Big problem with new land expropriation laws in South Africa

Legal experts have questioned whether South Africa’s new land expropriation laws will pass constitutional muster, and it will remain in doubt until the laws are challenged in court.

President Cyril Ramaphosa signed the Expropriation Act into law on 23 January 2025, sparking local and international blowback against what is seen as a threat to private land ownership in the country.

The Act is not yet in effect, with the commencement date yet to be announced. But this has not done much to help the growing negative discourse around the laws.

The Act replaced the 1975 Expropriation Act and adopts the language of Section 25 of the Constitution, which addresses the right to property and the conditions under which property may be expropriated.

According to law firm, Cliffe Dekker Hofmeyr, the Constitution highlights that property—whether movable or immovable—cannot be expropriated arbitrarily.

The new Act affirms this position, confirming that there has to be a legitimate public purpose or public interest underpinning the intended expropriation.

The laws also set out the factors which must be considered to determine suitable compensation for the expropriation.

However, herein lies the critical distinction, and the source of contention. Unlike the Constitution, which makes no provision for it, the Act introduces the concept of expropriation with “nil compensation”.

Cliffe Dekker Hofmeyr said that the Act brings express power given to the “expropriating authority” to offer nil compensation for the expropriation of “land”—i.e. immovable property—for public interest purposes.

This is after considering all relevant circumstances, including those specifically listed in section 12(3) in the Act.

The specific factors listed under section 12(3) – the nil compensation provision – are:

• Where the land is not being used and the owner of the land’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value;
• Where an organ of state holds land that it is not using for its core functions
• Where an owner has abandoned its land by failing to exercise control over it despite being reasonably capable of doing so; and
• Where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land.

However, the big question is now whether this is actually constitutional.

Critics of the Act have argued that it is not, while proponents say it is in line with the intention of the Constitution.

The legal experts noted that there was a previous attempt to change the Constitution to unambiguously offer no compensation, but this was rejected by the National Assembly and never came into force.

As it stands, the Constitution explicitly makes it clear that arbitrary land deprivation is not allowed, and that the expropriated party must be provided with compensation for the expropriation.

“Whether the wording of ‘nil compensation’ versus, for example, ‘no compensation’ is sufficient to succeed against a constitutional challenge can only ultimately be determined by our court, if and when the matter comes before it,” Cliffe Dekker Hofmeyr said.

New land expropriation laws bring some good changes

The legal experts noted that the “nil compensation” controversy wasn’t the only change in the laws, with the Act also introducing a far more structured process to be followed when the state wants to expropriate land.

This is a positive move, it said. Firstly, the expropriation process can be disputed, including the nil compensation provision.

Here, the parties must enter into a mediation process—something that was not present in the old laws, which opted for arbitration or referral to court.

In this way, the Act motivates for parties to find an amicable resolution. Only if this fails, can the matter move to court wthin 180 days of the notice to expropriate.

Secondly, the new laws introduce strict timelines that have to be adhered to and clarity on what processes need to be followed with bonds and other security.

However, given that many of these processes and timelines are untested, Cliffe Dekker Hofmeyr said that the approach of courts will impact how the Act plays out.

“The testing and development of legislative interpretation and implementation through the courts is not unusual and is as it should be in a constitutional democracy such as ours,” it said.

The legal experts said that the Act does a lot to bring structure to the expropriation process—much of which did not exist before.

It also brings a less “adversarial” approach to land expropriation, which the firm said is necessary when dealing with something of such a sensitive nature.

Unfortunately, because the Act also introduces many unknowns and questionable concepts like ‘nil compensation’, the implementation of the laws will likely come down to the courts.