In September 2022, the Expropriation Bill was passed by the National Assembly, taking a big step towards becoming enacted in law. In its current format, the bill allows for the possibility of nil compensation for expropriation. To say it has been controversial since it was first tabled in 2008 would be an understatement. While some see the bill’s potential to open up land ownership, others believe the bill will undermine access to capital and erode private property rights.
Public Works and Infrastructure Minister Patricia de Lille has assured South Africans that the government would not use the bill to arbitrarily seize land from private owners. However, it seems the majority of local real estate professionals are not buying into this narrative according to Prop Data’s latest poll.
Unpacking the Expropriation Bill poll results
In October 2022, Prop Data polled property practitioners on their feelings towards the Expropriation Bill. The results found:
82.5% feel negative about the bill.
11.8% feel neutral about the bill.
5.7% feel positive about the bill.
Commenting on the results, Brett Mantel, Principal at Jawitz Properties Midlands, says he is surprised the results were not 100% negative about the bill. “This bill has the capacity to threaten our very careers and do untold damage to not only the property industry from a practitioner’s perspective, but to the value of property and to the economy as a whole. I believe that all property practitioners, property owners, and in fact all South Africans should be incredibly concerned by it.”
The Expropriation Bill's impact on the real estate industry
Real estate professionals have long warned of the dangers the bill will have on the property industry. This includes the government having the power to take ‘custodianship’ of any and all property under an undefined guise of ‘public benefit or interest’. This might result in massive land grabs. Undeveloped farmland might also be at risk for expropriation as it could fall under the definition of the new bill’s ‘expropriation without compensation (EWC)’ clause.
Mantel points out that it is difficult to predict what could happen as there are a lot of variables to consider. “It would largely depend on what activities happen as a result of the bill being passed. At the extreme, if we start to see properties being expropriated en masse with no compensation, this will undermine the underlying value of property as an asset class, it will annihilate banks who have a significant mortgage book, and we will see the hard-earned wealth of everyday South Africans eroded as property prices plummet. We know that currently, expropriation is a reality, but it is the ‘without compensation’ bit that has the potential for untold damage across the economy,” he says.
What can concerned property practitioners do?
According to Mantel, concerned property practitioners should support bodies who feel negatively about the bill and are championing their cause. “You can sign petitions, share information with your network, donate to organisations (such as Dear South Africa) who fight hard daily for the good of all South Africans, and consider volunteering your time to assist in their efforts. We are not helpless unless we choose not to take action,” he affirms.
Jan Minnie, Director of Island Prime Consulting ltd, encourages property practitioners to take time to read the bill in its entirety. He says they would be surprised at some of the details such as custodianship. “Custodianship in effect means that the government can take custodianship of your property, business, etc. You will remain in ownership but the government will be the custodian and able to dictate if and when you can sell and to whom. This has been approved by all major banks except one. This in effect covers the banks because you will still have to pay your bond even though in effect you are no longer the king of your castle.”
He also adds that the custodian clause in the bill makes provision for the government to take from its citizens anything, not just property. It can be your business, your car, or anything else you own.
Brace yourself for the Expropriation Bill
Minnie believes property practitioners need to understand that EWC is a reality. He prompts all to take a knowledge-is-power approach and keep up to date with any new developments.
Mantel refers to a quote popularly attributed to Edmund Burke: “The only thing necessary for evil to triumph in the world is that good men/women do nothing”. He encourages everyone to make their voice heard and keep fighting for their place at the table.