Advice and Opinion

SA’s real expropriation situation

South Africa’s new Expropriation Act does not put property owners or buyers of residential or commercial assets at risk of having their homes expropriated without compensation, says Berry Everitt, CEO of Chas Everitt International.

The impression created by some badly-informed – and quite irresponsible – commentary is that this legislation means that all property owners are now at risk of the State suddenly deciding one day to expropriate their home, farm, or business and pay them nothing for it,” he says.

This is simply not true. In fact, this Act will help to protect the interests of property owners in SA because it stipulates very strict and specific conditions that must be met for the State to be able to justify any expropriation. It also clearly sets out the multi-step processes that must be followed and completed to determine a ‘fair and equitable’ compensation offer (Section 5), negotiate that amount with the property owner, and resolve any dispute.”

The Act stipulates that the final resolution of any dispute rests with the Courts, not with the Minister of Public Works and Infrastructure, he further notes.

And as a result, SA’s top property lawyers are in agreement that this legislation will not increase the possibility of zero or nil compensation being paid but it may in fact limit it, as far as private property owners are concerned – to some very rate cases such as when the State is able to justify the expropriation of empty land which it can prove that the owner does not currently use, or intend to develop, or have plans to utilize in future to generate income. This and other such instances are listed in Section 12(3) of the Act.”

The second important thing to know about the new Act is that it is not called the Expropriation Without Compensation Act. It is the Expropriation Act (Act 13 of 2024), and it is what is known as procedural legislation because it is only a set of guidelines for giving effect to the principle of expropriation that is already enshrined in the Constitution. In short, it is about the ‘how’ and not the ‘what’,” he says.

Thirdly, he says that it is also important that the concept of expropriation is by no means unique to South Africa. “Indeed, most countries have similar laws enabling the State to expropriate private properties for the public purpose – such as the need to build a new road, railway, hospital or school in a particular location – and providing for the owners of those properties to be compensated.”

What is different is that Section 25(a) of South Africa’s Constitution also provides for expropriation ‘in the public interest’ and there has been considerable concern in the past on how this ill-defined phrase could be interpreted or how it might be used to justify unfair or inequitable actions.

Now, however, even this worry falls away, since the new legislation makes all proposed expropriations subject to the same set of rules, and subject to the same legal challenges, no matter what the motivation for them might be.”

In every case, the Act says that the expropriating authority must consider all relevant circumstances and must ascertain (and be able to prove) the suitability of a property for the required purpose, the existence of all registered and unregistered rights in the property, and all facts, relevant to the calculation of an offer of just and equitable compensation for each person that would be affected if the property were expropriated, must be considered as well as the effects that the proposed expropriation may have on any plans being made by the relevant municipality (Sections 5 and 6).

Everitt says that the outsize reaction to the new legislation, which has just been signed into law by President Cyril Ramaphosa, is probably not surprising given the sensitivity of the land issue in SA. “But on closer analysis, the Expropriation Act should in fact serve as further reassurance for property owners and investors in SA that our Constitution protects their rights and that here, they will not be the victims of sudden and random State expropriations without any compensation.”

*The date on which the Expropriation Act will come into force has yet to be determined by President Cyril Ramaphosa.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Property Wheel.