Home builders to face huge fines for substandard work

New bill extends NHBRC mandate, protection for consumers.
Issues could arise if non-compliance by a government department results in project delays. Image: Shutterstock

Home building contractors may face fines of up to R1 million per unit for substandard work, should the Housing Consumer Protection Bill be enacted.

The bill was published for public comment in the Government Gazette at the end of August and stakeholders have until the end of October to submit comment.

It would replace the current Housing Consumers Protection Measures Act, in terms of which the National Home Builders Registration Council (NHBRC) registers all home builders and home-building projects and provides protection against substandard work via a guarantee fund.

Additions, alterations, renovations and repairs

The mandate of the NHBRC is being extended in the bill to include not only new building projects, but also additions, alterations, renovations and repair work if it is of such a nature that the local authority requires approved plans. Institutional housing like hospitals, prisons and old age homes as well as subsidised housing is also covered. Over and above home builders, the bill also requires developers to register.

As such, the register will for the first time include grading, much like that of the Construction Industry Development Board (CIDB), which grades construction companies according to financial and technical capacity and links a maximum project value to each grade.

If a home builder fails to complete a project within the time agreed upon, the consumer may report this to the NHBRC and it could affect the builder’s grading.

The information contained in the register will be available to the public.

Currently a building is covered for five years and the roof for one year under the NHBRC’s guarantee scheme. If the bill is adopted, the minister of human settlements may extend the period of the main guarantee, and the roof guarantee will be extended to two years, says Julia Motapola, head of legal services and compliance at the NHBRC. “Some consumers have been saying there is no guarantee of rain within a year in our dry country,” she says. “Therefore, we have proposed the extension to two years, to ensure the roof is at least tested by rainfall.”

Maximum fine to increase to R1m

Motapola says at the moment the NHBRC can impose a maximum fine of R25 000 on builders who are non-compliant. The bill seeks to increase that to 10% of the project value to the maximum of R1 million per housing unit, or the full cost of the repairs necessitated by the bad craftsmanship.

One of the proposals that concerns developers is that the MEC or provincial government may not release funds for subsidised housing unless the requirements of the Act have been met.

Advocate Alwyn Nortjé of listed housing developer Calgro M3, says that might become an issue if non-compliance by government departments result in project delays. “One wonders why the bill proposes to extend its powers to include the prohibition of the release of funds between the parties, where there are adequate other checks and balances in the bill itself to ensure compliance,” he says.

Alternative dispute resolution mechanism

The bill provides for alternative dispute resolution and even proposes that the NHBRC might act on behalf of consumers or appoint someone at the cost of the institution to do so.

It contains several measures to tighten up the corporate governance of the NHBRC, such as expressly stating that the body has to operate within the framework of the Public Finance Management Act (PFMA).

Nortjé says the full impact of the bill will only be clear once enacted and after more detail is given in the regulations that will subsequently be published by the minister.

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More bureaucratic regulation opening the opportunity for more bribes. All part of “reducing red tape” on small business. As usual, say one thing, do the opposite.

And which bakkie builder operating through a private company will actually pay the fines? Another ANC project doomed to failure

The state wants to police shoddy construction work while the biggest construction disasters were caused by the state. The ANC turned Kusile and Medupi into the largest heaps of scrap-metal on earth, and now they want to police other people.

It is just a racket. I doubt they inspect or certify “RDP houses” at all and, of course, turn a blind eye to “shacks”.

The NHBRC must sit on a ridiculous amount of cash. They get paid roughly 1% of construction costs of all new buildings, meaning they need to “replace” one in hundred houses to “break even”. I don’t think they replace one in a thousand.

And I am sure that these renovations that will now fall under the “ambit” of the NHBRC will also attract the one % fee…

I think all the cash the NHBRC sits on has already been “re-invested” elsewhere.


Who cares? They steal the window frames in the front of the house while they are putting frames in the back of the house. the next day the roof has gone.

Utter rubbish, and yet another cadre cash cow. I have recently paid over R1mil to NHBRC for a project. They are supposed to do site inspections, etc. We are 1 year into the project and not a single person has entered the site. What’s more is that your pay a fee based on the value of the sales price including land & vat, but are only covered for up to R500k. This cover is almost never paid as the NHBRC is the last in line to take their hands out of there pockets. Last I hear they were sitting on over R4bil and had only paid out in the region of R4mil….

The easiest way to make money is to steal someone elses.

Amen, had the same experience 20 years back which means they have not changed a bit from a gravy train to an reputable organization. I am sitting with the certificates issued 20 years ago and all the property has been transferred by the banks without them, a option that never where available to us when the bond rate were 25%. They killed the project by not issuing the certificates in time, and just for the record, I had to drive up to their offices and demand the certificates after almost 3 months, and the 3rd set of documents being dispatched. Then I receive it within an hour…..typical incompetency from a semi goewerment organization….

Exactly, and then suddenly right at the end of the project, they arrive and want to see the foundations. When explained that a building now rests on those, as they can see, and that they were requested to come and do their inspections on numerous occasions, they demand a soil test, etc. Just ran them off.

Another law, another useless department that will eventually need a minister and loads of jobs for cadres that will add NOTHING to improve productivity or accountability – definitely not cheaper and better buildings.

Who does the inspecting and evaluation of poor work? All the very people who were qualified and have the required minimum ten years experience have been retrenched, removed and excluded from the “home” construction industry.

It’s now a complete free-for-all and anyone can get way with anything, with impunity.

Another law, another useless department that will eventually need a minister and loads of jobs for cadres that will add NOTHING to improve productivity or accountability – definitely not cheaper and better buildings.

The NHBRC is yet another useless government outfit, specially created to provide jobs for cadres. Over the last twenty years, hundreds of reports/complaints have indicated that they do absolutely nothing towards ensuring the quality of houses being built. Another S.A. disgrace.

The bakkie brigade don’t care. They are gone at knock off time.

End of comments.





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