes not enrolled with the NHBRC are not covered by the Fund, and consumers may bear the full cost of defects. If a valid claim is made, the builder/developer is initially responsible for rectification. Should they be unavailable, unwilling or untraceable, the NHBRC may then intervene via the fund. It is worth noting that consequential damages are not covered.
Duties of Property Practitioners
Once the Act becomes law, Property Practitioners will be obliged to take reasonable steps to determine whether the home should be enrolled with the NHBRC or is covered under the Home Warranty Fund before marketing the home. Practically, this will mean that these enquiries must be made before the mandate is signed.
If enrolment is required or the home should still be covered under the Fund, the agent will need to determine whether this is the case, either by obtaining proof of NHBRC certification from the builder/developer or directly from the NHBRC.
Should the home not be enrolled, agents will be obligated to inform the NHBRC and alert potential buyers about the lack of protection.
Duties of Conveyancers
Once the new Act becomes law, conveyancers, before transfer, must confirm whether a home falls under the Act’s provisions and whether it has been properly enrolled. Non-compliance must be reported to the NHBRC.
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