FREED FROM THE CERTIFICATE, NOT FROM THE MARKET
A judgment out of the Pretoria High Court has removed one of the more aggressive uses of B-BBEE seen in recent years: the requirement that a property business hold a B-BBEE certificate before it may be licensed to operate at all. For the businesses caught by it, the relief is real and immediate. But there is a distinction in this ruling that every property practitioner — and every owner watching from another sector — needs to understand clearly, because getting it wrong could be a costly mistake in the opposite direction.
What the court decided
Since early 2024, the Property Practitioners Regulatory Authority (PPRA) had been refusing to issue Fidelity Fund Certificates (FFCs) — the licence without which it is a criminal offence to trade as a “property practitioner” — to applicants who could not produce a B-BBEE certificate, at one point demanding a minimum of 40 points. Because the Property Practitioners Act 22 of 2019 makes an FFC compulsory not only for estate agents but for a wide sweep of property businesses — developers, administrators, bond originators, auctioneers and more — the effect was to make participation in B-BBEE a precondition for lawful economic activity across a sector generating tens of billions of rand a year.
The business advocacy group Sakeliga challenged this, and has announced a High Court judgment striking down the statutory foundation of that requirement — section 50(a)(x) of the Act — as unconstitutional. The court also found the Act’s definition of “property practitioner” to be overbroad in part, freeing several categories of person (private owners selling their own property, certain advertisers, and others acting outside the ordinary course of business) from being regulated as practitioners at all.
The PPRA was ordered to pay costs.
Two qualifications matter. First, because a court cannot finally invalidate an Act of Parliament on its own, the declaration of unconstitutionality must be confirmed by the Constitutional Court before it is settled law — so this is a significant step, not yet the final word. Second, on confirmation, Parliament would have 24 months to repair the definition. The immediate effect, per the order, is that the PPRA may no longer refuse an FFC purely because an applicant lacks a B-BBEE certificate.
The distinction that matters
It is tempting to read a ruling like this as “BEE is over” for the property sector. It is not — and treating it that way would be a serious misjudgement.
What the court addressed was coercion through licensing: the use of a mandatory operating permit as the lever to compel B-BBEE participation. That is a specific, and the court found impermissible, mechanism. It is not the same thing as B-BBEE itself, which continues to operate exactly as before across the rest of the economy.
The difference is the difference between being forced to hold a certificate to keep your licence, and choosing to be empowered because it wins you business. The first is now off the table for property practitioners. The second has not moved an inch.
Why the commercial case survives the legal one
A property business freed from the licensing precondition still operates in a market where B-BBEE status affects who it can work with and what it can win. Consider who property practitioners actually deal with:
• Banks and financial institutions, which carry their own scorecards and procurement preferences and increasingly weigh the empowerment status of their panels and partners;
• Government and state-owned entities, still bound by preferential procurement rules — any practitioner wanting public-sector mandates still needs a scorecard;
• Corporate clients and large sellers, whose own B-BBEE recognition depends in part on the empowerment status of the agents and suppliers they appoint;
• Institutional property owners, who apply transformation criteria to estate and management mandates as a matter of policy.
None of that changed this week. A practitioner who discards B-BBEE entirely because the licence no longer demands it may find they have merely traded a regulatory barrier for a commercial one — shut out of bank panels, public tenders and corporate mandates that a competitor with a strong scorecard walks straight into.
Both principles in play
There is a genuine tension here worth stating plainly, because reasonable people land on different sides of it. On one side is the freedom to trade: the argument, which the court accepted, that the state may not turn a licence whose purpose is to protect clients’ money into a gate for an unrelated objective. On the other is the state’s transformation mandate: a constitutionally recognised imperative to redress skewed patterns of ownership and participation that persist three decades on. This judgment does not resolve that larger debate.
It draws a line at one particular method — licensing coercion — while leaving B-BBEE’s ordinary operation, and the policy goal behind it, intact. It is reasonable to expect the state to pursue the same objective by other, better-grounded means, and the confirmation proceedings will be watched closely.
What a property business should actually do now
The sensible response is neither to celebrate the end of B-BBEE nor to ignore the ruling. It is to make a deliberate commercial decision where, until now, you had none:
• If your business genuinely serves only private clients, holds no ambition toward bank panels, corporate mandates or public work, and its market does not price transformation — you may now lawfully operate without a certificate, and can stop paying for one you never used.
• If you deal with banks, government, corporates or institutional owners — or intend to — your B-BBEE position remains a live commercial asset, and this ruling changes nothing about the case for a properly designed, genuine empowerment strategy.
The point we have made consistently applies here precisely: B-BBEE undertaken only because a rule holds a gun to your head is the weakest and most grudging form of it; B-BBEE undertaken because it opens real commercial doors is durable and worth doing well. This judgment removes the gun. It does not close the doors. Know which situation you are in — and decide, rather than drift.
This article is general commentary, not legal advice. The judgment discussed awaits confirmation by the Constitutional Court and its final terms may change.
