Estates and complexes with service deals face backlash

Homeowners' Associations (HOAs) are facing scrutiny over exclusive service agreements that limit residents’ choices for essential services, notably internet providers.

Spokesperson for the Competition Commission Siya Makunga reports an increase in complaints, as many HOAs monopolise service providers, particularly in internet access, leading to higher costs and reduced quality.

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These arrangements often prevent residents from choosing more affordable or suitable options, creating monopolies that some argue violate competition laws.

The Commission’s recent advocacy campaign highlights that, despite the National Integrated ICT Policy White Paper’s 2016 call for ISP choice, weak enforcement is allowing HOAs to restrict providers within estates, reports BusinessTech.

The issue extends to property sales. The Real Estate Business Owners of South Africa (Rebosa) revealed that some HOAs are also imposing something called “access fees” on agents for entry. These fees are sometimes as high as 1% of the property’s price, limiting options for sellers and favouring larger agents.

Rebosa CEO Jan le Roux says that under competition law, these fees are illegal.

As calls for legislative reform grow, HOAs face mounting pressure to adopt transparent practices that support resident choice and affordability or risk potential legal and reputational consequences.

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