What is involved when land is expropriated?
What legal mechanisms are in place to ensure that all activities are carried out in a fair manner?
What is the process?
Under the Expropriation Act of 1975 (Act No. 63 of 1975) and the Expropriation Act Amendment of 1992 (Act No. 45 of 1992), the government is entitled to expropriate private property for reasons of public necessity or utility. The decision is an administrative one. Compensation should be the price that the property would have realized in an open market transaction.
Racially discriminatory property laws during apartheid resulted in highly disproportionate patterns of land ownership in South Africa. As a result, the post apartheid government has committed to redistributing 30 percent of the country’s farm land to black South Africans by 2014. Thus far, only 4 percent of total farm land has been redistributed under the government’s land reform program. The government has embarked on market-based land reform, but wants to speed redistribution. In 2005, the government indicated that it was willing to use its power to expropriate land should farm owners refuse court approved purchase prices.
For most of us, expropriation seems a very distant reality. The reality is that governments have always given themselves the right to expropriate property. But in a democratic society such as ours, expropriation is governed by strict legislation. This ensures that expropriation takes place only under certain conditions and that compensation is paid to the landowner. Apart from the Expropriation Act (Act No. 63 of 1975), Section 25(2) of the Constitution is also relevant. This clause holds that ‘property may only be expropriated in terms of a law of general application – (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.’ This ensures that property expropriation may only be done if the action is in the public interest or to provide a public service, usually infrastructure development. An example in the KZN Midlands is the proposed Spring Grove Dam. Elsewhere in South Africa, the Gautrain is an example.
Once you receive notice that your property has been expropriated, you can’t appeal the decision. What you can do is make sure that the proper expropriation procedure has been followed and that you are paid a fair price – usually defined as market value – for your property. Normally, the state is careful to ensure that the expropriation process is in order and that the compensation is a fair amount. According to our law the compensation amount and the time and manner of payment must be just and equitable, which means that you shouldn’t have to wait years to be compensated.
The market value of your property, should it be expropriated, will be determined by an independent property valuation. The amount of compensation payable for individual properties is determined as the amount which the property would have realised if sold on the date of expropriation in the open market by a willing seller to a willing buyer. The amount needed to make good any financial loss caused by the expropriation may also be used to determine appropriate compensation.
Compensation is primarily determined by the market value of your property, but the government can elect to pay two other compensation amounts. These are inconvenience compensation, where you are compensated for the inconvenience of having to buy another property and move home, and compensation for actual financial loss. This latter amount could be applicable if, for example, your business premises were expropriated. You would then be able to claim for the cost of changing your stationery and contact details, moving your phone lines, and so on. If your business was located in a particularly strategic position, you could also claim financial loss as a result. However, the onus would be on you to prove this. Where no agreement on compensation can be reached, the matter will be referred to the courts for the final decision.
Should the case go to court, the justice system would consider five factors when determining compensation. Compensation should take into account the property’s current use, the history of its acquisition and use, its market value, the extent of direct state involvement and subsidy in the acquisition and beneficial capital improvement of the property, as well as the purpose of the expropriation.
The author will not be held responsible for misinterpretation of the law, and strongly recommends that readers consult their local DAEA branch for clarification. Acknowledgements: Jeannie van Wyk & Jocelyn Newmarch