THE CONSTITUTIONAL BASE OF THE NEW EXPROPRIATION ACT

The new Property Expropriation Bill has the potential to weaken faith in SA property and to dilute property owning rights, say three senior Cape real estate agents consulted this week.

“The previous Act, which dates back to pre 1994 days, did allow for expropriation but only where this was deemed necessary for public works, e.g. a school, a hospital, a road or a dam,” said one agent.

“Furthermore, it stipulated that compensation had to be paid at market value and that where the seller suffered emotionally (e.g. in having to give up a home) the State had to pay an extra sum known as a solatium.”

While new legislation may probably be necessary at this stage in SA’s transformation, it worries many agents that independent commentators have said that the Act infringes sections of the new constitution – not only because it can be enforced without prior discussion, but also because the amount of compensation will now depend largely on what the state is prepared to offer and need not be market related.

Section 25 of the constitution stipulates that before an expropriation is implemented there should be a genuine attempt by the state and the affected party to come to terms, in most cases referring the matter – including the amount of compensation – to an independent body or to the courts.

Section 25 also makes allowance for a whole range of factors which could influence the compensation including whether the seller received low interest loans or subsidies but the emphasis is still on the individual’s rights, not the State’s prerogatives.

Under the new Act the process begins with the expropriation. If not accepted by the affected party he will have to fight a “rearguard action”.

Affected parties have a right to appeal to the courts but they will still be obliged to vacate their property on the stipulated date. Further, so long as the court’s decision hangs in the balance, they will be paid nothing – and these court actions can take years.

The courts themselves can now only decide whether the matter is in the public interest or not. They are no longer allowed to adjudicate on the time and the manner of the expropriation or the compensation paid.

In practice it appears that most owners whose properties are expropriated will simply have to accept the situation or face bankruptcy.

It also concerns many that the term “property” in the Act can be interpreted as anything material, including resources such as mines, land, or urban buildings. This leaves open a loophole which could have dire consequences down the line, especially as the Act allows the State to change the use to which the property is put.

“Under the new Act, the conditions or terms of property expropriation are greatly extended. The State now has only to say that it is in the public interest and they are free to expropriate,” said one CEO of an estate agency.