Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Get up to speed with the amended B-BBEE Property Sector Code

17 Jul 2017

Entities of a certain size are considered to be exempted micro enterprises, and thus deemed to be B-BBEE compliant as a Level 4 contributor (100%).

The 2017 Property Sector Code has been updated in a manner consistent with the principles in the Amended Generic B-BBEE Codes which came into effect on 1 May 2015.

This is according to Adam Ismail, partner at Webber Wentzel, who says these are entities or persons:

- With an annual turnover of less than R10 million per annum (if services based).

- With a net asset value of less than R80 million (if asset based).

- Estate agencies, brokers or valuators with an annual turnover of less than R2.5 million.

The 2017 Property Sector Code replaces the B-BBEE Property Sector Code, which was published by the DTI on 1 June 2012 (2012 Property Sector Code).

Ismail shares some key observations in relation to the 2017 Property Sector Code:

1. The ownership element 'aims to address the low levels of black ownership' in the sector, and has set a black ownership target of at least 27% to be achieved for each property owning company. It also includes specific targets for ownership by black women, broad-based groups and black new entrants in order to score the maximum points possible for ownership.

2. The 2017 Property Sector Code has created a 'normalisation formula' to address the dilution of B-BBEE shareholders in property listed companies due to frequent capital raisings that the industry sees. There is a formula which counteracts this dilution in order to ensure no material prejudice to property companies in the listed environment due to the dilution of its black shareholding over time.

3. The generic scorecard in the 2017 Property Sector Code differs in relation to the allocation of points on the scorecard from the 2012 Property Sector Code.

2017

Property Sector Code

2012

Property Sector Code

Ownership

Code 100

30 points

Code 100

20 points

Management Control

Code 200A

9 points

Code 200

10 points

Employment Equity

Code 200B

13 points

Code 300

15 points

Skills Development

Code 300

19 points

Code 400

15 points

Preferential Procurement

-

-

Code 500

20 points

Enterprise Supplier Development

Code 400

39 points

Code 600

10 points

Socio-Economic Development

Code 500

2 points

Code 700

15 points

Economic Development

Code 600

5 points

-

15 points


Ismail
says a measured entity must achieve a minimum of 40% in all three priority elements, namely: net value on the ownership scorecard, skills development and enterprise and supplier development. This was not a requirement of the 2012 Property Sector Code, and non-compliance with any one of these priority thresholds will result in the measured entity's B-BBEE status level being discounted by one level down.

With regards to non-compliance, Ismail says measured entities must obtain at least 40 points under the 2017 Property Sector Code in order to be B-BBEE compliant as opposed to the minimum of 30 points in terms of the 2012 Property Sector Code.

The 2017 Property Sector Code has been updated in a manner consistent with the principles in the Amended Generic B-BBEE Codes which came into effect on 1 May 2015.

Print Print
Top Articles
The MPC announced today that interest rates will be lowered by 25 basis points. The prime lending rate is now 10%, making it a great time to buy property.

Looking for your first home in Cape Town’s northern suburbs? Check out these stylish townhouses in Durbanville, Kraaifontein, Brackenfell and Goodwood…

The EB-5 programme is the quickest route to obtaining a US Green Card, and this will soon cost South African families US$1.35m instead of US$500k. Read on…

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724