Real Estate Investor Magazine South Africa October 2013 | Page 20

NEWS ALERTS

BY MONIQUE TERRAZAS

In The Property News...
The Good

The Bad

The Ugly

SA improving in Property
Rights Protections

Ruling breaks new ground on
property approvals

Farm Share Plan

According to 2013 International Property Rights
Index (IPRI), which measures the intellectual
and physical property rights of 131 nations from
around the world, South Africa is the highest
ranked African nation and ranks 26th overall,
with a score of 6.8 (out of 10). From 2009 to 2013,
the overall South African IPRI score decreased
by 1.2%. However, South Africa’s IPRI score
slightly improved by 0.1 points in 2013, due to
improvements in all component scores.

The Supreme Court of Appeal recently issued a
judgment, ordering Rhodes professor Matthew
Lester to demolish his R8 million property in
Kenton–on-Sea at his own expense within 180
days, deeming the house to be in contravention of
Section 21 of the National Building Regulations
and Building Standards Act. The judgment, which
upheld an earlier judgment of the Eastern Cape
High Court, was delivered by five of the country’s
top judges.

Organised agriculture is concerned about a
proposal contained in a Department of Land
Affairs policy document that says farmers should
be encouraged to ‘voluntarily’ give shares in their
farms to workers.

The IPRI emphasises the great economic
differences between countries with strong property
rights and those without. Nations in the top quintile
such as Finland, Australia, and the US enjoy an
average national GDP per capita of $38,288 while
nations in the second quintile, such as Ireland,
Chile and South Africa have an average GDP per
capita of $26,680 (South Africa trails with $9,616).

The case began 10 years ago and included seven
high court applications, entailing aspects of
neighbour, public and administrative law. Ndlambe
Municipality and High Dune House (Pty) Ltd,
the owners of a neighbouring property, applied for
a demolishing order on Lester’s property on the
grounds that it contravened building regulations,
obstructed the view and affected privacy. Lester
countered the claim, proposing the house instead
be altered in accordance with submitted plans.

Free Market Foundation director Jasson Urbach
said, “Countries in the top 20% are seven times
wealthier than countries in the bottom 20%. The
study shows that countries with low scores prosper
if their scores are increasing. Conversely, countries
with high scores stagnate if their scores decline.
What this means is that high-scoring countries
such as South Africa are punished severely if they
compromise property rights, whereas low-scoring
countries are rewarded generously if they enhance
property rights”.
“The IPRI highlights the key role played by
property rights not only in keeping an economic
system fair and transparent but also in representing
the backbone of any free market economy,” said
Lorenzo Montanari, Executive Director of the
Property Rights Alliance.

18

October 2013 SA Real Estate Investor

The Supreme Court judges said that when a
building was erected without approved plans in
terms of the National Building Regulations, the
court had no discretion, but to ‘enforce statutory
prohibitions’. “One is acutely aware of the financial
calamity, inconvenience and disruption which
the demolition of what is plainly [an] expansive
luxurious dwelling, and a primary residence to
boot, would cause Lester. But the upholding of the
doctrine of legality, a fundamental component of
the rule of law, must inevitably trump such personal
considerations,” the judges concluded.
The judgment could see thousands of homes and
offices in South Africa demolished and property
developers facing criminal charges.

According to this document, workers with 10
years of ‘disciplined service’ on commercial farms
should be given 10% shares in the ownership of
the land. After 25 years of service, this should
become 25% and after 50 years, the workers
should be given 50% shares. The proposal makes
no mention of what would happen when there
were more workers with more than 10 years of
service on the same farm.
AgriSA legal and policy adviser Annelize
Crosby said the proposal was not executable,
as shares in land only hold value when the land
is eventually sold. If the unlikely possibility
that such a policy – which she believed to be
unconstitutional – could be enforced, it would
lead to disinvestment in the industry, she
said. TAU SA said a provision that it will be a
‘voluntary’ programme would put ‘unnecessary
and unfair pressure’ on farmers to take part in
such initiatives.
Pieter Groenewald, the Freedom Front
Plus’ parliamentary spokesperson on Rural
Development and Land Reform, said that
the proposals are frightening and could cause
enormous harm to South Africa’s agriculture
as it could lead to large scale disinvestment. He
added that it is a thinly disguised attempt by
government to expropriate farms and boils down
to nothing less than brutal expropriation of land,
similar to that which took place in Zimbabwe.

www.reimag.co.za