Building a home in 2021: The dangers of not being NHBRC compliant

2021 is shaping up to be a busy year for both property sales and home builders, thanks in no small measure to the pandemic-induced concept of “work from home, live anywhere”.

If you are one of the many landowners about to invite a team of contractors onto your property to build your new dream home, or holiday house, or perhaps a house-to-let on an investment property, remember to check for full compliance with the Housing Consumers Protection Measures Act. It offers you, as the “housing consumer”, significant protection against dishonest contractors and faulty workmanship, plus access to its mediation services should any dispute arise. Your home is probably one of your more significant assets so it will be time well spent.

On the other side of the coin, any building contractor or property developer not complying with the Act risks both criminal prosecution (with a penalty of up to a R25,000 fine or a year’s jail time) and loss of all rights to claim payment from your client. You could, in other words, lose everything – as a recent High Court judgment shows…

High Court: Builder registration is not enough

For the builder, first step is registration with the NHBRC (National Home Builders Registration Council), but a recent High Court decision confirms that there is also a vital second step – enrolment of the house itself. Note that the NHBRC certificate of enrolment must be issued before construction starts.

The facts were these –

• A builder (a close corporation) contracted to build five homes for a housing consumer. The builder had been duly registered with the NHBRC.
• But, as it was involved in a dispute with the NHBRC, the builder did not itself enrol the homes. They were registered under the name of another entity.
• The builder however carried out the work itself, and in due course it sued the housing consumer for R1.1m.
• The builder lost, the Court holding that because of non-compliance with the registration requirements, it was “not entitled to claim compensation or payment for services rendered.”
• The end result – the builder (both the close corporation and its members) leaves with nothing. Except of course a doubtless substantial legal bill and the risk of prosecution for giving false or misleading information to the NHBRC.

Before you build…

• Make sure your builder is registered with the NHBRC and get a copy of the registration certificate – check that it is not expired. Go to nhbrc.org.za, call the NHBRC on 0800 200 824 or email it at nhbrc@nhbrc.org.za. Note that if you are an “owner builder” you may be exempt.
• You must have the NHBRC “certificate of proof of enrolment” of the house before any construction starts (you will need it anyway to get a bond for new house construction).
• Check that you are dealing with an experienced and reliable builder by asking for at least three recent client references, visit any active building sites to check quality of construction and materials for yourself, check with the NHBRC for the total number of houses enrolled by the builder and for any complaints lodged (check also on online consumer complaint sites for any negative or positive reports).
• Sign a full written contract with the builder, but only after your lawyer has checked it for you. Look for things like timelines, detailed building specs and plans, compliance with NHBRC technical requirements and its Home Building Manual, warranties given, deposits payable, agreed progress payments and the like.
• Make sure that all necessary municipal requirements have been met and that building plans have been approved.
• Keep your neighbours in the loop every step of the way – there is nothing like clear and open communication to nip any unhappiness or problems in the bud!

NOTE FOR ATTORNEYS: The judgement in Rabe Bouers CC v Chaya (2328/2015) [2020] ZALMPPHC 83 (30 October 2020) is on SAFLII.

See also the NHBRC’s “Why Register” webpage for more on the benefits of registration, obligations and penalties for failure to register.

The Housing Consumers Protection Measures Act, Act 95 of 1998, is downloadable from the University of Pretoria’s “Laws of South Africa” website – find it under “Housing”. Section 10A covers exemption for owner builders.

There is a “Housing Consumer Protection Bill” in the pipeline – draft available here – which would if promulgated replace the current Act and extend cover to home additions, alterations, renovations and repairs wherever municipal plans are required.

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