PPRA Warns Against Misleading Property Valuations

The Property Practitioners Regulatory Authority (PPRA) has issued a stern reminder to property practitioners regarding market and rental valuations, emphasizing the importance of ethical conduct in property transactions. This update is crucial for accountants working with property clients, as misleading valuations can have serious financial and legal consequences.

Key Takeaways from the PPRA Notice

1. No Misleading Valuations
   Property practitioners cannot inflate or misrepresent the market value or rental income of a property to secure a mandate. Misrepresenting figures not only violates ethical standards but can also lead to legal action.

2. False Statements are Prohibited
   Under the PPRA’s Code of Conduct, property practitioners must not make false statements—whether knowingly or negligently—regarding property values. Signing off on incorrect financial information, even unintentionally, can result in disciplinary action.

3. No False Claims of Expertise
   A property practitioner cannot claim to be a valuation expert unless they are officially registered with the South African Council for the Property Valuers Profession (SACPVP). While practitioners can offer general assessments, only registered valuers can conduct professional valuations.

4. Misleading Marketing is Banned
   Using aggressive or deceptive marketing tactics to influence clients into signing a mandate is strictly forbidden. Ethical marketing practices must be followed at all times.

5. Non-Compliance Can Lead to Sanctions
   Under the Property Practitioners Act 22 of 2019, any property practitioner who violates these rules can face sanctions. This could impact business operations and credibility within the sector.

Why This Matters for Accountants

Accountants should ensure their property-sector clients comply with these regulations. Any misstatement in financial reports based on inflated property valuations could lead to reputational damage, financial penalties, or even legal repercussions. This is a reminder that due diligence and ethical financial reporting are critical in the property sector. Accountants should educate their clients on these regulations to avoid costly mistakes.