Zero compensation for land – should we be worried?

Dec 11, 2018 | Features, Local Property

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

With the introduction of the Bill in the National Assembly, the comments made on the Bill must also be submitted to the relevant chair once the Bill is introduced in Parliament.

Parliament has approved that the Constitution be amended to make explicit that expropriation without compensation, in some instances, is a legitimate means to acquire property in order to address the unequal distribution of land ownership in the country. What does that mean for the property industry? Should property investors wait to see what the exact wording of the amendment will be or is it safe to continue investing in property in SA? Constitution expert prof Elmien du Plessis sheds light on the subject and on what will happen next.

The only question the Constitutional Review Committee had to answer this year was this: should section 25 in the Constitution be amended or not regarding expropriation of property without compensation as a legitimate means to bring about land reform. On 15 November 2018, this committee adopted a report with their final recommendations to Parliament. The exact words of the findings are:

“Having taken all these into account, the Joint constitutional review Committee recommends:

  1. That Section 25 of the Constitution must be amended to make explicit that which is implicit in the Constitution, with regards to Expropriation of Land without Compensation, as a legitimate option for Land Reform, so as to address the historic wrongs caused by the arbitrary dispossession of land, and in so doing ensure equitable access to land and further empower the majority of South Africans to be productive participants in ownership, food security and agricultural reform programs.
  2. That Parliament must urgently establish a mechanism to effect the necessary amendment to the relevant part of Section 25 of the Constitution.
  3. Parliament must table, process and pass a Constitutional Amendment Bill before the end of the 5th Democratic Parliament in order to allow for expropriation without compensation.”

The committee was not mandated to recommend land reform policy, the technicalities of expropriation or what must happen after acquisition. This is the road that lies ahead now.

Parliament adopted the report – what happens next?

On 4 December 2018 the National Assembly approved the recommendations, and on the 5th of December the National Council of Provinces did the same. This means that parliament approved the recommendation that the Constitution must be amended, but it is by no means clear what the exact nature of the wording will be, nor what the post-acquisition plans are.

On 6 December the National Assembly adopted the motion that an ad hoc committee be established to draft the amendment. This is part a process in terms of section 74 of the Constitution (https://www.parliament.gov.za/press-releases/national-assembly-approves-process-amend-section-25-constitution). This requires that an amendment Bill, that specifies the exact wording, be drafted. This can only be drafted by the executive (ie ministers), a committee of the National Assembly or an individual member of the National assembly.

Once the Bill is written, it must be published in the Government Gazette 30 days before its introduction in Parliament. This will be the period for public comment. Any member of the public can comment on the Bill. The Bill must also be submitted to the nine provincial legislatures. This is usually a very time consuming and intensive process.

With the introduction of the Bill in the National Assembly, the comments made on the Bill must also be submitted to the relevant chair once the Bill is introduced in Parliament. The comments are tabled in Parliament and will be available to the public. The process is therefore transparent.

Once the Bill is introduced, it is referred to a particular committee of the National Assembly that must then consider the Bill in accordance to the rules. In terms of Parliament’s press release, this includes another round of public participation.

This Bill will be voted on after at least 30 days have passed since the introduction, and for the amendment of the Constitution, at least two-thirds of the National Assembly votes are required. This will then require another process in the National Council of Provinces, where at least 6 of the 9 provinces in the National Council of Provinces must vote for the adoption.

There is therefore a fairly long and technical road ahead. Since the recommendation is to “make explicit what is already implicit” in the Constitution, I don’t foresee that this will have a drastic legal impact on expropriation law. But the uncertainty and the unease, of course, is to be expected because this will be the first time that the Bill of Rights is amended.

Next: spelling out when zero compensation would apply

Parallel to the amendment process, there should be an updated version of the Expropriation Bill out soon that will spell out in what circumstances, under the current Constitution, zero compensation would be payable. This should reflect the ANC’s 54th conference resolutions (as discussed in a previous article) such as the Labour Tenant’s land, land held for purely speculative purposes (usually on the outskirts of cities, and often with informal settlements already on it); abandoned land etc.

This will bring more certainty in the market and empower people to make investment and other decisions. The likelihood of residential property, even property that is rented out, being targeted is small.

The political process has been confusing with conflicting information floating around, conflating issues and stoking up people’s fears and expectations. We must not forget that 2019 is an election year, and that land is a hot topic.

While the process so far has had an impact on the economy already, according to some economists, it is important to keep an eye on the legal process, which so far has been within the confines of the Constitution. While we should be worried about the uncertainty that the political environment is creating and the fact that fears and expectations are not adequately managed in the process, we also know that ANC policy is not large scale expropriation of land for nationalization, and that the process is still ongoing within the confides of the Constitution.

Ends.

Related articles: Expropriation with(out) compensation Part 1

Expropriation with(out) compensation Part 2

(On 4 December the ANC with the EFF and minor parties approved the Constitutional Review Committee’s report with a majority vote and only the Western Cape voted against amending the Constitution on 5 December. However, the EFF propose nationalization of all property which is not what the ANC wants, so we’ll have to see how the political solidarity on this matter will unfold. Ed.)

Email your questions or comments on the issue of expropriation of land without compensation to editor@propertyprofessional.co.za