More need for professional agents as credit amnesty looms

There’s a credit amnesty coming – and it will make it even more important for property sellers and landlords to enlist the help of qualified and experienced estate agents.
That’s the word from Jan Davel, MD of the RealNet estate agency group, who says the amnesty will no doubt be welcomed by many, but will make it extremely difficult to assess the creditworthiness of potential homebuyers and tenants.
The amnesty, proposed by the Department of Trade and Industry (DTI) and the National Credit Regulator (NCR), is expected to become law before the end of the year, and the most likely effect will be that credit bureaux are required to remove all adverse listings relating to debts of less than R10 000 going back to 2006 (irrespective of whether these have been settled or not), as well as all adverse information about paid up debts or judgments on a continuing basis.
It is anticipated that this will immediately apply to between 1,5million and 2million people with impaired credit records, most of them understood to be earning less than R15 000 a month.
“But in effect,” notes Davel, “the most the bureaux will now be able to do for anyone running a credit check on any consumer will be to provide information about current unpaid debts of R10 000 or more.
“Credit grantors will not have access to any records of previous bad payment habits, defaults or judgments, so there will be no way for them to assess how consumers managed their debt in the past or whether they are good or bad credit risks.”
In the real estate sector, he says, this will make it all the more important for landlords, for example, to engage the services of professional rental property management agents who can help to overcome this problem by obtaining additional information such as salary slips, bank statements and access a rental payment record from the Tenant Profile Network (TPN).
“Secondly, property sellers will need to be much more cautious about accepting offers on their homes – and rely more on professional agents and their mortgage origination partners to ensure that prospective buyers are properly pre-approved for the home loans they would require to fulfil the transaction.
“Sellers can suffer considerable financial loss if they accept an offer and take their property off the market only to discover later that the prospective buyer does not qualify for the necessary bond.”
Meanwhile, he says, would-be homebuyers can expect to encounter even stricter credit criteria than those in place at the moment when applying for home loans. “This is evident from the fact that the banks have strenuously opposed the idea of the credit amnesty, precisely on the grounds that it will increase risk and could result in consumers borrowing more than they can afford.
“What is more, they have said that their increased risk would probably have to be passed on to consumers in the form of higher interest rates on home loans and other debts – and noted that those who haveworked hard to pay their debts and keep their credit records clean would very likely be unfairly prejudiced in the process.”

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