Deeds office backlogs are causing huge pain - as govt announces new interventions
- The closure of deeds offices due to the Covid-19 outbreaks has contributed to large backlogs.
- This has hit buyers and sellers, but also estate agents - many who have not earned an income for many months.
- On Thursday, government announced new interventions to keep deeds offices functional.
- For more stories, go to www.BusinessInsider.co.za.
As deeds offices struggle with backlogs after a number of coronavirus-related closures, government has announced new interventions to help ease the harsh impact this has had on home buyers and owners, estate agents and the construction industry.
Property transactions can't be wrapped up if registration with the deeds office is not finalised.
While in terms of lockdown regulations, deeds offices were allowed to open again in mid-May, various offices – including in Cape Town, Johannesburg and Pietermaritzburg – were forced to close for long periods due to Covid-19 outbreaks at their premises.
The backlogs at the deeds office have frustrated sellers and buyers alike, and left estate agents and developers without an income. According to the Western Cape government, the deeds office closures have had a “considerable negative impact” on the property industry.
“It has been so frustrating. The pipeline buildup of transfers and registrations waiting in the deeds office is seemingly growing day by day, with a small percentage of deeds being registered as opposed to what’s actually flowing into the deeds office," says Grant Butler, managing director at evo Copestone, which assists customers with home loans on behalf of banks.
Butler said delays at the deeds office are killing property deals.
According to Butler, banks require "mortgages and bond approval… and what happens is that after a certain amount of time, if the bond hasn’t been registered, banks can ask for a rework of the bond approval.
"If this takes more time, a 99.9% completed deal is likely to collapse due to delays," he said.
Lilieth Adams, estate agent for Tyson Property in Muizenburg, Cape Town, said a deal that was supposed to be transferred in February has only been transferred in August.
“Since then I’ve obviously not been getting any salary because I don’t get a salary without commission being paid. I’ve had deals hanging and hanging and without an income, it's been tough,” said Adams.
Adams said sellers and buyers are heavily impacted too, with one of her own clients left hanging and forced to depend on friends for accommodation.
“One of my clients who needed to transfer in February wanted to go back home in Bulgaria but couldn’t because he was stuck here without money since he didn’t have an income, the house was sold but transfer funds didn’t come through,” she said.
In Durban, it usually took about two weeks to complete a transfer but currently the waiting time is more than three months, according to Seeff property agent Greg Brouchaert,
Gauteng estate agents also report of delays at deeds offices.
Surrett Brits, an estate agent for Aida in Pretoria, says most of her transactions over recent months are still stuck in the deeds office.
Recently, the Cape Town High Court ruled that the deeds office must remain open and functional optimally, and Butler says many in the industry hope that this will be upheld.
“They (deeds office staff) have been, at best, unreliable. At worst, it seems malicious,” said Butler. “They just close and I’m not entirely convinced they understand the huge ramifications of what they’re doing and how many people they have affected with their inactivity.”
New interventions at deeds offices
The deeds offices have faced accusations that they are not taking the necessary health and safety precautions to prevent contagion – and to equip their workers to do their jobs from home.
Western Cape Minister of Finance and Economic Opportunities David Maynier accused the Cape Town deeds office – which has been closed more than once due to a Covid-19 outbreak – of not implementing health and safety measures, as required by law, and asked Minister of Agriculture, Rural Development and Land Reform Thoko Didiza to urgently intervene.
On Friday, Didiza announced new interventions to deal with this, including:
- Staff will be allowed to examine documents at home, to fast track the process. In the past, documents had to remain at the deeds offices. Didiza said that “appropriate steps” will be taken to ensure the safety of the documents and avoid fraudulent transactions.
- If there is an outbreak of Covid-19 at a deed office, the closure of offices will only be done under extreme circumstances. “Various options will be undertaken, which are not limited to ensuring that decontamination is only done in affected areas and not in the whole building and also to ensure that all officials continue to work while at home.”
- All deeds offices will rearrange their offices, to ensure social distancing and safety of staff, even those with co-morbidities. Deeds offices’ IT systems will be upgraded, and officials will be provided with “all relevant tools” of trade to allow them to work from home.
Deon van Zyl, chairperson of the Western Cape Property Development Forum (WCPDF), says it is clear that deed office staff working from home don’t have adequate tools to do business online.
“The choice of internet-based platforms to engage with applicants has highlighted narrow-minded procurement goals. There are clear front runners in technology, yet various government entities have elected to subscribe to old and disproven technology, leaving parties wanting to engage with government at their wit’s end with meeting calls being dropped and video screens having to be deactivated to save bandwidth.”
“We believe strongly that the full seriousness of the current economic situation, which was dire even before lockdown, has not hit home with the majority of government employees,” says Van Zyl. “And this is a failing of leadership and senior management who have not provided vital sensitivity training on the economy and generation of tax revenue to their teams, noting that such taxes pay public servants’ salaries.
“There is absolutely no practical understanding of the multiplier effects of their slow-to-stagnant decision making or the role they should be playing in the economic ecosystem.”
Pressure on deeds offices will only grow, as South Africa’s residential property market has unexpectedly recovered quickly from the hard lockdown. Experts were predicting that house prices would fall by between 5% to 14.5% this year due to Covid-19 - instead prices have climbed in the year to July and there has been a strong increase in demand.
This is due in large part to lower interest rates, which create stronger demand.
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