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News Article
New laws to protect property investors
4 April 2006
"Tough new laws to protect vulnerable property investors" Cape Times 4 April 2006
Roy Cokayne, writes in the abovementioned paper, that the Trade and Industry Minister, Mandisi Mpahlwa, has published regulations on public property syndications that, prescribe the minimum information that must be made available to investors in a disclosure document.
The ratio behind these welcomed regulations is the fact that in the past, properties were offered to the public, through property syndications, at inflated prices. These regulations were published in the Government Gazette earlier this year for public comment and are intended to provide safeguards and protect vulnerable and inexperienced consumers. A promoter who does not comply with these regulations, will be commiting a criminal offence and be liable, on conviction in terms of the Consumer Affairs Act (Unfair Business Practices Act), to a fine of up to R200 000,000, or imprisonment for up to 5 years, or both.
The underlying principles regarding the disclosure document were that statements, presentations and descriptions should not convey false or misleading information about the product or the promoter thereof. Material information is information that the investor needs to make an informed decision. All the risks must be stated and even a 10 year history (if the property is that old), of the sales history of the property is required. Details of the management of the syndication, tenants, income and expenditure projections and valuation are some of the pertinent prescriptive requirements.
All that the mentioned regulations mean, is that there are no more room for syndicaitons that do not meet the safety mechanisms prescribed.
We at Bluezone Property Investments absolutely welcome these regulations. In fact, we were contacted by the Department of Trade and Industy regarding our input and comment on the proposed legislation. It mean that all syndication companies, including ourselves, will have to adhere to these regulations or get out. The overwhelming feeling out there in the market is that there is a place and market for syndications, provided that they be regulated. Now these regulations have come and we need to stand up and be counted.
Comment - Izak van Niekerk
Bluezone Property Investments (Pty) Ltd
