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April 17, 2008

Draft land expropriation bill tabled in South Africa

Property would be expropriated if in the public interest, according to South Africa's Expropriation Bill, tabled in parliament on April 16.

“Expropriation in the public interest ... provides government with a tool to achieve ... land reform and reforms to bring about equitable access to all of South Africa’s natural resources,” according to a memorandum attached to the Bill.

This will broaden the scope of expropriation from the currently narrow term of “public purpose.”

The Bill provides for “just and equitable” compensation, which has to strike a balance between the public interest and the interests of the land owners. A decision on the amount takes into consideration the property’s current use, market value, the history of its acquisition and purpose of the expropriation. If agreement on compensation is not reached, an “expropriation authority” will make a determination, according to the Bill. This can be appealed in court.

The authority will also have the ability to depart from prescribed expropriation procedures where this is reasonable and justifiable. Under normal circumstances, the authority will first hear objections and representations before a decision to expropriate is taken.

The draft is the result of changes to the Expropriation Act of 1975. The changes would bring it in line with provisions in the Constitution dealing with equality, property rights, access to information and lawful, reasonable and fair administrative decision-making.

The Bill will be discussed by a Parliamentary committee before going to the National Council of Provinces for debate.

The Bill had the potential to weaken faith in SA property and to dilute property owning rights, say three senior Cape real estate agents.

“The previous Act, which dates back to pre-1994 days, did allow for expropriation, but only where this was deemed necessary for public works, like a school, a hospital, a road or a dam,” said one agent. “Furthermore, it stipulated that compensation had to be paid at market value, and that where the seller suffered emotionally (such as in having to give up a home) the State had to pay an extra sum known as a solatium.”

While new legislation may probably be necessary at this stage in South Africa’s transformation, some independent commentators have said that if the Bill goes through, it may infringe sections of the Constitution – not only because it could be enforced without prior discussion, but also because the amount of compensation would depend largely on what the state was prepared to offer and need not be market related.

Section 25 of the Constitution stipulates that before an expropriation is implemented there should be a genuine attempt by the state and the affected party to come to terms, in most cases referring the matter – including the amount of compensation – to an independent body or to the courts.

Section 25 also makes allowance for a whole range of factors which could influence the compensation, including whether the seller received low interest loans or subsidies. However, the emphasis is still on the individual’s rights, not the State’s prerogatives.

The Bill, if passed in its present form, would begin the process with the expropriation. Affected parties would have a right to appeal to the courts, but they would still be obliged to vacate their property on the stipulated date. Further, there could be no payment until the court had made a decision , which in some circumstances could take years.

The Bill also proposes that courts would be empowered only to decide whether the matter is in the public interest or not, and no longer to adjudicate on the time or manner of the expropriation or the compensation paid.

Some agents were concerned that the Bill proposes that the term “property” could be interpreted as anything material, including resources such as mines, land, or urban buildings. This would leave open a loophole that is open to abuse , especially as in its present form, the Bill would give the State the right to change the use to which the property is put.

“(If this was) the new Act, the conditions or terms of property expropriation (would be) greatly extended. The State now has only to say that it is in the public interest and they are free to expropriate,” said one CEO of an estate agency.

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