New Expropriation Act of 2024... what the experts say
Category Market Update
Much of the media discourse over the last month focused on the signing of the Expropriation Act of 2024 by President Ramaphosa, particularly the introduction of "nil-compensation," an apparent departure from the provisions of the Constitution, Section 25 (the "property clause") in particular.
We highlight a few important points as follows:
The Act has been in the works since 2018. It was in fact already passed by parliament in March last year, and was only awaiting signature by the president. The Act replaces the outdated Expropriation Act of 1975. Importantly, while signed, it has not yet taken effect, and may well be delayed, according to Miltons Matsemela Attorneys, something which is similar to the "amendments" to the Rental Housing Act of 1999, already signed in 2014, but yet to commence.
Potential Conflicts with the Constitution, Section 25 ("property clause")
While the Act is expected to face rigorous legal challenges, many legal experts believe that rather than conflicting with the Constitution, it in fact aligns with it, and provides for the circumstances under which nil-compensation may apply.
While the concept of "nil-compensation" (Expropriation without Compensation (EWC)), is contentious, many legal experts including Miltons Matsemela argue that while Section 25 of the Constitution provides for compensation, it 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.
Sections 33 and 34 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 establishes safeguards through required consultations, procedural adherence, consideration of all affected parties, and a focus on public interest like redressing past discriminatory practices.
Werksmans Attorneys also point out that EWC (Expropriation without Compensation) in the Act applies only to land, and not to other forms of property, i.e. real rights such as mining rights, limited real rights, intellectual property, and movable property, and only where land is expropriated in the public interest, as opposed to for a public purpose.
Section 12(3) of the Act specifically provides four potential scenarios where land can be expropriated for "nil-compensation", being (1) land held solely for speculative appreciation without productive use or development intent; (2) unused state land not likely needed for future core functions: (3) abandoned land where the owner demonstrably relinquished control; and (4) where market value of the land is less than, or equal to the state's investment in its acquisition and improvement.
Potential Risk of Land Grabs
The Act specifically prohibits arbitrary property deprivation, and the president and ANC have emphasised that all expropriation must be lawful and in support of economic development, investor confidence, and careful consideration of all factors and stakeholders.
Seeff Chairman, Samuel Seeff, adds that as for concerns around the Zimbabwe experience of land grabs, it should be noted that it never involved residential homes, and notably, the Zimbabwean government has since paid compensation for the expropriated farms.
Werksmans Attorneys are also of the view that it will not likely have any significant impact on land reform in urban and developed areas. Ultimately, the consensus seems to be that there are adequate checks and balances combined with a robust Constitution and strong Civil Society to safeguard against government overreach.
For additional reading, please see:
Miltons Matsemela on the Expropriation Act
Werksmans on the Expropriation Act
Expropriation Act
Business as usual for the Property Market
Seeff Chairman says it remains business as usual for the property market, and the Act is unlikely to have any impact. In fact, the outlook of the property market remains much improved compared to last year, and conditions are favourable to sellers.
The Southern Suburbs property market remains particularly buoyant, with continued high demand and a shortage of properties on the market. We are in a particularly good phase for sellers who are achieving excellent prices.
A reminder that Seeff is a market leader, and what's more, if you sell exclusively with Seeff before the end of April, you could win a cool R1 million cash prize. So, contact me/us now for a free assessment or to chat about your property needs.
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Author: Gina Meintjes
