Speaking after the recently held governing party’s lekgotla, the African National Congress (ANC) general secretary, Gwede Mantashe announced that there should be a limitation of foreign land ownership, to a maximum of 12 000 hectares or two farms. He further added that land ownership by foreign nationals would also be prohibited. Instead foreign nationals would only access land through leaseholds. News articles further quote him as implying that such legislation passed would have a retrospective effect. Mac Maharaj, the Presidential Spokesperson has nonetheless denied that it will be of retrospective application. It is not just the possibly retrospective application of the proposals which is troubling, but also the possibility of contravening constitutional provisions.
It must be said that the cap on foreign ownership of land is not a new concept. For example, in Alberta, Canada, foreigners can only own two plots of agricultural or recreational land, less than a total of 20 acres. Argentina restricts overseas buyers to 1000 hectares in key areas of the country and also limits foreign ownership of land to 15%. While there may exist, for South Africa, valid public interest reasons for the limit to foreign ownership – such as the constitutional imperatives for land reform, the manner in which the limitation will be conducted appears to be problematic at best.
Section 25(1) of the Constitution states that no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation.
The Constitutional Court in First National Bank of SA Ltd t/a Wesbank v Commissioner for SARS defined a deprivation of property as being arbitrary if the law in question either fails to provide sufficient reason for the deprivation or is procedurally unfair. In determining the legitimacy of a deprivation, the purpose of the law and the subsequent deprivation must be evaluated. Where the purpose of the law bears no relation to the property and its owner, then it is arbitrary. There should be sufficient justification for the deprivation, otherwise the deprivation is arbitrary. The nature of the relationship between the means and the ends that must exist to justify the deprivation depends on the nature of the property as well as the extent of the deprivation – be it permanent or far reaching. The greater the extent of the deprivation, the more compelling the purpose and the closer the relationship between the means and ends must be. While the limitation on foreign ownership of land is ostensibly meant to be a part of the nation’s land reform programme, it is doubtful whether the implementation of this policy will achieve its stated purpose.
The Presidential Spokesperson has further stated that “58% of poverty stricken people are in rural areas” and that the limitation of foreign ownership will alleviate rural ownership. It is unclear how expropriated urban properties will alleviate rural poverty.
The policy does not distinguish between foreign nationals and foreign juristic entities. As news articles have pointed out, United Kingdom registered companies with majority shares in South African companies such as Vodacom own vast tracts of land throughout the country, may be affected by this policy. The policy proposal runs the risk of running afoul of the principle of legality which requires laws to be ascertainable and clear. An added possibly unconstitutional dimension is the notion of foreigners only being granted thirty year leaseholds rather than complete ownership. The Constitution states that everyone is equal before the law and has the right to equal protection and benefit before the law. This equality before the law extends to non citizens. Laws may from time to time allow for differentiation (in order to achieve a public purpose) between groups, but this differentiation may not be an unfair discrimination such as this absolute ban on foreign land ownership.
The fact that the policy, should it be translated into law, would be of retrospective effect is in itself problematic. While a law can be of retrospective application, a procedural law may not apply retrospectively if the application would adversely affect an individual’s substantive rights. This policy proposal which will affect private property rights possibly breaches the principle of legality.
Viewed in context, a troubling dimension of the limitation of foreign land ownership is the fact that The Property Valuation Act (Valuation Act), signed into law last year, but not yet in effect, creates the Office of the Valuer-General who would be tasked with evaluating all properties that will be expropriated. As noted above, the Constitution prohibits the arbitrary deprivation of property and provides that expropriation is made subject to the payment of compensation, “the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.” Yet the Valuation Act precludes the involvement of the courts in determining the payment of compensation. This is in direct conflict with the provision in section 25 of the Constitution which requires compensation to be either “decided or approved” by a court.
The Expropriation Bill, tabled recently in Parliament may very well be passed into law. Should this happen, then land belonging to foreign nationals can be expropriated, with the owners receiving whatever the Valuer General (in terms of the Valuation Act) deems ‘just and equitable’, without any possibility of the court’s involvement.
To reiterate, the Constitution states that property may only be expropriated in terms of a law of general application and for a public purpose or public interest. It stands to reason that the expropriation of property belonging to foreign nationals would constitute regulatory excess and possibly exceeds the bounds for state interference with private property, thus tipping section 25’s delicate balancing act.
By Phephelaphi Dube