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Expropriation Bill set to harm real estate sector

MAIN IMAGE: Rona Bekker, Senior Policy Advisor at the National Employers’ Association of South Africa (NEASA); Tony Clarke, Managing Director of the Rawson Property Group

Danie Keet

The controversial Expropriation Bill  was passed by the National Assembly (NA) last week taking it a step closer to becoming enacted in law.

The bill, which was rejected last year, currently allows the expropriation of land only for public purposes and in the interest of the public. The bill makes it possible for expropriation of land with “nil compensation” under specific circumstances.

These circumstances include abandoned land, state land, or land held for speculative purposes.

Public Works and Infrastructure Minister Patricia de Lille has tried to assure South Africans that the government has no intention of using the bill to “arbitrarily” seize land from private owners.

“It is extremely dangerous to suggest that government will arbitrarily take people’s property such as their homes. [Land] is an emotive issue,” she said.

Political parties have all objected to the bill for varying reasons.

Rona Bekker, Senior Policy Advisor at the National Employers’ Association of South Africa (NEASA), said the Expropriation Bill is nearing the final stages to be enacted as law. Although the IFP, the ACDP and the DA are against the EWC Bill in its current form, the ANC holds the majority seats in the National Assembly, which does not bode well for hopes to block the adoption of this destructive Bill.

“What should be intensely concerning and unsettling to South Africans, is not only the Expropriation Bill, but the possible dispensation being created by this Bill, in conjunction with the Land Court Bill, the ANC’s National Democratic Revolution and other existing pieces of legislation such as the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act.

“This collective drive will ensure that the Government has the power to take ‘custodianship’ of any and all property under an undefined guise of ‘public benefit or interest’, which includes the never-ending reiteration of land reform – all without compensation being compulsory. This might result in massive landgrabs, with the EFF constantly fuelling the fire of unlawful occupation, with property owners facing an up-hill battle to protect their property rights without governmental support,” she said.

NEASA opposed the implementation of the EWC Bill, for several reasons, one of which is the effect the Bill will have on small businessmen and -women, in both their capacity as consumers and employers of this country. It does not support any race-based policies which undermine the ability of small business owners and employers to function optimally in the local economic environment. Although ‘empowerment’ is one of the key focuses of NEASA on all levels, they believe that expropriating the property of any private business owner, will be devastating to, not only those business owners, but in effect their employees, investors, and the economy in its whole.

The EWC would cause tremendous uncertainty in the property sector in general. This fear regarding the security of property rights, supposedly enshrined and protected in the Constitution, will cause a massive shying-away from buying and owning any property. The consequent reduced appetite will be the factor which ensures the significant drop of property prices, devastating the property and banking sector simultaneously.

Tony Clarke, Managing Director of the Rawson Property Group,  says the Bill will have devastating effects on the real estate sector.

“The Expropriation Bill brings about uncertainty to South African landowners and investors alike. Land that is not used to generate an income and therefore not developed and where the owner seeks to keep the land and benefit from its appreciation, will, if the bill is passed and not challenged in court, be a target of expropriation without compensation. The fundamental purpose of investing in property is to capitalise on its appreciation over time even if the property is not developed or does not create an income for an owner.

“If that fundamental right is at risk, we will see less investment in property  and land will inevitably not be the first choice of investment going forward, which will have a negative impact on the value of all land, including developed land. Economic crises start when land values start dropping and land security is at risk. The subprime collapse in 2008 is a perfect example thereof,” Clarke said.

According to Clarke, the agricultural sector is acutely at risk. Farmers farm parts of their land at a time and allow land to be restored over time, or farmers acquire land when financially able to and hold the land until such time that they can financially develop that land. Such land could fall under the definition of the new bill’s “without compensation” clause. Farmers cannot be expected to plan due to this bill and food security will be negatively impacted.

“Whatever happens, land reform is going to play a vital role in the future of our country. How we achieve that reform will say a lot about our values as a nation and deeply influence our standing in the international community. I am optimistic that we will find a solution that empowers the people without impinging on our fundamental human rights. However, the restitution of land to victims of dispossession or the creation of homes for the many deprived of such an opportunity, cannot be achieved based on arbitrary deprivation of property from legitimate owners,” he concluded.

Jannie Fourie, Principal Property Practitioner, Agrisell Piketberg, said it does not make any sense to use land the generates an income to alleviate South Africa’s housing shortage.

“There is more than enough unproductive open land surrounding towns and cities to address that problem. The negative impact of land expropriation should now once and for all be put to bed to enable the agricultural sector to do what it is supposed to do – to produce high quality agricultural products for South Africa,” he said.

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