“I can’t find a home!” – Racism in the SA real estate industry and what the government is doing to help. By Devan Moonsamy – CEO the ICHAF Training Institute
Some of you may know how difficult it is to deal with real estate agents, and how hopeless one can feel when searching for a home to rent or buy. Sometimes it feels like unless you are standing in front of them with cash or an approved bond in hand you are almost invisible to them. It’s no exaggeration to say that some are sharks.
They don’t phone you back, they don’t reply to emails, they don’t seem interested in serving clients. That’s not to say all real estate agents are bad, some of very helpful. But there does seem to be an overall poor level of customer service. Perhaps because of the nature of the industry, it allows room for unethical practices.
Myself, colleagues and friends of mine have simply heart-breaking stories to tell about how dazed, hopeless and insulted we have felt trying to find a place to buy or rent. Very few real estate agents stay in contact and treat you like a human being.
A friend in Cape Town couldn’t help laughing when she read that a place 3km from the coast is, “A stone’s throw from the beach.” When questioned about this, the agent said that’s advertised for “the people from Joburg”. Apparently, Joburgers can’t tell the difference between 30m and 3 000m… One can’t believe the lies!
But there is more to this story, much more. It’s not just about lousy service and obscuring the truth. It really feels like there is racism adding to the problem. In fact, we know there is racism looking at the evidence.
For example, in Cape Town, one real estate agency advertises on its fliers that they are not racist. They explicitly state that they don’t discriminate on the basis of colour against people applying to buy in a new development. Why on earth should they feel the need to state this in their advertising?
People must be communicating bad experiences to them, experiences of being racially profiled and ignored for having a dark skin. Seeing the struggles of these folk, they explicitly advertise not to worry about this when dealing with them. On the one hand, it is a good selling point. How do real estate agents hope to make sales by ignoring over 80% of the population? On the other hand, it is a kindness of them, considering how much racism others seem to be getting away with.
It’s shocking, but not entirely unexpected when I place it in the context of my own recent experiences in trying to find a property. I have faced similar discrimination when travelling as a tourist, when shopping, and in the workplace. It may be easier for me personally to see when racism is happening because I compare it to how my white companions, especially my long-time white partner, are treated compared to me – sometimes when we are in the same room.
Various demographics almost always play a role. Young single men of all races have also related how difficult it is to find a place to rent. Why? It seems because they are male, and landlords and ladies prefer female tenants or couples. But preferably without children and pets of course.
Recently, someone gave an excellent review to a young gentleman looking for a new place. The previous landlady was very happy with him. But no matter how well she spoke about him, he kept getting turned away. If we add to this the requirement that tenants and buyers be white, it must narrow the market tremendously.
Ideally, the focus should be on who needs housing most. A decent home to live in shouldn’t be a luxury, and the property market should be needs driven. Still, many factors combine to make it difficult for the ordinary South African to secure a decent, affordable roof over their heads.
There is another inconsistency: most real estate agents are white. I didn’t deal with a single coloured, Indian or black agent in Cape Town while looking for a place. Having monitored the property market for the right place over more than two years, my employee from Cape Town also reports having dealt with just one non-white agent.
Real estate agencies have too firm a hold on property and the trends that affect it. Many people are being locked out of the market by excessive prices, the nightmare of dealing with agents, and discrimination. One factor that comes into play is that many previously whites-only areas are still largely dominated by white people. Integration takes time certainly. However, white agents have a firm hold on the property market in certain areas. They have the power to prevent non-whites from accessing housing in these neighbourhoods. All they have to do is ignore prospective non-white tenants and buyers. White agents may be overly protective of the white areas they live and work in.
It’s something which is very hard to prove of course, and it’s very hard to enforce non-discriminatory practices in an industry which is already so open to abuse.
A further question I have is why buyers can’t find private sellers and thus get around agents. There doesn’t seem to be any website or other forms of advertising for private buyers and sellers. Who is squashing this market and how are they doing so? There must be a way to remove the middle person and thus reduce costs in the housing market.
In conclusion, I would like to point out solutions to some of these problems. The government has announced the launch of its Megacities projects and various related programmes aimed specifically at helping the millions who are struggling to access housing and basic services.
What is encouraging is the Finance Linked Individual Subsidy Programme (FLISP). It is specifically aimed at first-time homebuyers who are stuck in “real estate limbo”. These are people who don’t meet the criteria for RDP housing, but who also can’t afford bond repayments. It provides this large but underserved group a chance at owning their own property.
I urge readers to find out more about the FLISP and Megacities projects to see if they meet the requirements. It looks to be a fantastic opportunity for many South Africans to finally break the chains around the real estate market.