Following the adoption of a motion by Parliament in late May, the matter is now with Parliament's Constitutional Review Committee who will consider whether to amend the Constitution and how it will be done.
Since then, there have been various media reports on the topic, often creating confusion in the property market. It is vital to note that it is very early in the process and there is no need to panic or pay attention to the sensational publicity on the topic. The process is still a long way off from being proclaimed into law and it would still need to pass through rigorous processes.
We have also seen President Cyril Ramaphosa and the ANC come out strongly and reiterating that no land grabs in any form will be tolerated whatsoever and that any expropriation will be done within the confines of the law and with the utmost care, and in pursuance of economic growth and development and business and investor confidence.
SA has a very robust and progressive Constitution, regarded as one of the best in the world, and all laws have to be in line it. Property rights are currently protected by Section 25, but there are many other safeguards and such a law regarding land expropriation without compensation is expected to be subjected to rigorous litigious tests. It would also be necessary to change the Land Restitution Act and there are currently no proposed or draft amendments to either this act, or the Constitution.
Without detracting from the need for land reform and redistribution, constitutional and legal experts and economists have expressed doubt about whether such a law would pass the many other tests provided for by the Constitution.
The current proposal is around agricultural land and there are many concerns surrounding the mechanisms of expropriation and the effect on the greater community, property owners and, in particular, the financial and economic impact. Banks, for example, in addition to agricultural land bonds, also provide extensive loans to this sector hedged against crop yields and other assets. There is also the impact on the futures market to consider.
Also of great concern is the fact that land expropriation and nationalisation have a poor record internationally and most experts believe that there is no case study of success to draw from. There are already concerns about current food insecurity and lack of success insofar as agricultural land reforms are concerned. Some commentators have proposed that perhaps a hybrid approach in the form of a blended financing model and BEE in agriculture might be used to transform productive farmland, specifically land which is uninhabited, unused and unbonded, but again, given the lack of success thus far, this too would need a whole new approach.
In any event, what is clear is that government is still a long way off from a workable solution and the need for economic growth will have to drive any land reform. It is therefore vital for property owners, buyers and investors to note that it remains business as usual for property ownership, the property market and all legislative protection is still in force.
