SAARDA supports the lockdown period which the government imposed to ensure that the spread of the COVID-19 virus is inhibited to such an extent that our health services remain able to cope with the number of patients who are infected. It is the correct principle to value human life.
1. Closure of the Deeds Offices during lockdown.
When the national state of disaster was declared on 15 March 2020 the Registrars of Deeds of the respective Deeds Registry Offices opted not to declare the services rendered by their offices as essential government services, as they were entitled to do in terms of the autonomy granted to them in terms of Section 3 of the Deeds Registries Act, 1937 (No 47 of 1937).
This resulted in the closure of all the Deeds Offices during lockdown. From Friday 27 March it was no longer possible to either lodge new conveyancing documents at a Deeds Office for examination, or register transactions which were lodged prior to the lockdown date but which were not ripe for registration just before lockdown was instituted.
2. The impact of the closure of the Deeds Offices on the property industry.
The interruption of the functions of the Deeds Offices to register deeds of transfer of land and mortgage bonds had the following immediate impact on the everyday lives of all connected parties with transactions at the Deeds Offices which can no longer be registered on its due date:
- The general residential property market like developers, builders, professional engineers, town planners, bond originators, property practitioners (estate agents and agencies), conveyancers and banks, not to mention second tier dependents i.e. sub-contractors, manufacturers, suppliers, local daily rate labourers on construction sites, etc cannot receive earned income on the matters for which the registration was sterilized by this closure of the Deeds Offices.
- The process of allocation of Subsidy Houses (for households with an income below of R3 500 and less) linked to its occupation by the approved and verified housing subsidy beneficiary on completion has come to a halt too. This also delays the transfer of such Subsidy House to the housing subsidy beneficiary, which transfer commences after date of occupation.
- The Affordable Housing market where the developers deliver FLISP houses (for households with an income from R3 5001 and R22 000) and Bonded Houses (for households with an income from R22 000) is also hugely affected. Not only is the transfer of these completed houses or stands with building packages no longer possible, but the construction of these houses had to stop too.
- Where sellers had to vacate their sold properties at the end of March for the purchasers to take occupation, such arrangement had to be cancelled, and alternative arrangements had to be made.
- Where purchasers had to vacate their existing properties and take occupation of their new properties, such arrangement had to be cancelled, and alternative arrangements had to be made.
- This also affected the landlords of the properties which some of these sellers planned to occupy, and also where some of the purchasers may have terminated their lease agreements but could not move out at the end of March. This knock-on effect extended to affected tenants too.
- As a result the sellers, purchasers, landlords and tenants also suffer financial losses because of delayed or non -payment of purchase prices and rent.
3. SAARDA and the Affordable Housing development sector.
The South African Affordable Residential Developers Association (SAARDA) not only represents the interests of developers involved in the Affordable Housing development sector but also acts as a mouthpiece for the other relevant role players in this market such as contractors, construction companies, marketers, bond originators, professional consultants and conveyancers.
Most of these industries work purely on a “no work no pay principle”. This has the effect that not only did the industry not receive income due to the closure of the Deed Office, but will remain without income and will soon be, or in most instances are already without means to but essential goods to see through the lockdown. The closure meant an immediate end of income and closure of pipeline income, thereby leaving many emerging developers very vulnerable.
However, the best case scenario for these developers and role players, if lockdown is not extended after 16 April, is the continuation of construction of houses, the processing of deeds by the examiners at the Deeds Office currently lodged but not ripe for registration yet as well as the commencement of new lodgements at the Deeds Office from 17 April. Such new lodgements, if the rates clearance certificates for such transactions remained valid, may result in new registrations towards the end of April or beginning of May only.
The first 2 weeks of lockdown without normal cashflow already had a devastating effect on these developers and role players in terms of challenges to meet ordinary financial commitments, addressing labour issues, dealing with suppliers and generally in ensuring the sustainability of their businesses. These trials will not diminish during the last week of lockdown.
4. Relief sought by SAARDA on behalf of its members
Any extension of the lockdown period after 16 April, without triggering the source of the cashflow for the developers and other relevant role players in the Affordable Housing development sector in the form of the services provided by the Deeds Offices, will lead to even more destructive financial effects. It is crucial that the government, amidst this abnormal situation, take steps to assist and safeguard this invaluable housing industry, protect property and prevent further disruption without compromising health and the possible spread of the virus.
The request by SAARDA therefor is for the government to declare the functions of the Deeds Offices to register deeds of transfer of land and mortgage bonds from 17 April 2020 as an essential government service in terms of Section 27(2)(a)and (b) of the Disaster Management Act, 2002 (Act No. 57 of 2002), with the necessary workable conditions regarding health management and interaction as deemed fit.
This directive should also consider allowing for the developers in the Affordable Housing development sector and all relevant role players in this market such as contractors, construction companies, marketers, bond originators, professional consultants and conveyancers to commence with their normal business activities and interactions with their clients, with the workable conditions regarding health management and interaction as deemed fit.