How to check a developer and new development in Cape Town

Before you pay a deposit on a new development in Cape Town, check four things: that the seller is registered with the National Home Builders Registration Council (NHBRC), that your unit has its own enrolment certificate, that the contract sends your money to a trust account, and that the company behind the project is active and has finished buildings you can visit. Each check takes minutes and none relies on the developer's word.

This guide also explains what NHBRC enrolment does not protect, which is where buyers most often over-trust a certificate. It is general information, not legal advice: have a conveyancer read your contract before you sign. The rules below come from the Housing Consumers Protection Measures Act 95 of 1998, which is still in force. The Housing Consumer Protection Act 25 of 2024 will replace it from a date the Minister has yet to set, and it differs in places, so confirm the current position with the NHBRC or your conveyancer.

Is the seller registered with the NHBRC?

The Housing Consumers Protection Measures Act says nobody may carry on the business of a home builder, or receive any payment under an agreement with a buyer for the sale or construction of a home, unless they are a registered home builder (section 10(1)). Because the rule covers whoever receives your money, check the company named as seller in your contract, not only the contractor whose name is on the site board. A person who breaks the rule, and a director who knowingly allows it, faces a fine of up to R25,000 or up to a year in prison on each charge (section 21).

The Act also requires the NHBRC to keep a database of registered, suspended and deregistered builders. It must include the names of the directors, the number of homes the builder has enrolled, the number of valid complaints that needed on-site conciliation and the builder's grading, and it must be free to a buyer for their own non-commercial use (section 9). You can verify a builder by company name or registration number on the NHBRC's online services. What that site displays may be narrower than the Act describes, so if you cannot find a record, ask the developer for the registration number and phone the NHBRC on 0800 200 824.

Is your unit enrolled, and can you see the certificate?

Registration is the builder's licence; enrolment is done home by home. The NHBRC says the builder, not the buyer, must enrol each new home at least 15 days before construction starts. The builder must give you a copy of the certificate of proof of enrolment (section 14(3)). Ask for it, together with the enrolment number of your unit, and verify it with the NHBRC before you pay more than a reservation deposit.

Timing matters. The Act lets a builder demand or receive a deposit once a written agreement is in place, but it may not receive any other payment until the home has been enrolled (section 13(7)). The agreement must be in writing and signed, set out all the material terms, and have the specification of materials and the plans approved by the local authority attached (section 13(1)). A builder cannot contract out of the statutory warranties: any clause that waives them is void (section 13(6)).

Enrolment lets the NHBRC inspect the home at stages of construction and gives you cover from the date of occupation: three months for defects, one year for roof leaks and five years for major structural defects. The NHBRC is clear that the three-month snag list is not covered by its warranty and is the builder's responsibility, so list defects in writing and send them to the developer inside that window. Our step-by-step guide to buying off-plan shows where snagging fits in the process.

What NHBRC enrolment does not guarantee

• It can lapse before you move in. Enrolment is deemed cancelled if a court orders the builder's provisional liquidation or sequestration, or if its registration is withdrawn or suspended, before the occupation date (section 14(5)). The NHBRC may also cancel or suspend enrolment if it is not satisfied the home is built to its technical requirements (section 14(4)). It must then seek to inform you and advise you on your options (section 14(9)).

• Its fund is for defects. The Act obliges the NHBRC to pay for rectification of major structural defects (reported within five years of occupation) and roof leaks (within 12 months) where the builder is in breach and no longer exists or cannot meet its obligations, and the home was enrolled at occupation (section 17(1)). The NHBRC may reduce a payment or refuse a claim (section 17(2)).

• Completion risk and your deposit are a separate question. The Act says the NHBRC may set up further funds for enrolled homes a builder fails to complete and for deposits a builder misappropriates (section 15(5)). "May" is not a promise, and we did not find a published scheme confirming that such a fund operates, so ask the NHBRC directly before you rely on it. Your deposit's protection is the trust account rule below.

• Cash buyers get no second check. A bank may not lend against a bond to buy a home from a builder unless it is satisfied the builder is registered and the home is or will be enrolled, and the bond conveyancer must check this too (section 18). If you pay cash, nobody does it for you.

Where should your deposit go?

Section 26 of the Alienation of Land Act says nobody may receive payment under a deed of alienation for a unit until it is registrable, with two exceptions. The money may be kept in the trust account of an attorney or estate agent, or the seller may take it if you first receive an irrevocable, unconditional guarantee from a registered bank or insurer to repay it if the unit does not become registrable. If the seller becomes insolvent before the unit is registrable, money held in trust or guaranteed becomes payable to you immediately. The Property Practitioners Act separately requires trust money to be kept in a trust account.

In practice, pay only to the conveyancing attorney named in the agreement, and confirm the account details by phone with the firm before you transfer. Do not pay into the developer's own business account unless you hold the bank or insurer guarantee described above, and have your attorney confirm that the guarantee meets section 26 first. Reservation fees paid before a written agreement exists are where buyers have the least certainty, so ask in writing whether the fee is refundable and where it is held.

How do you check the company and its track record?

A registered builder can still be a weak counterparty. Spend an hour on the company and its history:

• Look up the company on the CIPC register. Search the name or registration number in the Companies and Intellectual Property Commission's online enterprise search (through CIPC eServices or BizPortal; you need a free profile and log-in). Check that its status is in business rather than in deregistration, liquidation or business rescue, and note the registered directors.

• Follow the people, not just the brand. Use the directors' names, which the NHBRC database also lists, to find their other projects. Check the company named in the contract, not only the name on the brochure.

• Compare promises with delivery. Find a finished building by the same people. Compare the original completion date with the real one, the brochure with the finished finishes, and ask owners and the managing agent how handover, snagging and levies went.

• Ask which approvals are in place. The City of Cape Town handles land use and building plan applications through its Development Application Management System (DAMS) on e-Services. Ask for the approved building plan reference and the zoning of the site, and for the start date of construction.

What to compare in the contract

Verbal promises about views, finishes or parking count for nothing unless they are written into the agreement. Before you sign, check that it has:

• the plans and the specification of materials attached, as the Act requires;

• the expected completion date and what happens if it slips;

• the trust account or guarantee that holds your deposit, and whether it is refundable;

• an estimate of the monthly levy and how it was worked out;

• whether the price includes VAT, which decides whether transfer duty applies (see our guide to what a new apartment costs).

Where to look: portals, the developer and RealSoon

Property portals such as Property24 and Private Property are the widest place to build a shortlist, but a listing is an advert placed by the seller: prices are often "from" prices, and older listings are not always taken down. Go to the developer for the dated price list, floor plan, specification and sale agreement, and to the public records above for everything you should not take on trust. Check the estate agent too: ask for a Fidelity Fund Certificate number and verify it on the Property Practitioners Regulatory Authority's portal.

RealSoon is an independent information site: we are not an estate agent or a developer, we do not sell property and we take no share of a sale. Read the area guides on our Cape Town page, browse current projects on our developments page, and always confirm prices and availability with the developer. Our South Africa overview summarises the rules behind these checks.

Before you pay a deposit

1. Get the dated price list and confirm your unit is available at that price.

2. Verify the seller's and builder's NHBRC registration.

3. Ask for the unit's enrolment certificate and number, and verify it before paying more than a reservation deposit.

4. Look up the company on the CIPC register and note its status and directors.

5. Read the agreement with your own attorney: plans and specification attached, completion date, levy estimate.

6. Confirm in writing, and by phone with the firm, whose trust account holds the deposit.

7. Ask which planning approvals are in place and when construction starts.

8. Visit a finished building by the same people and talk to its owners.