Expropriation Act, no cause for concern for residential property

Following the signing of the Expropriation Act of 2024, and reactions to the nil-compensation issue, and comments from the US president and others, it is pertinent to reiterate that there is no cause for concern for residential property.

Seeff chairman, Samuel Seeff, a key role player in the property industry says the Act has been anticipated for some time, and it remains business as usual for the property sector. It has been in the works since 2018, and was passed by parliament (the country's law makers) in March last year.

It is important to point out that the Act specifically prohibits arbitrary property deprivation. It is also subject to the protection of the "property clause" under Section 25 of the Constitution, and it will likely face rigorous legal challenges. Seeff also points out that President Ramaphosa and the ANC's have emphasised lawful expropriation which supports economic development, investor confidence, and careful consideration of all factors and stakeholders.

Notably, the new Expropriation Act of 2024 replaces the outdated Act of 1975. Miltons Matsemela Attorneys recently noted that while signed, the Act has not yet taken effect, and may well be delayed, similar to the "amendments" to the Rental Housing Act of 1999, signed in 2014, but are yet to commence.

Insofar as the contentious issue of nil-compensation is concerned, the Attorneys highlight that while Section 25 of the Constitution provides for compensation, this may not be absolute when considering other sections of the Constitution. Section 36 for example allows for limitations on rights, including the right to compensation provided it is reasonable and justifiable.

The Expropriation Act then effectively provides for the circumstances under which nil-compensation may apply, thus aligning with the Constitution. Sections 33 and 34 also provide Constitutional guarantees of lawful, reasonable, and procedurally fair action, access to judicial review, and the right to have disputes resolved in court.

The Act thus provides various checks and balances as to what must be considered, the need for extensive consultations and processes to be followed, including having regard to parties with interests and rights to the property. Expropriation without compensation must also be in the public interest, for example to redress past discriminatory practices. Government will likely also give serious consideration to any potential tax revenue losses which could result as set out in Judge Denis Davis's 2018 Davis Report.

Four potential scenarios for nil-compensation are envisaged in Section 12(3) of the Act. These are: (1) where land is held solely for speculative appreciation without productive use or development intent; (2) state land which is unused, and unlikely needed for future core functions: (3) abandoned land where, despite being reasonably capable, the owner has demonstrably relinquished control; and (4) where the market value of the land is less than, or equal to the state's investment in its acquisition and improvement.

As for concerns around the Zimbabwe experience, Seeff highlights the fact that it never involved residential homes. Additionally, the Zimbabwean government has now paid compensation for the expropriated farms. Ultimately, the consensus is that there are enough checks and balances, and we have a robust Constitution and strong Civil Society to safeguard against government overreach.

For additional reading, please see:
https://live.evlink1.net/public/messages/view-online/ooouEDwwxI5uOQIc/Cr60fluE9yk3B6Vg/f72a412d36a23db3

https://www.parliament.gov.za/storage/app/media/Acts/2024/Act_13_of_2024_Expropriation_Act_2024.pdf

The property market kicked off this year in a much stronger position compared to last year. Given the latest interest rate cut, the third successive cut since late last year, the market is particularly favourable for both buyers and sellers.

Seeff urgently needs stock to meet buyer demand, and it is an opportune time to sell. Selling exclusively with Seeff before the end of April could also win you a R1 million cash prize. Contact us today for a free evaluation of your property, or to discuss your needs.

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