{"id":371862,"date":"2020-02-07T08:49:16","date_gmt":"2020-02-07T06:49:16","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=371862"},"modified":"2020-02-07T08:49:16","modified_gmt":"2020-02-07T06:49:16","slug":"pay-your-bond-but-lose-your-property-south-africas-big-land-expropriation-problem","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/371862\/pay-your-bond-but-lose-your-property-south-africas-big-land-expropriation-problem\/","title":{"rendered":"Pay your bond but lose your property – South Africa’s big land expropriation problem"},"content":{"rendered":"

Parliament has extended<\/a> <\/strong>the comment period for South Africa’s proposed land expropriation bill, but major questions remain around the legislation – especially how the law will impact banks and home loans.<\/p>\n

In its submission on the bill, the Banking Association of South Africa (BASA) said it fully supports government plans to rectify past racial injustices, to correct current land ownership patterns, to reduce inequality and alleviate poverty.<\/p>\n

However, the association said that this process should be undertaken in an orderly manner that does not dilute property rights in the country.<\/p>\n

“A marked decrease in the value of land-based property, caused by either an amendment to legislation and\/or market uncertainty, and the resultant reduced appetite from property buyers could destabilise the banking sector, and have a negative impact on the credit rating of the sector and the country,” it said.<\/p>\n

Basa said that the current exposure banks have in relation to land-based property is approximately R1.613 trillion in the form of mortgages<\/strong>.<\/p>\n

It added that this amount excludes other types of non-mortgage loans afforded to borrowers premised on their net worth, where their land-based property constitutes much of their net equity base and provides support to lenders for such loans in the event of default (the market value of land-based property is estimated to be in excess of R7 trillion).<\/p>\n

“Many banking crises around the world have as their starting point the decline in land-based property and the impact that this has on market confidence. An example of this is the 2007-2008 global financial crisis which started from the downturn of land-based properties in the United States of America,” it said.<\/p>\n

Loans<\/strong><\/p>\n

Basa said that a critical consequence of the bill would be the negative impact on the capital adequacy and the stability of commercial banks. It added that private-sector lenders could:<\/p>\n