Is there a property crisis in South Africa?

Posted by on 12 June 2014 in Uncategorized | No Comments

South African Research Chair in Property Law, Stellenbosch University[*]

At a recent Property Rights Conference hosted by AfriBusiness ‘business leaders and experts’ agreed that there is a property rights crisis in South Africa and that government is launching a ‘carefully crafted onslaught’ on and ‘undermining property rights in a systematic way’. However, the policy documents and legislation they refer to do not support this view.

The Expropriation Bill 2013 provides for expropriation in the public interest and for a public purpose, of all types of property, but the Bill just incorporates requirements set out in the 1996 Constitution. The fact that the state may expropriate any property, in the public interest or for a public purpose, and that the state must pay just and equitable compensation (not market value) reflects constitutional provisions.

The distinction between deprivation and expropriation was also introduced by the Constitution. Both are regulated by the Constitution; if the state uses these powers improperly the courts can overturn whatever the state has done. In the AgriSA case, the claimants (Agri SA) agreed that the deprivation was constitutional and chose not to challenge it. The Constitutional Court dismissed the claim that the Mineral and Petroleum Resources Development Act 2002 (MPRDA) expropriated mineral rights since the state did not acquire those rights.

The National Water Policy Review 2013 also simply reflects the right of access to sufficient water in the Constitution. The change in the water regime already took place in 1998 with the National Water Act abolishing private ownership of water and replacing it with use rights. For the majority of domestic users of water and even the big agricultural and commercial users (those with water rights) this did not make any difference. It is poor, domestic users of water in informal settlements that still have problems to gain access to water.

Land reform is both allowed and governed by the Constitution. New developments in land reform policy or legislation must pass constitutional muster. The Property Valuation Bill 2013 proposes that land to be acquired for land reform should be valued by the Valuer-General in accordance with certain procedures and criteria. This merely brings the valuation process in line with the Constitution, which requires compensation to reflect a just and equitable balance between the affected persons’ rights and the public interest, instead of just market value. This has been the constitutional practice since 1996; it is not new.

The Green Paper on Land Reform is vague and full of rhetoric, but the idea that state-owned land will in future be transferred in the form of leasehold, instead of full ownership, does not apply to private land. Furthermore, the functions of the Land Management Commission are considerably reduced in the latest version of the Land Management Commission Bill 2013 and are now mostly focused on state land.

Before the elections the Minister of Land Reform unveiled plans to transfer 50% of agricultural land to workers, according to their term of service, without compensation, but it is early to describe this as an attack on private property. The Final Policy Proposals on Strengthening the Relative Rights of People Working the Land 2014 indicate the state’s intention to advance both land reform and food security in the context of the Constitution. It can be assumed that the details, once worked out, will conform to constitutional requirements, including the constitutional protection of existing property rights.

The Extension of Security of Tenure Amendment Bill 2013 does not grant occupiers rights that they do not already enjoy in terms of the 1997 legislation. The Bill does introduce new procedures to avoid a confrontational approach in evictions. The Restitution of Land Rights Amendment Bill 2013 reopened the lodging of restitution claims until 30 June 2019, which may contribute to uncertainty regarding claims that have been finalised and land that had been transferred. It is uncertain whether the government has the budget and capacity to conclude the restitution of additional land claims. To that extent the Bill appears to be ill considered. However, neither the legal requirements for a restitution claim nor the factors to be considered have been amended.

The Promotion and Protection of Investment Bill 2013 allows the state to redress historical, social and economic inequalities and to protect other constitutional rights in the process of regulating investment, but this has nothing to do with land restitution. It is aimed at protecting local interests in cultural and biological resources against exploitation by investors, giving effect to a constitutional obligation. The protection of foreign investment is also subject to the Constitution and international agreements.

The Spatial Planning and Land Use Management Act of 2012 provides for a uniform, effective and comprehensive system of spatial planning and land use management that ensures ‘social and economic inclusion’. This should be understood in light of the historical context of racial segregation and fragmented spatial planning. Despite twenty years of democracy, the regulatory framework has failed to rectify spatial inequalities, resulting in continuing marginalisation of socio-economically vulnerable groups. The Act seeks to address this disparity by enacting a uniform system of planning law within the framework of the Constitution.

The Rental Housing Amendment Bill 2013 proposes stricter regulation of the rental property market, but it does not explicitly adopt prescribed rent restriction (rent control) as a strategy. Regulation of the rental housing market is legitimate in South African law, provided the regulatory measures comply with the constitutional protection of landlords’ and investors’ property. The Bill’s approach is to allow parties to agree on rent and rent increases, provided that the agreement does not unfairly prejudice the weaker party. The 2013 Bill does propose amendments that specifically protect vulnerable groups such as lower-income tenants and backyard dwellers by way of stricter regulation, without threatening existing rights.

The argument is sometimes heard that IP rights are under threat from the state. Section 25 of the Constitution applies to IP rights such as copyright works, patented inventions, and registered trademarks and designs. These rights are protected like tangible property and state regulation of them is equally legitimate if it complies with constitutional requirements.

There is indeed a property crisis in South Africa, but it does not consist of a government attack on existing rights. On the contrary, the crisis exists in the fact that the poverty gap has not been closed in the twenty years since the advent of democracy, nor has the government succeeded in reducing extreme poverty, homelessness and lack of access to resources, public services, employment and wealth. Despite the growth of a significant black middle class since 1994, the poverty gap still largely reflects racial patterns.

It is disingenuous to deny that the large-scale poverty and socio-economic inequality that still plagues South African society is largely to blame on historical inequalities directly caused or exacerbated by apartheid. Many of those historical inequalities, such as access to water or mineral wealth and access to proper living, commercial and educational benefits in urban growth areas, were directly linked to the racial distribution of land, influx controls and other spatial inequalities that characterised apartheid. Those inequalities did not just disappear when the apartheid laws were abolished. State intervention, in the form of transformative action, was and still is needed to redress the systemic inequalities and to allow for the development of a more ‘normal’, equal society. The democratic constitutional dispensation that was agreed upon by all parties during the 1993-1994 multiparty negotiations and in the 1994-1995 Constitutional Assembly grants the state powers and the duty to promote socio-economic equity. Social and economic realities now, twenty years after the first free elections, make it clear for those who want to see that we require further and stronger state action in the struggle against poverty, and not a cut-back in transformation efforts.

At the same time, the constitutional dispensation also provides limits to what the state can do. We live in a constitutional democracy that secures our rights, including property rights, against unlawful state intervention. Property rights are in fact protected strongly by the South African Constitution and the courts have the power to invalidate legislation or state action that exceeds those constitutional limits. To that extent, there is no property rights crisis of the kind that the AfriBusiness conference describes.

[*] Signed by members and fellows of the South African Research Chair in Property Law, which is funded by the Department of Science and Technology, administered by the National Research Foundation and hosted by Stellenbosch University. The views expressed in this article are those of the signatories and should not be ascribed to any of these institutions.

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