News & Advice Trending

With a few significant changes on the cards for the South African property sector in 2017, Just Property recently caught up with Cor Van Deventer of Greyvensteins to ask him for some of his insights on the Expropriation Bill and the Protection of Investment Act.

“The Expropriation Bill has received a great deal of attention in the media of late, particularly due to the controversial push from various parties to have this Bill passed as soon as possible,” shared Van Deventer. “Expropriations by the state, or organs of the state, are done on a very regular basis in the public’s interest. Government intends to speed up land reform with the new proposed legislation,” he added.

“The Bill’s definition of property is so wide open to interpretation that it could include residential and commercial property, other moveable property, as well as intangible property such as intellectual rights. The definition of expropriation, as it currently stands, implies that the organ of the state or state itself can expropriate property on behalf of a private individual, or a private company. 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. 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 Van Deventer, previously, if 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. If government didn’t offer enough compensation, property owners could refuse to sell and the land could not be expropriated.

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 new Bill does require that the state first exhaust all efforts to purchase the property on reasonable terms in the open market before it can even consider expropriating it. This layer of protection is remarkable, even in comparison to countries like Canada or Australia,” said Van Deventer.

The Promotion of Protection of Investment Bill

Despite strong opposition, Protection of Investment Act was passed in November 2015.

“The first draft of the Promotion and Protection of Investment Bill was prompted by the case of Piero Foresti, Laura de Carli and others versus the Republic of South Africa. Here, foreign investors challenged the South African policy of Black Economic Empowerment (BEE) in international arbitration. The matter was presided over by international arbitrators and government lost. Government then became concerned that its policies, in this case BEE, would not be protected through the international arbitration mechanism,” explained Van Deventer.

This lead to government reviewing its investment laws and regulations. “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. He added that this section is very vague and may be faced with a Constitutional challenge in the future.

“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

“With regards to equal treatment of foreign investors, previous bilateral investment treaties (BITs) operated on the basis that all parties were treated equally in the investment relationship. The Act makes provision that foreign investors will not be treated less favourably than South African investors,” explained Van Deventer.

He highlighted that the South African government has left very little room when it comes to taking into account foreign investor’s interests. “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. We need to take into account that the majority of BITs were entered into before our Constitution came into effect and therefore did not adequately protect the interests and values of our Constitution.”

Van Deventer also shared that it is still very early to predict what influence this Act will have on future foreign investment into South Africa. “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. We need to strike a balance between protecting foreign interest and that of our own and only time will tell if this Act will achieve this.”

Leave a Reply

Repo Rate Cut: Encouraging News For Home Buyers
Is Now The Right Time To Upgrade To a Bigger, Better Home?
Why Creditworthiness Is Just As Important For Tenants
Is Investing In Property During The Recession Still A Good Idea?
28 Important Questions To Ask When Buying Property
Is Hosting Your Property On Airbnb Legal?
5 Easy Ways to Sell Your Home FAST!
Divorcing And Need To Sell? 3 Possible Options
Unrealistic Expectations Can Sour Relations With Agents
Poor Economy Affecting South Africa’s Property Market
Does The Property Market Still Need Estate Agents?
New Landlords Need Experienced Agents
Make Your Bond Work For You
The Perils of Rising Consumer Debt For Landlords
The Gap Between Asking and Selling Price Widens
First-Time Home Buyer? How To Avoid Tax And Get Up To 44% More Space
Is Now The Right Time To Upgrade To a Bigger, Better Home?
Is Investing In Property During The Recession Still A Good Idea?
28 Important Questions To Ask When Buying Property
3 Most Annoying Things About Buying A Home (And How To Avoid Them!)
House Hunting: How To Get Over The One That Got Away
Factors To Consider When Letting Out Property
7 Deadly Sins to Avoid When Investing in Property
4 Hot Tips For Investing In Student Accommodation
Is Property an Asset or Expense?
Property Buyers Value Lifestyle Over Value-Growth Prospects
How Older Buyers Show The Power Of Home Equity
How To Make Your Offer To Purchase More Attractive To Sellers
How To Find Your Diamond In The Dust?
Essential Questions For Home Buyers To Ask Their Real Estate Agent
Top Tips For Selling Your Home in Winter
5 Easy Ways to Sell Your Home FAST!
Unrealistic Expectations Can Sour Relations With Agents
Cut Your Price and Get The Jump on Other Homesellers
Unrealistic Seller Expectations Contribute To Declining Sales
Key Aspects And Features That Sell Homes
Lightstone predicts a buyer’s market for 2017
House Won’t Sell? Here’s What You’re Doing Wrong!
Factors that determine property value
Create Home Buyer Appeal Through Home Staging
Is There A Difference Between Offers?
How To Decide When To Sell
Does My Agent Care About Me Or Just The Commission?
3 Questions To Ask Before Listing Your Home
I Just Bought A Home – Now I’m Unexpectedly Being Transferred
Why Creditworthiness Is Just As Important For Tenants
Factors To Consider When Letting Out Property
New Landlords Need Experienced Agents
The Perils of Rising Consumer Debt For Landlords
First-Time Tenant? What You Need To Know
Average residential rental values on the increase
Is It Possible To Terminate A Lease Agreement Without Recourse?
New Generation Digs Now On The Rise
When Is Your Rent Due?
Gauteng Property Rental Market Forecasts Growth
Keeping Track of Parking On Common Property
How And When To Legally Evict Tenants
The Rental Housing Amendment Act: Waiting For Light In The Dark?
Tenants: Be Aware Of Ongoing Credit Checks
How To Rent With Pets
Divorcing And Need To Sell? 3 Possible Options
5 Mistakes To Avoid When Relocating
7 Tips For Packing And Moving Quickly
Moving? Things To Think About!
Maximising Small Spaces
7 Tips To Help Your Children To Adapt To The Move
What To Do With Your Home When You Have To Relocate
Moving With Pets Can Be Tricky
Estate Agent Moving Tips
Telltale Signs You Need A New Home
Seven Signs You Need A New Nest
Über Wealthy On The Increase And On The Move
First-Time Home Buyer? How To Avoid Tax And Get Up To 44% More Space
Repo Rate Cut: Encouraging News For Home Buyers
Is Investing In Property During The Recession Still A Good Idea?
4 Hot Tips For Investing In Student Accommodation
Make Your Bond Work For You
Energy-Saving Tips For Your Home This Winter
Costs To Consider When Investing In Property
Smaller Properties Yield Great Investments
8 Myths Preventing People From Real Estate Investing
Own Fixed Property? You Need a Will!
Tax Tips for Landlords – What You Need To Know
The Perfect Investment Property
St Francis Bay’s housing market attracting top dollar
Factors that determine property value
Average residential rental values on the increase
Is Hosting Your Property On Airbnb Legal?
How To Protect Your Commercial Property Investment
Commercial property still important asset class for private buyers
Know The Risks Before Building Airbnb Castles In The Sky
Green Buildings Catching On In South Africa
Digital Disruption And The South African Commercial Real Estate Market
Can You Run A Business From A Sectional Title Home?
What’s Driving Change In The Commercial Property Sector?
5 Ways Commercial Property Space Planning Can Save You Money
Investing In Commercial Property an Attractive Option
3 Obvious Signs That It’s Time For Office Relocation
3 Things You Need To Know Before Buying Vacant Land
Price Correction In Commercial Property Market
South Africa: Evolution of Industrial Properties
The Commercial Times Are Changing