Wesbank

BBS backs down

SHARE   |   Tuesday, 05 July 2016   |   By Ditiro Motlhabane
Property in Gaborone Property in Gaborone

Property valuers contracted to Botswana Building Society (BBS) are in massive celebrations after scoring a landmark victory when the Society cowed to pressure and reversed a long standing decision by management to impose a flat rate for valuation fees. The Society notified the property valuers, through the Regulator of activities and conduct of registered real estate professionals - Real Estate Advisory Council (REAC), on June 17 that they will now be paid valuation fees at the rate of 0.15 % for the different properties they have been allocated for 2016/17 financial year. Now, property valuers will be smiling all the way to the bank after BBS caved in to their demands for a reasonable offer, as they anticipate good returns from the contracts which have suddenly turned lucrative as they involve thousands of properties under the BBS portfolio in different parts of the country. At the agreed 0.15% rate, a property valued at P5 million can fetch P7 500 in valuation fees way above the P1 000 initially offered by BBS. "Yes, we are very happy with this development. It is close to what we have been advocating for. Although it does not follow the Guidelines set out in the Act it is an improvement from what we used to get. Valuers will now get what is due to them, and in turn pay the appropriate VAT to government," said a source close to the developments.


This comes after protracted negotiations between BBS and the regulatory body for real estate practitioners (REAC) and their association – Real Estate Institute of Botswana (REIB). Before the introduction of the new fees BBS had insisted that the valuation fee for properties in Gaborone be P1 000.00 plus VAT and P2 000.00 plus VAT for outside properties. The parties fell out after property valuers and REIB rejected the BBS initial offer of a flat P1 000, arguing that it violates the Real Estate Professionals Act 2009, which sets out guidelines on the calculation of valuation fees. Two weeks ago BBS spokesperson Sipho Showa said both parties have since come to an agreement on rates to be charged by members of REAC engaged by BBS. He, however, did not divulge the details of the agreement. REAC Registrar Mike Tumagole also confirmed that a new deal has been cut, but declined to elaborate further. Although Tumagole last Sunday caused publication of a purported rebuttal "in the strongest terms" of a story carried by this publication in the preceding week The Patriot on Sunday is in possession of documents showing that he was being economical with the truth. Although he claimed negotiations were held in cordial atmosphere which was characterised by mutual understanding, property valuers who spoke to this publication told a different story.


Although Tumagole expressed "utter shock and dismay at untrue statements meant to derail our meeting and to tarnish the good image and cordial relationship that existed with BBS over the years", such could not be further from the truth. The Patriot on Sunday is in possession of documents showing that on May 03, REIB Secretary General Marilyn Mosha instructed their members not to accept the instruction from BBS as it did not comply with the Act. She cautioned the valuers that non-compliance could earn them the wrath of the regulator – REAC. Tumagole also conceded that some sections of the Act and Regulations required thorough interpretation, which led to the valuation instructions being suspended. He, however, failed to explain why the May 10 suspension was lifted shortly thereafter by BBS without any agreement reached with the valuers. He instead confirmed that negotiations ultimately resulted in both parties agreeing to the interpretation of the section that was followed by the "correct valuation fee rates being adopted and applied". This decision was communicated by REAC via a WhatsApp group on June 17.


Minutes of the REAC meeting of May 03, seen by The Patriot on Sunday, further expose Tumagole's contradictions on the BBS saga. In Matters Arising from the Meeting held on March 15, 2016 Chairman Montshwari Mooketsi advised that REAC should engage commercial banks regarding valuers' panels. He further said "if the banks are not responsive, both the Chairman and deputy Chairman (to) appoint with the Governor of BOB". The Chairman indicated that the issue needed a bigger strategy and a position paper has been submitted to the Minister and the PS to intervene. "He (Mooketsi) cited an example of BBS which has decided to pay valuers P1, 000.00 per report which is in conflict with the mandatory fee scale. REAC should write a letter to BBS that they are in breach of the Act and also individual valuers not to accept such instructions as Council (REAC) may take serious action against them," reads part of the minutes, which culminated in the REIB’s letter to BBS on the same day.