The Big Property Conundrum – LAND.

Time to Panic?

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Towards the end of February, the National Assembly adopted the EFF’s motion to amend the Constitution to allow expropriation without compensation. The proposed changes are to be made to section 25, commonly named the property clause.

Is now the time to pack our bags and flee? Or is this yet another example of, as Professor Steven Friendman puts it, a crisis followed by a compromise? In order to understand this, we need to peel back the layers and look at the facts.

Section 25

During the previous land expropriation debate, back in 2017, DA Shadow Minister of Science and Technology Annelie Lotriet highlighted the fact that: “Section 25 does not guarantee property rights, but merely protects it from arbitrary state interference. Deprivation that is not arbitrary is permissible.”

Bulelwa Mabasa, director and land claims specialist at Werksmans Attorneys echoes this: “as it stands at the moment, each case of expropriation is dealt with individually. The State may, in certain cases, already justify expropriation without compensation. But section 25 does not support unlimited and unfettered expropriation without compensation as a law of general application.”

Jeremy Cronin, the deputy Minister of Public Works, confirms this when he says that in certain cases it would be “just and equitable” for the compensation amount to be zero – thus paving the way for the state to expropriate without compensation under the current Constitution.

“Market value for compensation can be considered but there is no obligation for it to be considered. In the literal reading of the property clause [Section 25] landowners could get zero,”

Section 25 (2) says: “Property may be expropriated only in terms of law of general application — (a) for a public purpose or in the public interest; (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.”

While it’s regularly quoted in day-to-day conversation, the Constitution does not make any reference to “willing buyer, willing seller.” Instead, section 25(3) lists the criteria for compensation: “The amount of the compensation … must be just and equitable, reflecting an equitable balance between the public interest and the interest of those affected, having regard to all relevant circumstances, including – (a) the current use of the property; (b) the history of acquisition and use of the property; (c) the market value of the property; (d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and (e) the purpose of the expropriation.”

“Willing buyer, willing seller” would refer to the market value of the property being paid upon expropriation, only one of the possible conditions – and one that can be overruled with ease.

Even so, Carol Patton, Deputy editor of Business Day, explains that this has not been the route that events have followed: “Primarily because the state has hardly used expropriation at all and where it has, has tended to pay the market value for land, even as section 25(3) states is not the only criterion by which to determine compensation.”

This could very well change, if rhetoric is anything to go by. Recently, Rural Development and Land Reform Minister, Maite Nkoana-Mashabane said that she is preparing for a test case to expropriate land without compensation.

At the same time, several cases of land invasion popped up around the country. Dumisani Hlope, a political analyst, warned that these illegal occupations would continue as long as people feel that politicians fail to deliver on promises made during election seasons. Agri SA’s head of the Centre of Excellence on Land, Annelize Crosby, cautioned that: “Most of these invasions are taking place in urban areas and not on farm land. The trend has obviously got burning. It should concern all South Africans and government. While the frustrations are understandable‚ we cannot tolerate a situation in this country where it is a free-for-all.”

Free falling

Researchers at the Agricultural Business Chamber (Agbiz) Wandile Sihlobo, Theo Boshoff, and Sifiso Ntombela. recently published a paper exploring hypothetical scenarios for the land issue. The land grab scenario, they say, would mean that: “Aside from human rights violations becoming commonplace, employment would decline, production would fade and imports would rise, leading to high levels of food insecurity…This scenario would rank poorly from both an economic and a legal point of view.”

Cas Coovadia, MD of Banking Association SA (Basa) adds to the dystopian outlook by explaining that expropriation without compensation would erode property rights and would mean that land could no longer serve as collateral for loans. Chris Hattingh, a researcher at the Free Market Foundation, warns that: “As soon as the first property is seized, foreign investors will cease their operations and local investors will look for every possible avenue to get their businesses and property out of the country before it is taken from them.”

Neil Gopal, CEO of the South African Property Owners Association (SAPOA) raised his concerns as well, stating that: “The guarantee of private ownership to ensure investment, in tandem with addressing the ills of the past, is fundamental to a stable democracy.”

While it makes sense that those who own land are currently feeling nervous, angry, and confused, it’s worth a look at the technicalities behind land policy.

Land policy

Professor Ben Cousins explains that the country’s land policy rests on three main pillars: restitution, redistribution, and tenure reform. “Restitution involves people claiming back land taken away from them after June 1913, or compensation for their loss. Land redistribution involves acquiring and transferring land from white farmers to black farmers, for a variety of purposes, including farming and settlement. Tenure reform aims to secure the land rights of those whose rights are insecure as a result of past discrimination.”

According to Professor Cyril Mbatha, the current discussion surround land expropriation seems to confuse land restitution with land redistribution: “Expropriation, with or without compensation, would be appropriate as terms in restitution cases, where communities were forcibly removed, regardless of whether the communities have laid any land claims. It is the responsibility of the state, where possible, to get them back to the land. However, where redistribution is not about historically forced removals which require land claims in court, expropriation of land without compensation in relation to land redistribution programme does not make sense.”

He goes on to explain that redistribution is generally a BEE programme: “The government gives away its own land and buys other land to redistribute to previously disadvantaged community members to promote racial and gender transformation for productive and economic cultivation.” In restitution cases, the government has no moral authority to tell beneficiaries what to do with their land – something President Ramaphosa has highlighted during the SONA and which was again brought up in the ANC Nasrec conference resolutions.

Mbatha explains that the government is attempting to talk about too many concepts at the same time: “This is muddling complicated issues.”

The Nasrec resolution, finally released at the end of March, discusses the issue of land expropriation. A key phrase includes: “Expropriation of land without compensation should be among the key mechanisms available to government to give effect to land reform and redistribution.” This is, of course, followed by the now-famous reassurance that: “We must ensure that we do not undermine future investment in the economy, or damage agricultural production of food security. Furthermore, our interventions must not cause harm to other sectors of the economy.”

While the EFF’s motion in Parliament pushed for all land in the country to be state-owned, the resolution ties this down by stating that: “The ANC’s approach to land reform must be based on three separate elements: increased security of tenure, land restitution and land redistribution.” Simply put, this highlights the ANCs more traditional views on land. At the centre of the resolution is the focus on securing property rights for those at risk.

This has been an issue that has long plagued the government. It is a well-known fact that a society can’t prosper if people don’t have rights to property. This has been shown in countless countries, not least of which our neighbours, Zimbabwe. As long as the government holds the title deeds to properties given to benefactors, these people remain without rights. Hattingh summarises this by asking: “If your property is not secure, if it can be seized at any time, why would you invest time and money in developing your home, let alone an area?”

It would seem, then, that the issue at hand is less about the redistribution of land without compensation, and much more about securing the rights of all South Africans to own and use their property as they please. As always, these things don’t happen in a bubble. Amidst the drama unfolding around land, we have a ruling party trying to overcome its own internal divisions, the world’s rating agencies keeping a close eye, and a minority opposition igniting metaphorical fires as they go.

If ever there was a job for a man with a history of getting the job done, this would be it. It seems President Rampahosa has his work cut out for him.

 

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