On February 23, Parliament passed the Expropriation Bill that will allow the state to pay for land at a value determined by a government adjudicator and then expropriate it. This effectively scraps the “willing buyer, willing seller” approach to land reform.
Despite the proposed intention of the bill to redress racial disparities in land ownership, there are a number of problematic clauses that make it possible for land to be expropriated unfairly. Dr Anthea Jeffery, head of policy research at the Institute of Race Relations, says the bill leaves property owners open to massive losses should government decide to expropriate their homes, land or other property.
One clause — the focus of much discussion, but which remains in the bill that has been passed — defines expropriation as “the compulsory acquisition of property by an expropriating authority”. Jeffery explains that this definition means that no expropriation has taken place if the state does not acquire ownership of the property.
“If the state says that it will take property as custodian, rather than as owner, then this is unlikely to count as an expropriation, and the current owner will then get no compensation,” she says.
The bill also allows for the “history” of the property to be taken into account when determining compensation for expropriation, allowing for a reduction in compensation based on past ownership. This formula, which comes from the property clause in the Constitution, means that compensation may be significantly less than market value.
At the same, the bill also allows the state to carry out an expropriation by serving a notice on the owner, which Jeffery says is unconstitutional. “The state has to go through a preliminary process and invite the owners to make representations, but it is not required to give reasons for rejecting these representations,” she explains. “Once it has investigated the value, it can simply expropriate without court approval and by service of a notice. Ownership of the property can pass to the state as early as the next day.”
A property owner who wants to challenge the validity of the expropriation or the compensation offered by the state must go to court to do so. In addition, the bill does not recognise losses through indirect expropriation — for instance, when a company is required to transfer 51% ownership of its business at a loss to a BEE investor, who might not have the full funds to cover the transaction. They will not be able to claim damages under the new bill.
Now that the bill has been passed by Parliament, it still has to be passed by the National Council of Provinces, after which it will be sent to President Zuma to be signed into law. “None of these concerns were addressed, and I doubt that the National Council of Provinces will not pass it, so it will be up to President Zuma to make a decision, and given the current focus on land reform in SA, I am fairly certain he will sign,” says Jeffery.
The most significant outcome of the passing of this bill will be the acceleration of the land reform process. However, the bill leaves the possibility wide open that any property could be expropriated with unfair compensation and without accessible channels for objection.
Words: Georgina Guedes
