National Home Builders' Registration Council & another v Xantha Properties 18 (Pty) Ltd

The respondent, Xantha Properties 18 (Pty) Ltd, a registered home builder, embarked on a property development in Wynberg, Cape Town consisting of shops and 223 residential apartments. The respondent intended to rent the apartments to tenants, not sell them or develop them under a sectional title scheme. The respondent disputed its obligation under s 14(1) of the Housing Consumers Protection Measures Act 95 of 1998 to enrol the project with the National Home Builders' Registration Council (the first appellant) and pay the prescribed enrolment fee (exceeding R1.5 million). The respondent ultimately enrolled and paid under protest, then sought a declaratory order from the Western Cape High Court that s 14(1) did not require home builders to enrol homes built solely for rental purposes. The High Court (Nuku J) found in favor of the respondent. The appellants (the Council and the Minister of Human Settlements) appealed with leave.

• Whether s 14(1) of the Housing Consumers Protection Measures Act 95 of 1998 applies to homes being built with the intention that they be let and not sold
• Whether persons who rent homes are 'housing consumers' as defined in the Act
• Whether the definition of 'business of a home builder' as amended in 2008 to include 'leasing, renting out' required enrolment under s 14(1)
• Whether the relevant provisions of the Act and regulations were unconstitutional, unlawful or invalid as irrational if they compelled enrolment of rental properties

1. The appeal was upheld, with costs, including the costs of two counsel. 2. The order of the court a quo was set aside and substituted with: 'The application is dismissed with costs, including the costs of two counsel.'

Section 14(1) of the Housing Consumers Protection Measures Act 95 of 1998 applies to homes being built for the purpose of leasing or renting out. The amendment to the definition of 'business of a home builder' in 2008 to include 'leasing, renting out' was intended to apply throughout the Act, including to the enrolment requirements under s 14(1). There is no indication in the structure or purpose of the Act that the legislature intended to treat homes built for rental purposes differently from those built for sale. The underlying purpose of the Act is to ensure adequate housing by requiring competent builders to construct homes to approved standards, and this purpose applies equally to rental and sale properties. Without enrolment, inspectors would be unable to identify homes and fulfill their statutory duties under s 19.

The Court noted, without deciding, that it accepted for purposes of the judgment that tenants might not fall within the definition of 'housing consumers' under the Act (though the Court expressed doubt about this interpretation, noting that 'acquire' means 'come to possess' and is not limited to ownership). The Court observed that even purchasers have contractual remedies for defects, so the existence of such remedies for lessees does not distinguish rental properties from those for sale. The Court also noted that circumstances often change and homes built for rental might end up being sold, and requiring enrolment of all homes would prevent abuse by unscrupulous developers building inferior homes ostensibly for leasing then selling them. On the constitutional challenge, the Court emphasized that merely labeling litigation as 'constitutional' is insufficient to invoke the Biowatch principle - the issues must be genuine and substantive constitutional considerations, not commercial disputes dressed up as constitutional matters.

This judgment clarifies the scope of the Housing Consumers Protection Measures Act 95 of 1998, particularly confirming that the 2008 amendments requiring enrolment apply equally to residential properties built for rental purposes as to those built for sale. It reinforces the consumer-protection objectives of the Act and the importance of ensuring all homes meet prescribed structural and technical standards regardless of whether they are to be sold or let. The judgment also provides guidance on the Biowatch principle regarding costs in constitutional matters, confirming it does not apply to commercial disputes merely because constitutional rights are invoked.