In January 2025, President Cyril Ramaphosa signed into law the Housing Consumer Protection Bill, introducing significant changes to the legislative framework of South Africa’s home building industry. This new legislation will replace the Housing Consumers Protection Measures Act of 1998 and aims to enhance consumer protection and industry standards.

Key Differences Between the New Act and the Current Act:

1. Expanded Scope: The new law broadens its applicability to include not only professional home builders and developers but also owner-builders, who are now required to register with the National Home Building Regulatory Council (NHBRC). Additionally, the new law extends the mandate of the NHBRC to provide warranty cover to repairs, renovations, alterations, and extensions to existing homes, which are not covered under the current Act.

2. Strengthened Regulatory Mechanisms: The legislation introduces more robust enforcement tools and prescribes appropriate penalties or sanctions to deter non-compliance by homebuilders. This includes provisions addressing the personal liability of members, directors, or trustees of a homebuilder, as well as duties of estate agents, financial institutions, and conveyancers.

3. Home Warranty Fund Enhancements: While the current Act established a Home Warranty Fund to address major structural defects, the new law continues this fund and allows for its surplus to be used for developmental programs within the home building industry, promoting economic transformation.

Benefits for Housing Consumers and Home Builders/Developers:

For Housing Consumers:

• Improved Protection: The new law ensures better safeguarding of consumer interests by enforcing higher standards and accountability among homebuilders and developers.

• Quality Assurance: With stricter regulations and mandatory NHBRC registration, consumers can expect improved quality in home construction and renovations.

• Warranty Cover: Consumers now have the ability to directly institute claims against the Home Warranty Fund from commencement of construction for structural defects, providing an earlier and clearer path to remediation.

For Home Builders and Developers:

• Industry Development: Access to developmental programs funded by the Home Warranty Fund surplus can aid builders in improving skills and business practices.

• Clear Regulations: The establishment of comprehensive codes of conduct and clear guidelines helps builders and developers understand compliance requirements, reducing the risk of litigation.

• Market Sustainability: The law creates an enabling environment for new entrants into the home building industry by introducing contractual provisions that ensure their sustainability in the market.

Overall, the Housing Consumer Protection Act represents a significant advancement in regulating South Africa’s home building industry, aiming to ensure higher quality standards and greater accountability, ultimately benefiting both consumers, builders and developers.