Expropriation without compensation is coming - here's how it will work

Business Insider SA
Photo: Mlungisi Louw

  • This week, South Africa’s Expropriation Bill was gazetted.
  • It will for the first time allow the expropriation of property without compensation.
  • But this can only happen in select circumstances, and the courts will remain the ultimate arbiter.
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The new Expropriation Bill 2020 was gazetted on Friday, and will now be submitted to parliament. A process is also underway to amend Section 25 of South Africa’s constitution.

Together, they will for the first time allow expropriation without compensation in South Africa.

Here’s what will change

As in many other countries, expropriation has been part of South African law for decades. The state has expropriated land to build roads, hospitals, and even for the Gautrain.

But the new changes will allow the state not to pay for land, and will also allow expropriation to be used for land reform.

The bill says property can only be confiscated when it serves a public purpose or is in the public interest. “It may not be exercised unless the expropriating authority has without success attempted to reach an agreement with the owner or holder of a right in property for the acquisition thereof on reasonable terms.”

The new law also states that the property owners must receive a “just and equitable” amount for the property – “reflecting an equitable balance between the public interest and the interests of the expropriated owner”. The amount that the owner is entitled to must take into account a long list of determinants, including its market value.

But the new law also makes provision for property to be taken without payment.

When will government be able to take land without paying for it?

The bill states that it “may be just and equitable for nil compensation to be paid where land is expropriated in the public interest” in these circumstances (but not limited to them):

  • where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from the increase of its market value.
  • where a government institution holds land – which it got for free – and it’s not using the land for its “core functions” and is not reasonably likely to require the land for its future activities in that regard
  • where an owner has abandoned the land by “failing to exercise control over it”
  • where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land; and
  • when the nature or condition of the property poses a health, safety or physical risk to persons or other property.

Who will decide whether land can be expropriated?

Expropriation without compensation will only be used in very limited circumstances, and the courts will have to be satisfied before it will be allowed, says Bulelwa Mabasa, director and head of the land reform restitution and tenure at Werksmans, and a member of the Presidential Advisory Panel on Land Reform.  

It’s quite contrary to what happened in the Zimbabwe land reform programme, and is not akin to nationalisation, she told Bruce Whitfield on 702’s The Money Show.

The land owner will have to receive notice well in advance, and get a chance to object. The state will have to give reasons for why the land is needed and for what purpose the land will be used. The power to determine whether land can be confiscated still lies with court, ultimately.

Mabasa welcomed the new bill, saying it will bring more “clarity” for prospective investors in South Africa – but she warned that expropriation without compensation won’t solve South Africa’s land reform issues.

Even Public Works and Infrastructure Minister Patricia de Lille warned this week that it isn’t a silver bullet. "It is only but one acquisition mechanism that in appropriate cases will enable land reform and redress," De Lille said.

But professor Ruth Hall from the University of the Western Cape's Institute for Poverty, Land and Agrarian Studies – who also serves on the presidential panel on land reform - says it could help some “stuck” land claims to move forward, for a start.

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