Members of parliament met last week to discuss the long-awaited draft bill on land expropriation without compensation.
With the draft bill set to be published for public comment in the coming weeks, there has been some fear-mongering on social media platforms suggesting that the proposed law will lead to Zimbabwe-like land seizures.
As a result, Private Property spoke to the director of real estate at legal firm Cliffe Dekker Hofmeyr, John Webber, for clarification.
Section 25 of South Africa’s Constitution currently states that where compensation is payable for the expropriation of land by the state, the amount payable should be ‘just and equitable’.
It further states that ‘the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interest of those affected.’
Two different proposals have been made to amend section 25, said Webber.
“The first proposal is the adding of a proviso to the effect that only ‘a court may determine that no compensation is payable in the event of expropriation of land for purposes of land reform’ .
“The second proposal is that ‘land may be expropriated without the payment of any compensation as a legitimate option for land reform in order to redress the results of past racial discrimination.’
“The difference between these proposals is that the latter does not require the courts to decide on the value of compensation, meaning that various government departments and authorities could zero-value any land expropriated for land reform purposes.”
It is this difference that has conjured up the dreadful images of Zimbabwe’s land seizures, which in Webber’s view, is exaggerated.
“The fact is that our Constitution already allows for a number of factors to be considered in determining value. This amendment does not put us on the same road as that of Zimbabwe, but how people see the amendment and react to is what changes sentiment.”
The question on everyone’s lips is whether or not this amendment will have any impact on the owners of private properties.
However, Webber thinks that this is exceptionally unlikely.
“If it were to be applied it would have enormous unsettling effects on the whole economy,” he said.
He said that while the banks are subject to the rule of law, any compensation received by a property owner will first be applied towards settling the outstanding bond in respect of such property.
If no compensation was received, the banks would also receive nothing, he said.
“A carte blanche expropriation without compensation system would affect the banks’ propensity to lend money in the future, make tenure uncertain and raise interest rates. Should this happen the banks would grind to a halt,” Webber said.
“Market values would decrease, rates and taxes would similarly go down. These are just some of the many knock-on effects which would occur and which would be disastrous for the economy.”
Webber does believe there may be isolated cases of homes being expropriated – citing the building of a public road or a housing development, as examples.
“There has to be a public need for the expropriation, and the expropriation is restricted by what that future use or need is.”
That part of S25 is not being amended, it is only the issue of compensation which is under scrutiny.
“Private home owners are protected by S25 in that they reside in their home and it is for private use. It is not a public purpose or in the public interest to expropriate one’s home in order to give to someone else, leaving the original owner homeless.
“The government would achieve nothing by that musical chair arrangement,” he said.
Where to from here?
After being presented in parliament, Webber said that the bill will be deliberated by members of parliament – likely on 10 December 2019.
It will then be published in the Government Gazette for the public to comment on the bill until about the end of January next year.