Real Estate Investor Magazine South Africa May 2013 | Page 59

OFFSHORE
Green Paper on Land Reform

The critics argue that:-

The Green Paper on Land Reform was
published on the 30th of September 2011.
O ne of t he mo s t i mp or t a nt e lement s
addressed in the Green Paper is the four-tier
system of land ownership. The Paper sets out
that there will be four types of land usage and
ownership in South Africa, namely, State,
private, foreign and communal. The Paper
envisages a system where in certain instances
ownership will have limitations, obligations
and/or conditions. Under the new proposal,
State and public land will be available on
leasehold while private land will be available
as freehold with limited extent and communal
tenure through institutionalised use rights.

1. The Government is putting the proverbial
cart before the horse. Government appears
to have decided upon a policy of restricting
foreign ownership without establishing
the percentage of land and value of land
ac t ua l ly ow ned by foreig ners. Ma ny
argue that this percentage is so small that
it in no way affects or compromises the
Government’s Land Reform Programme.
The question that remains unanswered is
why the Government did not first wait for
its audit to be completed before suggesting
the introduction of these restrictions?
2. Even when the audit is complete, it will
not properly reflect the true picture for the
following reasons:
• The information provided by deeds offices
across the Country will not provide accurate
confirmation of how much land is owned by
foreign nationals.
• Even if this was available, it is important to
take into account both the area and the value
of the land being surveyed. Differing value of
property may skew this analysis.
3. A ban on foreign ownerships does not help
the country’s image and may be perceived as a
sign of antagonism to foreign investment and
even a further example of xenophobia.
4. The Land Management Commission
established by the Green Paper arguably
infringes on the jurisdiction of the South
A frican Courts and more specif ically
infringes on the Constitution.
5. Making foreigners an issue is not the best
way to deal with Land Reform in South
Africa. The policy seems to target foreigners
as being the problem or impediment to Land
Reform, which is not the case.

Proposed Restrictions on
Foreign Ownership
The proposal seeks to limit foreign land
ownership to a leasehold of a minimum of
thirty years. The leasehold could be extended
to fifty or ninety-nine year leases.
The Land Management Commission which
is introduced through the Green Paper will
oversee land owned by foreigners. Minister
Nkwinti was quoted as saying that the focus
however, will be on restricting agricultural
land owned by foreigners. It appears that
the Government is determined not to allow
foreign interest to buy up huge tracts of
South African commercial agricultural land
to produce food for export abroad. The land
ceiling is used on both citizens and noncitizens and targets prime agricultural land
that is not being used to its full potential. In
this context, the ownership of certain game
farms or parts thereof may be under threat
as it could be determined that the land is not
being used for food security. The Government
has emphasized that the restrictions would
not affect the commercial farmers as long
as they farmed productively. Speculative
accumulation of agricultural land will be
targeted by the new legislation.
Minister Nk w inti conf irmed that the
Government had completed an audit of
state-owned land but was still busy with
its audit of privately-owned land, which
includes that owned by foreigners. Once
the Government has completed the audit
the Government policy can be finalised and
legislation be implemented.
www.reimag.co.za

One of biggest challenges Government
continues to face is how to deliver on electoral
promises concerning land distribution. Despite
the Government not having completed a land
audit on privately owned land, it is clear that the
Government has set its sights on limiting the
ownership of land by foreign nationals. While
long-term leases have been suggested, it is not
yet clear how the proposals will translate into
Law. There will clearly be further restrictions
on land ownership, both to South Africans
and foreign nationals. Foreign nationals
who currently own property in South Africa
may take some solace in that (almost always)
legislation cannot apply retrospectively.

RESOURCES
Marto Lafitte & Associates

May 2013 SA Real Estate Investor

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