The Regulation of Land Holdings Bill:
On the 12th of February at the State of the Nations Address (SONA), President Jacob Zuma announced that he intends to bring forward to Parliament a new policy that seeks to limit foreign ownership of land in South Africa.
Currently the weaker rand and lenient property laws make South Africa a prime destination for international investment, with an estimated 7% of land owned by foreign-nationals – the impact that the passing of this Bill is thought to have on property investment has caused widespread unease among industry professionals, both local and international.
What the proposed Bill entails:
Should this Bill be passed, foreign-nationals (referred to as non-citizens) will no longer be able to own land in freehold. However, they will be eligible for long-term leasing of land for business use of between 30 to 50 years. According to the President there is no reason for this to negatively affect foreign investment in South Africa as it is an established practice among many other countries across the world.
The amount of land a foreign individual owns will be closely regulated and more restricted, with a ceiling set at 12000 hectares per individual. Anything over and above this will likely be bought and redistributed by the government. However, according to the legislation, those foreign-nationals that have already acquired freehold will not have their tenure amended with the passing of the new law as this would infringe on their constitutional rights.
A Land Commission will carry out compulsory land holdings disclosures; the information disclosed will include race, nationality, gender, the amount of land owned and its use. These will be assessed and maintained in accordance with the national deeds registry.
However, before being assented to by the President and Parliament, the proposed Bill will be sent to Cabinet for approval and then a process of open and extensive public discussion will take place on the matter, allowing for concerns to be addressed.
The main concerns regarding the Regulation of Land Holdings Bill:
Leading industry professionals feel that the very nature of the Policy could have a negative effect on investor confidence due to an approach perceived as discriminatory – causing uncertainty among those who are considering South Africa as a potential investment destination.
The main concern for the property sector is ensuring that economical growth is stable and long-term, and a large contributor to this is both domestic and international investment. The industry relies on confident investment in property for sustainable economic growth, and focus should be on promoting attractive investment potential in South Africa rather than introducing uncertainty and hesitation. Land allocation should be determined by whether its use will result in economical, social and environmental growth, and not an individual’s nationality.
The President stated that a large percentage of land is being used for luxury and leisure purposes when it would be more beneficial to redress past injustices in the property market by re-purposing that land to those living in poverty for households and rural enterprises, as well as preserving limited land for food security; in keeping with protecting the interests of South Africa.
This said – set against the backdrop of South Africa’s current economic climate – many industry representatives feel that the passing of a Bill that could negatively impact prospective international investment and development of commercial and industrial property is far more damaging to the safeguarding of South African assets.