Expropriation with(out) compensation: unpacking the issues (part 1)

Oct 3, 2018 | Local Property

Prof. Elmien du Plessis is an Associate Professor in the Faculty of Law at North-West University.

The payment of compensation is a consequence of a properly authorised expropriation.

People are understandably anxious about some of the statements made on expropriation of land without compensation, however if viewed from a legal perspective, it is possible to distil a consistent message through official documentation and the communication from the presidency. Elmien du Plessis, Associate Professor in Law at North-West University, unpacks the main issues.

Since the ANC announced, at its 54th National Conference, that it wants to start employing expropriation without compensation as one of the key mechanisms for government to acquire land for land reform, there has been a lot of conflicting statements published. People are understandably anxious about some of the public conversations in the political realm, so it is important to understand the legal basis for expropriation.

Expropriation is a mechanism for the state to acquire property for land reform purposes. Unlike buying the land through negotiation, expropriation is a compulsory acquisition that only the state has. Since it is an infringement on property rights, there are strict requirements that the state needs to adhere to when exercising this power. No private person can ‘expropriate’ property. When someone therefore occupies your land without your permission, it is not expropriation.

Legal requirements around expropriation

The state needs the power to expropriate when it wants to do public projects such as building roads or railways, or if it is in the public interest namely land reform. This purpose or interest is spelled out in legislation – if there is no underlying purpose or if it is not done in terms of land reform legislation that spells out the interest, it is not an authorised expropriation. There are also strict procedural guidelines laid down in the Expropriation Act of 1975 that must be adhered to.

An owner cannot choose not to be expropriated, but they can make sure that the state expropriates the property within the rule of law. Our judicial system recently showed that it could keep the government from exercising its expropriation powers in instances where the state couldn’t prove an underlying restitution claim, in other words the state couldn’t justify public interest

The payment of compensation is a consequence of a properly authorised expropriation. This means that the state can expropriate the property with the compensation issue being dealt with separately. If the parties cannot agree to it, the matter can go to the courts to determine the compensation.

‘Just and equitable’ compensation

The South African compensation standard is ‘just and equitable’ compensation, not market value. While in many instances market value will be ‘just and equitable’, it could also be less, or even more, than market value. What is just and equitable has not been adequately tested in our Constitutional Court in the case of land reform, or challenged by the state, mostly because the state has to date not expropriated any property for land reform purposes.

Since determining what is just and equitable requires weighing up the interests affected against the public interest (section 25(3) of the Constitution), the argument is that in some instances, that balancing can rest on R0. This, however, is only foreseen in very limited instances, such as in the case of abandoned, hijacked and unmaintained buildings and portions of farms on which labour tenants have been residing for decades. There is no talk of a blanket expropriation of all property or productive property for no compensation.

“Property” and “expropriation”: risk to residential properties

The Constitution qualifies ‘property’ as not being limited to land. Yet the ANC’s 54th National Conference resolution on expropriation and its subsequent motion in parliament to consider whether Section 25 of the Constitution needs to be amended limits the discussion to the expropriation of land. This is one area where some clarity would be helpful.

The only urban or residential property that seems to be at risk is dilapidated inner city buildings where the owner can no longer be found. There are no talks of expropriating the second property of owners. Many owners of holiday houses are worried whether their holiday homes constitute “abandoned” property. I am of the opinion it does not, for the very reason that the property is not abandoned in the same sense that the so-called high-jacked buildings in the inner city of Johannesburg are abandoned, for instance. Most owners pay their taxes and intend to return to the property during holiday times. But probably most important is the fact that, as far as urban property is concerned, the emphasis falls on affordable housing close to work and schools. Most holiday homes will not fall into this category.

Expropriation as a way for the state to acquire property is not an end in itself. Without proper guidelines and policies to answer the ‘what after expropriation?’ question, land reform will stagnate and expropriation will be meaningless. This will lead to more frustrated people, and more land invasions will most probably follow to protest government inefficiency. This is not beneficial in any way. It is therefore in the interest of South Africa that land reform happens, and that it does so in a sensible and sustainable way and – most importantly – within the rule of law.

Related reading: How fears about land expropriation impact current property market

This ends first part of the article Professor Du Plessis wrote for Property Professional on expropriation of land with(out) compensation. Next week she looks at appears to be the plan of the ANC, what the chances are of any changes made to the Constitution before the election in 2019 and what to do in the meantime. If you have any questions for Professor Du Plessis, please email them to editor@propertyprofessional.co.za.

 

About the author: Elmien (WJ) du Plessis is an Associate Professor in the Faculty of Law at the North-West University, South Africa. She holds BA (International relations), LLB and LLD degrees from the University of Stellenbosch. She obtained her doctorate on Compensation for Expropriation under the Constitution in 2009. She is interested in property law issues, especially in the land reform context, and has published numerous articles and chapters in this area. She is an NRF Thuthuka grant-holder. She has a passion for finding the human element in law and likes to ensure that legal rules make sense in the real world. (Source: http://news.nwu.ac.za)