There is still great uncertainty around the implications of expropriation of land without compensation (EWC), and uncertainty is bad for the property market. While experts are cautious, they all point to the importance of acting on sound advice rather than sentiment.
In an article first published in the Finanacial Times, and republished in Business Day on 26 August, President Cyril Ramaphosa wrote: “While a parliamentary committee is at present wrapping up public hearings on this issue and still needs to give consideration to any possible constitutional amendment, there have been several suggestions on when expropriation without compensation may be justified. These include, for instance, unused land, derelict buildings, purely speculative land holdings, or circumstances where occupiers have strong historical rights and title holders do not occupy or use their land, such as labour tenancy, informal settlements and abandoned inner-city buildings.
The ANC has been clear that its land reform programme should not undermine future investment in the economy or damage agricultural production and food security.
“This is no land grab; nor is it an assault on the private ownership of property. The ANC has been clear that its land reform programme should not undermine future investment in the economy or damage agricultural production and food security. The proposals will not erode property rights, but will instead ensure that the rights of all South Africans, and not just those who currently own land, are strengthened. SA has learnt from the experiences of other countries, both from what has worked and what has not, and will not make the same mistakes that others have made.”
There is still great uncertainty around the implications of expropriation of land without compensation (EWC). No market likes uncertainty and the property market is no exception. Just Property CEO, Paul Stevens, says, “EWC is one of a number of factors that are influencing the property market in South Africa. Its realities are more evident in some parts of our country than others but the sentiment is universally unsettled. And sentiment is a powerful thing, especially where it can so easily be amplified by social media and the interconnectedness of today’s world.”
Have South African buyers and sellers adopted a “wait and see” position as a result?
“We are noticing a downturn in the number of property transactions occurring. Whether that is related to a downturn in economic climate, land expropriation or a multitude of factors, would be purely speculative on our part.” says Cindy Beets, Head of Marketing and PR at Lightstone Property (Pty) Ltd, who provide information, valuations and market intelligence on all properties in South Africa.
This view is echoed by Johette Smuts, Head of Data and Analytics at PayProp, who says “I think it is too soon to see definite indications in data”.
Should property owners be selling their properties now ahead of EWC?
Should people who may benefit from land expropriation hold off buying property for now, and should buyers rather wait to hear the outcome? “If we wait to make life decisions every time there is political uncertainty or policy changes, we won’t make decisions at all,” says Liesel Greyvenstein, Director at Greyvenstein Attorneys, Notaries and Conveyancers. “The reality for the vast majority of South Africans is that we simply cannot afford to move to another country so we have to move with the times.”
Stevens notes that stressed sellers are not in the best position to make rational decisions or negotiate from a position of strength. He urges individuals to look at their unique circumstances objectively with the help of expert advisers, rather than acting on the comments of lay-people whose perspectives may too be flawed by emotion and negative sentiment.
Stevens echoes Smuts’s advice; “Assess your financial position, assess your risks, and if you have properties as an investment. If you feel the need to diversify, adjust your portfolio. But don’t make decisions based on unknown possibilities and emotion.”
Read more: Do residential home owners need to be concerned about land expropriation?
