Expropriation laws used to take R30 million land without paying
A court battle is erupting over the expropriation of a 34-hectare property in the City of Ekurhuleni without compensation, which the previous owners claim was worth R30 million.
According to business lobby group Sakeliga, the property is called portion 406 of the Driefontein Farm, which was expropriated without compensation in 2019.
While the City of Ekurhuleni has stated that the expropriation is make better use of the land and build houses for the poor, Sakeliga said the real intent is to test the limits of Section 25 of the Constitution and the country’s expropriation laws.
The property in question was explicitly stated by the city to be part of various ‘test cases’ for expropriation without compensation back in 2018.
Section 25 of the Constitution allows the government to expropriate land in the public interest, but specifies that it cannot be arbitrary deprivation of property, and that compensation must be just and equitable.
The ANC government had previously attempted to change the Constitution to allow for expropriation without compensation, but this was unsuccessful.
Instead, it pushed through new laws – being the Expropriation Act signed by president Cyril Ramaphosa at the start of the year – which allows the state to put forward ‘nil’ as the value of the compensation.
The laws, while signed, are not yet in effect.
Legal experts have stressed that the Expropriation Act still needs to align with Section 25 of the Constitution, and that the ‘nil’ compensation provision has to be tested in court to see if this is the case.
According to Sakeliga, six years after the initial notice of expropriation in February 2019 the matter is now scheduled for court-directed mediation in October and an 18-day trial in February 2026.
It noted that, at the time of expropriation, the owner was applying for development rights and the property was valued at no less than R30 million, with independent valuations since then ranging as high as R64 million.
“If market-related compensation is not restored, the case will herald an economic, political, and social crisis in South Africa,” it said.
Why zero compensation was offered
According to court documents around the case, the City of Ekurhuleni rejected the owners’ claim of R30 million for the property, saying that this was not “just and equitable”.
It said that the property had been standing vacant for 30 years, was being held for speculative purposes, and on the balance of needs, the public interest outweighed the owners’ rights.
It flagged:
- The property was vacant and had been vacant for 30 years
- The property had no improvements, and had not been improved for 30 years
- There were no leases, and had no leases for 30 years
- The property had never been sold at market value
While the property was expropriated under the previous Expropriation Act, the new laws outline very specific cases where the state may move to expropriate land without compensation.
Land held for speculative purposes, as the city alleges in this instance, is one of the cases.
However, the laws are not yet in effect, meaning the courts will have to apply the previous Act in this case.
To address the clause in that expropriation cannot be “abitrary deprivation”, the city said the land would be used for social housing to fulfil its obligations under the Housing Act.
“In a nutshell, it is in the public interest or for a public purpose for the City of Ekurhuleni to have expropriated the property in question in order to fulfill its obligations in terms Section 9 of the Housing Act,” it said.
“More importantly, to give effect to the constitutional rights in the Bill of Rights and any other interrelated right in respect of the poor, marginalized and vulnerable people who are residing in 123 different informal settlements, and condensed in 11,900 settlement units within the jurisdiction of the city.”
The city said it had over 43,112 poor people living in the city-owned hostels and had a backlog of housing in excess of 427,802.
The fight is on
However, Sakeliga said that the city was using the matter as a test case to set a precedent for the government to use to grab other land in South Africa.
“If the Driefontein expropriation without compensation is left to stand, it would have far-reaching consequences,” it said.
“Economically, valuations for all similar properties would have to be adjusted downward, constituting a loss to all direct and indirect, local and international holders of interest in such properties.”
This will ripple through financial markets, it said, and uncertainty of property ownership will have far-reaching effects on land stewardship, development, and trade, with knock-on harms to all productive economic and social land use.
“Politically, one should expect severe strain on the current coalition government and also within political parties in the coalition or aspiring to be in future local and national coalitions,” it added.
Moreover, foreign political scrutiny will escalate sharply, causing a crisis of legitimacy in the international arena. The Expropriation Act has drawn the ire of the United States in particular, and has already been used in political pushback against South Africa and the ANC.
The government has repeatedly defended the expropriation laws, saying they are extremely limited and only apply in very specific cases.
“Socially, allowing this expropriation without compensation to stand would quickly invite other state entities in South Africa to attempt the same and worse, and would embolden the organisers of illegal land invasions to unprecedented degrees,” the lobby group said.
Sakeliga CEO Piet le Roux said the group would be monitoring the case and has started lobbying political parties to take action.
It has also alerted businesses and property developers to the matter, and is drawing international attention to the case through lobbying trade representatives in other countries, including the United States.
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