Developer must register with council
THE SUPREME Court of Appeal (SCA) has granted an application brought by the National Home Builders’ Registration Council preventing Xantha Properties18 from failing to enrol its development.
Xantha Properties had embarked on the construction of a property development in Wynberg comprising a number of shops and 223 residential apartments.
Although registered as a “home builder” as defined in the Housing Consumers Protection Measures Act, Xantha Properties had said it had no intention of selling these apartments or developing them under a sectional title scheme, but with the sole intention of renting them to tenants.
Xantha Properties had disputed being obliged to enrol this development project with the National Home Builders’ Registration Council, arguing that the section did not require a home builder to enrol houses being constructed for the purpose of being let.
The National Home Builders’ Registration Council contended otherwise, and insisted on the development being enrolled and that it pay the necessary enrolment fee of more than R1.5 million.
Xantha Properties conceded by paying the amount owed, but proceeded to seek a declaratory order in the Western Cape High Court to the effect that it was obliged neither to enrol its development nor to pay such fee – which was granted.
The matter was taken to the SCA by the council.
Judge of Appeal Lorimer Leach ruled in favour of the council, dismissing Xantha Properties’ application, with costs.
Xantha Properties argued that the act was intended to “provide a form of housing insurance in favour of housing consumers against errant home builders”.
In his judgment Judge Leach said: “In considering the interpretation of the act, it is necessary to remind oneself that the act is consumer protection legislation designed to offer protection against incompetent builders and the construction of homes having structural defects, and that to achieve those aims it requires registration of home builders and the enrolment of the homes they build.”
Judge Leach added “home builder” and “business of a home builder” were interrelated.
“Section 10 of the act goes on to require ‘home builders’ to be registered as such, and prescribes that no person may carry on the business of a home builder unless so registered.
“Section 10(3) further provides that the council may only register a home builder if satisfied that the person seeking registration meets various criteria, will comply with a home builder’s obligations in terms of the act, and has the appropriate financial, technical, construction and management capacity to do so,” said Judge Leach.
Judge Leach held that the high court had incorrectly reached the conclusion that Section 14 did not apply to homes being built for lease and rental purposes.