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Homebuilders and developers must take note of the new Housing Consumer Protection Bill
19 February 2020
“I used to run a small construction company before I retired. My wife and I now want to build our retirement home on land we bought a few years ago for this purpose. One of my previous construction partners now tells me that there is new legislation coming that will require me to register with the National Home Builders Registration Council (NHBRC) if I am going to build my home. Is this true and will it apply to me if I only build my own home?”

You are correct about possible changes coming. Towards the end of 2019 the Minister of Human Settlements, Water and Sanitation published the new Housing Consumer Protection Draft Bill, 2019 (“Bill”), which Bill is intended to replace the existing Housing Consumers Protection Measures Act completely and may bring sweeping changes with it.

The Bill states that it will apply to the building of a new home and to any addition, alteration, renovation or repair of a home, in so far as such requires the submission of building plans to a municipality. Essentially, all changes (including building) that is required to have a plan submitted to the local municipality, will have to comply with the Bill. The current exemption contained in the Housing Consumers Protection Measures Act 95 of 1998 (“Act”) that a person who uses his own labour to build a home and builds for his own occupation if the home is part of an approved PHP Project, will no longer apply. Rather, exemptions in the new Bill focus on whether the structure is co-owned as defined in specific legislation or whether the structure is a temporary building, caravan, informal settlement, hotel or motel.

Another change is in respect of the registration as a homebuilder at the NHBRC. The Bill places an obligation on the NHBRC to establish and maintain a register of homebuilders and developers. This means that each person or entity who wants to build a home, whether it is for personal use or as part of your business, will have to apply to the NHBRC to be registered as a homebuilder and will have to pay the prescribed annual fee. The NHBRC is also required to keep record of each home that is to be built and this will place a further burden on the homebuilder or developer to enrol each and every home with the NHBRC before construction commences as well as to pay the prescribed enrolment-fee.

The Bill also changes the time-frames placed on the warranty cover that a homebuilder should provide to a homeowner who purchases or occupies a home of the homebuilder. In the Act the warranty cover for a roof leak for a newly-built home is 12 months, but this period will be extended to 2 years from date of finalisation of the construction of a home, to extend the period for a homeowner to institute a claim for repairs. The time period for the rectification of major structural defects, however, remains five years as is in the Act.

Should a homebuilder or developer not comply with the requirement of registration at the NHBRC or enrol the homes which he is building, such a homebuilder or developer will be guilty of an offence and  liable to a fine not exceeding R1,5 million or imprisonment. This fine is considerably higher than the current R25 000.00 penalty or imprisonment contained in the Act. 

A final change that can be noted, is the duty that the Bill places on estate agents, financial institutions, conveyancers and the Registrar of Deeds to confirm before they proceed with a property transaction whether the property constitutes a home as defined in the Bill and whether the home is enrolled with the NHBRC, and if it is not so enrolled, to notify the NHRBC accordingly. A conveyancer bears an additional duty to also report the non-compliance to the Registrar of Deeds and estate agents have an additional duty to notify a prospective buyer that the home has not been enrolled according to the Bill. 

If these parties do not comply with this duty, they may be reported to the Estate Agency Affairs Board, the Financial Service Board, the Law Society or the Auditor-General (as applicable). This extends the watchdog function over homebuilders and developers further to also include these parties who now have an obligation to confirm compliance with the Bill.

For the moment, the Bill is still just draft legislation and the Act still applies, including the exemption for a person who uses his own labour to build a home and builds for his own occupation. Once the Bill becomes law in the format currently proposed, the situation will change and you will need to register with the NHBRC to build your own home.
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