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EXPROPRIATION WITHOUT COMPENSATION

EXPROPRIATION WITHOUT COMPENSATION

The issue of EWC is stubbornly staying with us, and even urban home owners have started asking about the implications of what would happen to their home loans in the case of a house being expropriated without compensation. The Banking Association of South Africa’s response, that the bond is a contract between you as an individual and the Bank, and as such remains payable, did not do any good to the prevailing negative sentiment.
The LREAD attended a symposium on Expropriation without Compensation (EWC) on the 25th of February at the University of the Western Cape’s Institute for Poverty, Land and Agrarian Studies (PLAAS).

Prof Ruth Hall led the discussions, and provided a comprehensive overview of land reform policies and politics in South Africa. She mentioned case law where the SA Government in the past had the opportunity to flex its muscles to expropriate private land, but choose not to do it, and rather pay market value and in some cases an additional amount on top of the market value to compensate the expropriated owner for the discomfort. One of the best known cases is the MalaMala land restitution project. To quote a Financialmail article from 9 January 2020:
“The original asking price for the land, under the willing-buyer, willing-seller model, was R751m. The government rejected this as too expensive, and the case was set for the Constitutional Court, for a potentially precedent-setting ruling on expropriation of land without compensation. But in an out-of-court settlement, the state agreed to pay a staggering R1.1bn — effectively wiping out the entire annual budget of the Land Claims Commission.
With the above example as a frame of reference, Prof Hall encouraged the attendees to differentiate between “political theatre” on the one hand, and reality on the other hand.

According to Prof Hall, the current process to change the property clause in the Constitution is political theatre, where a lot of posturing and political noise is generated, but without any tangible affect. This is proven by cases such as MalaMala, where Government does not seem to have the appetite to expropriate, even when it has the opportunity to do so through the courts and using existing legislation.
The Expropriation Bill, which describes in detail the conditions when land can be expropriated without compensation, is the reality, according to Prof Hall. The Expropriation Bill is expected to be signed into law in the next few months. The conditions for such expropriation is explicitly set out in the Bill, and include:

  1. Abandoned land;
  2. State owned land;
  3. Land held purely for speculation;
  4. Land which government has already invested more in than it is worth;
  5. Land occupied by labour tenants.

These conditions are to Prof Hall’s mind relatively modest, and describes a government which is not ready or motivated to expropriate land on a large scale.
From the LREAD’s interpretation of the above, it seems that the hard work of land reform and agricultural transformation will not receive any silver bullets from either the Constitutional changes or the Expropriation Bill. Land transformation in agriculture is still in the hands of the people who are currently farming and owning it, together with the potential partners with whom they want to share it.

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