Expropriation Bill, ‘not the draconian law’ property owners may think
Category LawDotNews
(DotNews, republished with permission)
We have recently heard a lot of populist rhetoric centred on the need for more aggressive expropriation policies and "expropriation without compensation". Some of the loudest cries have come from the President, the Economic Freedom Fighters and other political stakeholders. The long and short of it is a call for the State to be allowed to seize land from property owners without compensation. Although the call is a popular mantra to spout by politicians looking for votes in a country where land ownership is both highly contentious and racially skewed, the simple truth of it is that there will be no "expropriation without compensation" for as long as section 25 of the South African Constitution, which protects the right to property, remains as is.
The two most important innovations which the Bill has introduced relate to the process which the authorities must embark upon before expropriating property, and the manner in which compensation is determined.
Until now land expropriation has been addressed in The Expropriation Act, which pre-dated the South African Constitution by two decades. It is a draconian piece of legislation which confers extensive powers on the authorities (including government departments and municipalities) to expropriate. Little protection is given to property owners.
More recently, the Expropriation Bill, 2015 ("the Bill"), has been introduced as a complete replacement for the Expropriation Act. The introduction of the Bill has created some anxiety for property owners and investors, but this may be misplaced given that the Bill is vastly superior legislation in all respects and has been drafted in accordance with section 25 of the Constitution.
The two most important innovations which the Bill has introduced relate to the process which the authorities must embark upon before expropriating property, and the manner in which compensation is determined. The Bill provides that:
- the "power to expropriate property may not be exercised unless the expropriating authority has without success attempted to reach an agreement with the owner or the holder of an unregistered right in property for the acquisition thereof on reasonable terms"; and
- furthermore, before deciding to expropriate property, the expropriating authority must undertake an extensive investigation and information gathering process in order to determine whether it is necessary to expropriate the particular property.
Since expropriation is a drastic step which deprives the owner of a property of the owner's rights, the Bill effectively says to the authorities: investigate thoroughly, and then do all in your power to purchase the property on reasonable terms before expropriating.
In terms of the compensation to be paid for expropriated property, the Bill incorporates the approach adopted in section 25 of the Constitution, which requires the amount of compensation to be "just and equitable". This involves the determination of the market value of the property, adjusted by four factors: the current use, the history of the acquisition and use of the property, the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property, and the purpose of the expropriation. The meaning of these listed factors and "just and equitable" will, however, need to be fleshed out by our courts over time.
Critics of the Bill have proposed an alternative bill which requires the expropriating authority to obtain a high court order before confirming a proposed expropriation, and paying compensation in full before the expropriation. While these criticisms are worthy of consideration, and while the Bill can certainly be improved in certain respects, it is doubtful that the constitutionality of the Bill will be successfully challenged on these grounds.
Overall, the pre-expropriation steps introduced by the Bill are very significant improvements to the current act, which is totally outdated and needs to be replaced. The Bill largely incorporates the approach adopted in section 25 and will protect the owners of property in a manner which the current Expropriation Act fails to do. It should, in fact, go a long way towards ensuring that potential investors in property in South Africa are not deterred. Following from this, it is important that any misplaced fears about the Bill are put aside and that for the sake of expropriating authorities and property owners the Bill is finalised as soon as possible.
Author: Welgedacht Properties
