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NHBRC billions should be used to aid industry

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The National Home Builders Registration Council should reinvest the billions it is sitting on to help the devastated development and construction industry, says the Western Cape Property Development Forum.

Shortly after lockdown was announced, the forum called on President Cyril Ramaphosa to urgently enact emergency legislation to allow access to some of the R6.747 billion of NHBRC funds to support contractors needing to pay their sub-contractors and labour a living wage.

It also intends to call on the council to suspend the charging of registration and enrolment fees for at least the period it takes for the development and construction industries to recover.

The NHBRC, however, says it does not have the authority to make such decisions. Forum chairman Deon van Zyl says in the light of the president’s call for support of the Solidarity Fund – set up to help those in need – the NHBRC should consider contributing some of the industry-collected funds to support contractors, artisans and labour or at least reimburse developers for developments that have been enroled with the NHBRC but not yet developed.

He says the NHBRC does not have a mechanism by which it can reimburse the industry. “It is, however, patently clear that the NHBRC is sitting on substantial assets that could sustain it for years to come, noting the minimal payout on claims and the excessive operating costs.”

As it stands, the NHBRC is set up to receive money from the development and construction industries with minimal reinvestment into these industries, he says.

“Bearing in mind that these charges are effectively being passed on to the end users, the NHBRC income is in fact a charge to society at large. “The drafters of the relevant legislation did not foresee a situation where the NHBRC would ever be required to re-invest into the industry at a time like this.

“Even though the NHBRC was created to provide an insurance structure to protect the consumer from unscrupulous and incompetent contractors, the reality is it has become a self-funding business with very little being reinvested into industry.”

The latest NHBRC annual financial report available on its website is for 2017/18 (2018/19 does not seem to be available) states: 

  • Total revenue: R775 million a year.
  • Total expenses: R748m, of which R728m was operating costs.
  • Total claims amounted to R9m.
  • The NHBRC’s total assets are worth R6 746bn.

“This is not an error compared to the numbers in millions above,” Van Zyl says. Payouts were 0.13% of this asset value. The NHBRC, however, has not been mandated to look into releasing money back into the industry, says spokesman Tshepo Nkosi.

As a regulatory body it does not have this authority. “Unless it comes from the Presidency or is a ministerial directive, we are unable to do so.” He adds, however, he does think such an initiative is “a good idea”.

“It is definitely something I can bring up; I can bring it to our CEO’s attention.” 

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