LAND (Part 4)

Land [Part 4]

We have journeyed through the Land issue of our country.

No matter how well-informed, no one knows who was where when [Part 1].

The issue may boil down to the Cultural value of land, the Commercial value of land and the Capital value of land. These three characteristics were covered in Parts 2&3.

My opinion is not the “law” so please forgive me if you have a different version. In fact, let me know if you disagree and we can chat. As usual, I would love to learn.

But something has just arrived and it bears mention. It is the latest version of EWC land and it looks far less inflammatory than what we have feared. Let’s have a look at the article……..

BusinessTech 29 July 2019, reported:

“The presidential advisory committee has published its report on land expropriation without compensation.

The report makes a number of recommendations on land in South Africa –  including provision for the establishment of an integrated planning system’ which will be responsible for the planning and coordination of the land expropriation process.

The report also calls for the speedy distribution of land that is already owned by the government, as well as ‘voluntary donations’ from various sources such as churches, mining houses, and commercial farmers.

In line with the current Expropriation Bill that is being considered by parliament, the report suggests that the conditions for land expropriation without compensation, should include:

  • Where land is occupied or used by a labour tenant;
  • Where land is held for speculative purposes;
  • Where land is state-owned or owned by a state-owned entity;
  • Where the owner has abandoned the land; and
  • Where the market value of the land is equivalent to or less than the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land.

Over and above these conditions, the report suggests that expropriation without compensation also applies in the following circumstances.

  • Hopelessly indebted land;
  • Land obtained through criminal activity;
  • Informal settlement areas;
  • Inner-city buildings with absentee landlords;
  • Land donations (as a form of EWC); and
  • Farm equity schemes.

What happens next?

Last week, the National Assembly has agreed to establish a multiparty committee to introduce legislation amending section 25 of the constitution.

This committee will draw on the findings of this report as well as previous studies, and past legislation to come up with a new bill which covers the above issues.

The new committee will report back to the National Assembly by 31 March 2020, and will and be composed of 11 voting members and 14 non-voting members.

Voting members will be drawn from the African National Congress (6), the Democratic Alliance (2), the Economic Freedom Fighters (1) and other parties (2).

The 14 non-voting members of the National Assembly, will comprise of the African National Congress (2), Democratic Alliance (1), Economic Freedom Fighters (1) and other parties (10).

Once the bill has been finalised it will be gazetted and undergo a full public consultation process.

This means that the earliest that land expropriation can be introduced is mid-2020. However, it will likely take much longer as the bill will face intense scrutiny from the opposition parties and members of the public.”

A couple of points that will also conclude this resume of Land, that it exists, how it is transformed culturally or commercially to have “meaning” and that it is the source of the most vicious tension at this point in time in South Africa. The land redistribution issue sorted, we would be able to stop focussing on it as a distraction and we could focus on the real issue, its productive use for food, industry and habitat. If not sorted, some of us fear it will disintegrate into civil war and scorched earth to the detriment of All. But my fear is that it gives rise to the biggest impediment to future growth and prosperity; the reason for every failure and the balm that we use to soothe our consciences when we continue failing to deliver to our people. To this point, I understand, I really do and accept, that apartheid was a social, inhumane disaster but it is no longer the reason for every cock-up in this country starting with the school book fiasco of a few years ago where our erstwhile president blamed apartheid, to the disgusting rape of VBS bank by greedy, self-seeking individuals that got onto a “scheme” of mega-returns. You should all be bloody ashamed of yourselves and jailed immediately! Like the game of Monopoly, Go to Jail Do Not Pass Go.

That stuff off my mind, a few points:

  • The Land proposals above don’t seem inflammatory by any means. I guess there may be some who have farm in old trusts and therefore will be aggrieved by losing them but, to the point, land must be productive or really, it has little value beyond its cultural value.
  • The use of State land is significant. Unfortunately, it may include Green Belts, like Emmarentia Lake, in its ambit. So, just by the way, you can buy plots in England through St James Capital Group that are farms at this stage that need to be converted into development land. The fight in Britain to preserve green belts is huge and can delay rezoning by a decade. In other words, we’re not the only country in the world with a housing backlog and protestations against affordable housing; the UK is 3 million houses short and fighting to deliver.
  • Allied to this is the issue of affordable housing where “I” live. It will destroy the value of my property, you know? Sadly, collateral damage is unavoidable if we are to readdress the disadvantages of the past and you or I may be caught in the cross-fire.
  • That said, one of the concerns is that land invasion will be enflamed by reckless demagogues who drive “their people” to invade land. The only solution to this is the voice of reason, followed by the rule of Law, followed by forced eviction. We have watched this movie in Hermanus. It is ugly and municipalities have inadequate resources to begin the negotiation process and then no power to enforce the law and then poor Police resources as a last resort. It is ugly and may be coming to your town soon; don’t be naïve. However, once all attempts failed and Dubai [a pristine, 10th biggest Milkwood forest in the world now burnt, on the beach and actually owned by a private company who failed to evict; as well as the site for the future municipal desalination plant] was occupied by 300+ shacks, it has been reported that a proper multi-use development will be built in due course – so hope remains!

The problem will fester on unless we solve it. Solving it will be tough and well-nigh impossible in some cases. It will call for cool heads and warm hearts. Money will need to be found so as to follow through on well-intended land redistribution. Our negativity will need to be tempered by practical realization but if we don’t commence the process it will be a sore point from generation to generation. I think it’s reached the point where politicians are so hell-bent on winning votes that even if they got huge swathes of land, their “people” would reject their plots and swop them for a stable, proper job in the city with a pension and medical aid. As always, time will tell.

But what is reassuring about the list above is that honest, hard-working, bond-paying home owners will still have their properties. They will go to work every day, their kids will grow tall and educate, and their capital value will be realised by maintaining their property and selling it in a process which is world class. You and I fit into this mould and we, in the property industry, ensure the dream every day for every kind of person and family. Don’t allow the “noise” to cripple your motivation to get up in the morning and “house the nation”. Right here in Hermanus, Greeff Properties is opening for the first time; goodie for them as they recognise that “this too will pass”.

Homeloan Junction is in this with you. Fully invested but not naive, committed responsibly and solely to the good of the industry and to thriving for many years to come.

Speak to us and let us surprise you with what we can deliver to your business.

Yours in Property.

Jack Trevena

Jack Trevena

With over 30 years of experience in the banking and home loan industry, my hope it is share what I have learnt over the years with my blogging community, inspire conversation around the subject and in the process discover unique insights into this ever changing environment.
Jack Trevena

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