There are a few significant changes on the cards for the South African property sector in 2017.
While many of the proposals bring welcome amendments, legal analysts and real estate agents have noted that some of the changes coming into force this year won’t necessarily be welcomed by all involved.
Real-estate group, Just Property, and Cor Van Deventer, director of law firm Greyvensteins lay out what property owners can expect:
The Expropriation Bill
Van Deventer has raised concerns about how the current definition of “property” in the bill is wide open to interpretation, in that it could include residential and commercial property, other movable property, as well as intangible property such as intellectual rights.
“In addition, as compared to the Expropriation Act of 1975, which only makes provision for expropriation for public purposes, the new Bill goes a step further by including ‘public purpose’ and ‘public interest’ definitions,” said Van Deventer.
“The new version of the Bill opens the door for expropriation of land for people who would like to undertake economic developments, such as low-income housing ‒ in fact, it encourages it,” said Van Deventer.
Office of the Valuer-General
According to previous expropriation laws, when government expropriated land for roads, farmland or electricity usage, it was on the ‘willing seller, able buyer’ principle – where, if owners did not really want to sell, they didn’t have to, said Van Deventer.
With the establishment of the Office of the Valuer-General, the government can now expropriate property and pay out what the valuators have determined the price of the property to be. This amount will be will be based on market value.
To be considered will also be the property’s history of acquisition, current use and the purpose of expropriation.
The Promotion of Protection of Investment Bill
This bill stems from a court case in which foreign investors challenged the South African policy of Black Economic Empowerment (BEE) in international arbitration.
“According to this Act, government may take measures, in accordance with the Constitution and legislation, to redress historical inequalities, uphold the values and principles of the Constitution, foster economic development and protect the environment,” said Van Deventer.
“In its first draft, the Bill did not allow for international arbitration. It has tried to downplay concerns by stating that international arbitration may be resorted to, only if such arbitration is consented to by government and only once all domestic remedies have been exhausted.”
Bilateral investment treaties
“This Act makes provision that foreign investors will not be treated less favourably than South African investors, taking into account that the majority of BITs were entered into before our Constitution came into effect,” explained Van Deventer.
The investment security provision also states that foreign investors will get the same level of security as domestic investors, but this is subject to the state’s available resources and capacity.
“It is clear that the Act protects South African interests above those of foreign companies. Proponents of this Act argue that it is in keeping with international trends, but other countries that have cancelled BITs, like Australia and Canada, have vastly different economic environments to ours,” he said.