Anger over new property repossession rules ; say your say
Some South Africans are not happy with the new rules for repossessing properties.
According to Advocate Douglas J Shaw of Debtors Defence, who is doing a PhD on the subject of repossession law, South Africa’s rules lead to more than 10 times the percentage of defaulters losing their homes than other countries such as the UK.
“Over the last year the Rules Board that decides on how repossessions work has issued new proposed rules for comment,” said Shaw.
“The removal of the bizarre prohibition against reserve prices has been welcomed but the rules do not address that, unlike most other countries, properties are mostly sold for less than 50 per cent of their value with a considerable number being sold for under R1000.
“It is good that there can now be reserve prices but we need rules providing that the reserve price is the market price of the property which can then fall gradually in a structured way if the property doesn’t sell.
“This would also address our highly dysfunctional sheriff auctions system. We cannot leave the reserve price to the bank’s discretion. That would only work in a system where the banks have a conscience. Ordinary citizens need protected.”
Shaw has proposed a new Rule 46A, which will provide rules for when the bank can sell the property and when it can’t.
“For example, if the person now has a new job and can now pay the arrears over a few years, they should not be able to sell (many other countries, notably England, wouldn’t let them).
“Where the property is worth much more than the bond, the banks should not be able to sell until the bond reaches 90 per cent of the property value. Where the person has money and doesn’t pay then their salary can be attached rather than selling their house which is far more damaging.
“I heard the Banking Association of South Africa on the radio telling the public that they only sell as a last resort (as required by the Constitutional Court in Jaftha).
“I don’t know whether the spokesman is just out of touch or whether they are intentionally misleading us but I can tell you that is not the case.
“I see hundreds of cases every year where the banks sell properties where there is equity, where the person can now afford to pay; where rescheduling is eminently reasonable; or where there are other solutions to the problem.
“Most of the time they say the person must pay off the whole arrears immediately, often in the hundreds of thousands of Rands, or the bank will sell the house for peanuts with the sheriff. That is the norm.
“And what should be done when the banks have caused the financial crisis that has caused the default as in America? Should they then still have the same rights to ruin their client’s lives?”
Shaw’s rule gives the Minister the ability to halt all repossessions for a few years as the Irish government did during their crisis, which was caused entirely by the irresponsible lending of their own banks.
He said hundreds of people hearing the news on dedicated banking email lists have mobilised and sent messages to the Rules Board, communicating a very clear message as to where the people of South Africa are on this issue.
Readers wanting to support (or oppose) the rules proposed by Advocate Shaw can send their comments to the Rules Board at jbalkishun@justice.gov.za and mmokulubete@justice.gov.za before January 29.
Unfortunately, my research shows that we probably have the worst law of sale in execution in the world. If these changes go through as they are, I’m afraid it will still be the worst in the world.”
