Ever since the possibility of land expropriation (with or without compensation) hit mainstream media, it’s been shrouded in uncertainty and plagued by fearmongering. Will residential properties be subject to expropriation? If so, will homeowners be compensated? Will they be forced out onto the street? How will properties be selected? Will there be any kind of lead time? We don’t have all the answers, but one thing we do know is that uncertainty only fuels more uncertainty. This piece sets out to dispel as much of that as possible.

Before delving further into the issue, we have to address the fearmongering. Alarmists and conspiracy theorists have been spreading misinformation as far and wide as possible, making outrageous claims including the destruction of wealth and that commercial banks will go bankrupt. This is simply not true.

As Mark Milner from Alan Levy states, “for an economy to function, money has to be advanced. It stands to reason that if the government decided to expropriate properties where bonds were in place, the banks would stop granting bonds because there would be no guarantee of a return on investment. If the banks left the property market, there would be no property market.”

He continues, “In my view, these levels of paranoia are not necessarily justified, mainly because the new [expropriation] Bill provides far more rights and far more considerations than its predecessor ever did. The mechanisms that are in place (including the Constitutional Court) and which have always protected landowners are going to continue to function.

“What also needs to be remembered is that the government cannot simply state that it’s going to expropriate land; there is a process to be followed, and anyone who is affected by the decision has the right to be compensated for the loss of the property.”

It’s imperative to remember that no changes have been made to the bill yet and the Joint Constitutional Review Committee has again requested more time to assess all submissions from the nation’s citizens regarding the issue. It is now expected that its work will be finalised by the end of November. Even so, homeowners will not be left out in the cold.

“It’s vital to remember that homeowners have rights which are protected by the courts. The expropriation bill is clear on this, stating that everyone – including the bondholder – needs to be taken into account. In other words, a decision by the expropriation committee isn’t necessarily something that will be cast in stone, and it’s virtually guaranteed that the courts would be inundated with cases should the government try to bulldoze any expropriation decision through,” says Milner.

Even if the Joint Constitutional Review Committee finds that the Constitution needs to be amended to allow for land expropriation without compensation, the bill would still have to pass through parliament, and land reform would be performed on a selective basis with specific goals.

“[The] ANC position on expropriation without compensation is for specific circumstances in the land reform process. This is aimed at supporting open commerce and certainty,” said ANC election head Fikile Mbalula.

While there is still some uncertainty surrounding the issue, we hope this gives homeowners more confidence in their position and the future of the property market.

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The Berman Brothers are Saul and Paul Berman, property and development magnates who live and work in Cape Town, South Africa. They operate predominantly in the city of Cape Town, with the majority of developments happening along the Atlantic Seaboard. Areas such as Green Point, Sea Point and Bantry Bay have been the focus of the Berman Bros Group as they have worked on several projects to rejuvenate the area. To view their current developments, visit their property portfolio site.

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Want to rent, buy or sell your property on the Atlantic Seaboard or in Woodstock, Cape Town? Berman Brothers Properties specialise in listing and selling your property and we have a variety of available houses, new apartments and other real estate options to ensure that you find your next dream home. Contact us on +27(0)21 439 9030 to find out more about the latest developments.

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