Tenants and property owners will have to wait and see whether rents and levies will rise or fall after a ruling that estate agents, property managers and sectional title managing agents must register as debt collectors.
The ruling by the Council for Debt Collectors followed a case in Cape Town where a sectional title managing agent was charged with contravening the Debt Collectors’ Act by demanding more than the act prescribed for phone calls and letters written to a sectional title owner who was in arrears with his levies.
Costs will rise, says the National Association of Managing Agents, while the Council for Debt Collectors says tenants will pay less because “the conduct of managing agents when collecting debts” will be under its scrutiny.
Managing agents and the Property Owners’ Association have asked the Department of Justice to exempt them from registration. The department has referred the request to the Council for Debt Collectors, which will consider it at a meeting today.
“If we are not exempted, managing agents will be faced with extra costs which might mean higher fees for bodies corporate,” said Gerhard Jooste, chairman of the National Association of Managing Agents.
Andries Cornelius, legal officer at the Council for Debt Collectors, said estate agents who did not collect rent did not have to register, “but the moment someone collects arrear rent and levies and demands payment for doing so, that person must be registered”.
Debt collectors were entitled to a 10 percent collection commission, apart from what they charged for writing letters and making calls, said Cornelius.
“A debt collector can only charge R14 for writing a letter or phoning, but managing agents were demanding R250 for seeking payment from people whose rents and levies were in arrears.”
Jooste argued that managing agents were not disputing the fees prescribed by the Debt Collectors’ Act. “Our application for exemption is saying it is impractical to have two trust accounts. Clients will have to pay monthly levies into one trust account, and arrears into another.
“Having just one trust account is not possible because the different requirements for the Debt Collectors’ Act and the Estate Agency Affairs Act do not allow us to comply with both at the same time.
“Once you start adding up all the charges you can demand according to the act, the comparison between them and what managing agents used to charge anyway is not bad.”
Meanwhile, there are already signs that fees will increase for some. Permanent Trust, a city rental collecting firm, told clients last month that it had decided to register with the Council for Debt Collectors and abide by its recovery-fee schedule and debt-collection code of conduct.
“The Debt Collectors’ Act provides for specific charges to be made and we will have to implement these charges (even when this was done as a free service in the past),” said a letter from Permanent Trust, adding that each monthly rental charge would be treated as an independent debt when in arrears.
“To avoid unnecessary charges and legal fees, you are urged to pay your rental by due date,” Permanent Trust recommended.
Vivien Marks, who trains estate agents, said many agencies risked imposing high penalties on tenants instead of adhering to the restrictions on debt collectors.
She urged the Estate Agency Affairs Board to investigate and instruct all managing and rental agents nationally. “In particular a huge percentage of the public own sectional title units and this directly affects them as well,” said Marks.
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