Study motivation

1
byDR S M D SIBANDA
DEPARTMENT OF LAND AFFAIRS REPUBLIC OF SOUTH
AFRICA REPORT OF THE PANEL OF EXPERTS ON
OWNERSHIP OF LAND BY FOREIGNERS IN SOUTH
AFRICA Presentation to the Portfolio Committee
on Agriculture and Land Affairs 17 October 2007
2
Background to the Study

• In the past five years there has been growing
  public concern on the proliferation of foreign
  ownership of land in the country.
• Foreign ownership was considered to be one of the
  factors denying South Africans access to land in
  their country.

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Background (continues)

• Therefore, Cabinet took a decision in August 2004
  to appoint a panel of experts to investigate the
  specter of ownership of land by foreigners in
  South Africa.
• The Minister appointed a panel of experts on 24
  August 2004 to give effect to the Cabinet
  decision.
• The Department of Land Affairs provided
  administrative and technical support.

4
Terms of Reference of the Panel

• To investigate, consider and make
• recommendations regarding
• The nature, extent, trends and impact of the
  acquisition and use of, and investment in
  land in South Africa by non-South
  African citizens
• The extent to which the current lack of a
  comprehensive policy and legislative framework
  contributes to the acquisition, use and
  investment in land by non-South African citizens

5
Terms of Reference (continues)

• Whether the Government should (and how)
• monitor and intervene by policy,
  legislative and other means, in preventing any
  possible negative consequence of land
  acquisition/use by non-South African citizens
• The impact on the property markets of land
  acquisition and use by non-South African
  citizens, distinguishing between land use
  for residential, commercial, agricultural,
  eco-tourism/ tourism/ game lodge and golf course
  purposes and

6
Terms of Reference (continues)

• Comparative international/ foreign practices
  (laws, policies, impact, etc) on the issue of
  land ownership by non-South African citizens.

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Contents of the Report A Synopsis

• The Report provides indicative data and
  information as far as ownership by foreign
  individuals is concerned.
• The ownership by foreign natural persons varies
  between 1 and 3 depending on the category of
  the land in question.
• Ownership by foreign natural persons is
  significantly higher in percentages in coastal
  and game farming areas and of land in the
  categories of erwen, agricultural holdings, farm
  land and sectional titles.

8
Contents of the Report A Synopsis(continues)

• A distinction should be made between individual
  and corporate foreign ownership.
• Individual foreign ownership varies between about
  1 for residential houses to 3 for sectional
  title properties. The values of these properties
  are more or less in line with the number of them.

9
Contents of the Report A Synopsis (continues)

• Corporate ownership is more problematic to
  determine, and clear distinctions at a
  statistical level between foreign and South
  African-owned is not yet possible. (Therefore the
  recommendation for disclosure.)

10
Contents of the Report A Synopsis (continues)

• The overall situation is the following
• Measurement Erf Farm AH Sectional
• Value 63.61 78.09 50.82 37.97
• Count 4.67 27.45 11.57 16.26
• Size 4.13 33.63 8.23 75.93

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Contents of the Report A Synopsis (continues)

• This table means that business and other
  corporate bodies own 4.67 of all the residential
  houses in South Africa. These houses occupy 4.13
  of the total land used for residential housing,
  and the value of these houses is 63.61 of all
  the houses. They also own 27.45 of all the farms
  in South Africa, which have a combined value of
  78.09 of the total value of farms in the country.

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Contents of the Report A Synopsis (continues)

• It is clear from the table that, although the
  number of properties in each of the four
  categories, and their physical size, are
  relatively small, their value is very high. It
  means that they are properties mainly in the
  upper market, which also means that they have a
  high value for speculation. It is therefore
  important to interpret the statistics in terms of
  not only the number of properties, but also their
  value, and therefore their possible impact on the
  property market.

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Contents of the Report A Synopsis (continues)

• All this justifies the regulation of land for its
  use for land reform and housing purposes.

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Contents of the Report A Synopsis(continues)

• The Panel has only just completed and presented
  to the Department its report on the determination
  of the extent of foreign ownership and use of
  land through corporations and trusts. The results
  of this study will be made available at a later
  date.

15

• Contents of the Report A Synopsis
• (continues)
• The Panel established that the lack of a national
  policy on the regulation of foreign ownership of
  land in South Africa is certainly not the norm in
  the world, including in countries with comparable
  economic systems and levels of development and
  countries with more advanced economies
• Some form of regulation is therefore important
  irrespective of the extent of ownership and use
  of land by foreigners.

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Recommendations A Summary

• Compulsory Disclosure of Nationality, Race,
  Gender and other information
• Similar to the requirements of the Financial
  Intelligence Centre Act, 2001 (FICA).
• Requires amendment of Deeds Registries Act, 1937
  (Act No. 47 of 1937) and Regulations.

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2. Special Ministerial Approval

• For certain changes in land use, and disposal of
  certain categories of land to foreigners
  especially where such change of use or disposal
  has the potential to negatively impact on the
  states constitutional obligations to effect land
  reform, land that is subject to restitution
  claims or that is earmarked for redistribution or
  integrated human settlement.

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• 2. Special Ministerial Approval
• (continues)
• Currently there exists a State Land Disposal
  Committee and there are provisions allowing the
  establishment of Provincial State Land Disposal
  Committees. These committees have no jurisdiction
  over municipal lands that continue to be
  incorrectly and unconstitutionally categorized as
  private land. Further, not all provinces have
  functioning committees.

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Special Ministerial Approval(continues)

• As the third tier of government, municipalities
  may own and dispose of land registered in their
  name. This category of land falls within the
  ambit of public land.
• Although municipalities may deal with land which
  they own within the limits of the relevant
  legislation, objectives of government as a whole
  should be considered when disposing of public
  land which includes land from all three spheres
  of government in the spirit of cooperative
  governance as required in terms of the
  Constitution.

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2. Special Ministerial Approval (continues)

• For this reason, the national, provincial and
  municipal spheres of government should be
  represented at the Provincial State Land Disposal
  Committees to achieve the synergy required by the
  Constitution.

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3. Inter-ministerial/departmental oversight
committee

• A permanent inter-ministerial/departmental
  oversight committee consisting of at least the
  Departments of Agriculture, Land Affairs,
  Provincial and Local Government, Environmental
  Affairs and Tourism and Housing must be
  established as a matter of urgency.

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3. Inter-ministerial/departmental oversight
committee (continues)

• Such a committee has to
• monitor trends in foreign ownership of land and
  changes in land use and
• recommend to government appropriate corrective
  interventions.

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Inter-ministerial/departmentaloversight
committee (continues)

• The interministerial oversight committee has to
  be supported by an interdepartmental task team.
• The Ministers have to appoint persons with
  relevant skill to be part of the envisaged
  interdepartmental task team.

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3. Inter-ministerial/departmental oversight
committee (continues)

• This inter-departmental task team will also be
  involved in giving effect to recommendation 1
  dealing with disclosure. The amendments to the
  Deeds Registries Act and Regulation 18 of the
  Deeds Registries Act have to be driven by this
  task team.

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Inter-ministerial/departmental oversight
committee (continues)

• What is needed at this point in time is the
  following
• The constitution of the interministerial
  committee
• The constitution of the interdepartmental task
  team to process responses from members of the
  public following the expiry of the sixty days
  permitted for public comments on the Report
  consolidation of the final report and giving
  effect to recommendations 1 and 3 of the Report.

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4. Classified/protected areas and outright
prohibition on foreign ownership

• Prohibition of private ownership of land by
  foreigners (and in some cases nationals) in
  certain areas (to be classified) on grounds of
  national interest, environmental considerations
  and national security. E.g. National Key Points,
  coastal areas, conservation areas, land close to
  military installations, water catchments and land
  along borders/ international boundaries.

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5.Limited temporary moratorium on the disposal of
State land to foreigners

• Moratorium of about 2 years prohibiting disposal
  of State land to foreigners and, in limited
  cases, to nationals who do not qualify for
  redress under the national land reform policies
  and legislation should be put in place. This is
  not a blanket prohibition but meant to prevent
  certain spheres of government and organs of state
  from disposing of land that may be used for land
  reform and human settlements for the dispossessed
  and marginalized individuals and communities.

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5. Limited temporary moratorium (continues)

• Such a moratorium could be lifted once the
  Ministerial Approval process and the
  Inter-Ministerial/Departmental Oversight
  Committee suggested above have been established
  and are operational.
• Legislation, including municipal by-laws and
  ordinances, that categorise land belonging to any
  organ of State/sphere of government as private
  land, would be unconstitutional and the
  Constitutional Court may be approached for an
  order under section 167 (5) of the Constitution
  for an appropriate declaration.

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6. Zoning, land use and planning
legislation

• The rationalisation and harmonization of land use
  planning and zoning laws through enactment of
  overarching national legislation should be
  prioritised as a matter of urgency.
• The current Land Use Management Bill (LUMB) is
  well placed amongst other things to achieve the
  recommendation in question.

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6. Zoning, land use and planning
legislation (continues)

• A review of current practices in the zoning and
  rezoning procedures, the development of golf
  estates, hobby farms, polo estates and game
  farming ought to be brought under the preview of
  the Special Ministerial Approval processes and
  Inter-Ministerial/Department Oversight Committee.
  
• The country is already sitting with a case of
  murder of a farm manager connected to the
  conversion of land use to game farming (see, W
  Hlongwa, Make Way for Wild Animals City Press,
  28 January 2007 on p. 21)

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7. Disposal of State Land

• All three spheres of government should be covered
  by all the recommendations in this Report and
  that government and all organs of State ought to
  lead by example in implementing the regulatory
  regime on foreign ownership of land and a general
  prohibition of disposal or change in land use
  that may undermine land reform, the attainment of
  integrated human settlements and compromise the
  sovereignty of the nation and the citizens.

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8. Leaseholds

• In line with the practice in some countries
  studied, the government may consider medium and
  long term leases of public land as a viable
  mechanism for future acquisition of land and
  interests in land by foreigners. Leaseholds have
  time limits and may be less controversial than
  full ownership rights even though they still
  exclude citizens from ownership and use.

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9. Enabling omnibus legislative amendments

• Giving effect to some of the recommendations
  through a comprehensive General Laws or Land
  Matters Amendment Bill, similar to Judicial
  Matters Amendment Bills that the Department of
  Justice and Constitutional Development use. The
  advantage of such an approach is that the
  consequences to other pieces of legislation that
  may arise from amendments to a specific Act or
  Acts are easily catered for in a single Bill.

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10. Fronting

• Fronting has been identified as an
• issue that can undermine the governments policy
  on land reform and regulation of foreign land
  ownership. It is therefore recommended that
  measures should be included in any policy
  formulation to deal with this problem.
  Consideration may be given to various sanctions,
  including assets forfeiture.

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The Constitutional Authority for the
Recommendations

• These recommendations of the Panel of Experts are
  underpinned by sections 21(3), 25(5) and 26 of
  the Constitution dealing with
• the right of every citizen to enter, to remain in
  and to reside anywhere in, the Republic
• the States constitutional obligation to take
  reasonable legislative and other measures, within
  its available resources, to foster conditions
  which enable citizens to gain access to land on
  an equitable basis and

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The Constitutional Authority for the
Recommendations (continues)

• The right of everyone to have adequate access to
  housing
• The States constitutional obligation to take
  reasonable legislative and other measures, within
  its available resources, to achieve the
  progressive realisation of this right and

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The Constitutional Authority for the
Recommendations (continues)

• Persons constitutional rights not -
• to be evicted from their home
• to have their home demolished without an order
  of court made after considering all the relevant
  circumstances.

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Presentation of the Report to the Minister

• The Panel of Experts presented the report to the
  Minister on 6 March 2007.
• The Minister accepted the report in principle
  subject to further consultation with key
  stakeholders.

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Consultation with senior managers of the DLA

• On 20 March 2007, the report was presented to
  Senior Managers who also accepted the report
  together with the recommendations with the
  provisos
• that the report be edited and integrated properly
  to allow easy reading and logical flow of issues
  raised
• that institutional preparations for the
  implementation of the recommendations needed to
  be looked into.

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Consultation with senior managers of the DLA
(continues)

• Consultation with DLA TOP Management took place
  on 15 June 2007
• The Department endorses recommendation 1. The
  issue of nationality, race and gender is
  important for the purpose of knowing who owns
  South Africa as well as for determining the
  extent of transformation in the ownership of land
  across race and gender configurations over time.

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Consultation with senior managers of the DLA
(continues)

• The Department similarly endorses recommendation
  2 and 3.
• In line with the position taken by the Social
• and Economic Clusters as well as the
  Presidency, the Department supports
  recommendation 4 subject to linking up this
  effort with the policy and legislative
  requirements of the Water Act, 1998 (Act No. 36
  of 1998), National Environmental Management Act,
  2003 (Act No. 57 of 2003), Protected Areas Act,
  2004 (Act No. 31 of 2004), Integrated Coastal
  Management Bill and the Land Use Management Bill
  to name a few.

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Consultation with senior managers of the DLA
(continues)

• On recommendation 5, the Department is of the
  view that the imposition of a moratorium on State
  land is in order.
• However, this is not possible on privately owned
  land in the absence of an enabling policy and
  legislative framework.

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Consultation with senior managers of the DLA
(continues)

• Recommendation 6 is supported and
• must be taken forward in terms of the Land Use
  Management Bill (LUMB).
• The principle of recommendation 7 is supported by
  the Department.
• Recommendation 8 is supported in the sense that
  it is a viable alternative to giving outright
  ownership of State land to foreigners.
• Recommendation 9 states the obvious and is
  supported by the Department.
• Recommendation 10 is acknowledged as a cautionary
  measure.

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Consultation with the Social and Economic Clusters

• On 18 April 2007, the Report was presented to the
  Social and Economic Clusters and useful inputs
  were made on the subject matter at hand.

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Presentation to Cabinet

• On 18 July 2007, the Minister presented to
  Cabinet the Report of the Panel of Experts on
  Ownership of Land by Foreigners in South Africa.
  Cabinet deliberated on the report presented to
  it by three members of the Panel of Experts
  supported by Dr S M D Sibanda from the Department
  of Land Affairs.
• Cabinet generally supported the Report and
  recommendations and approved that the Report be
  finalized before releasing it for public comment.

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Presentation to Cabinet (continues)

• The Panel of Experts have since attended to the
  issues raised by Cabinet. As such, the Report
  contains all aspects that Cabinet instructed the
  Panel of Experts to do.
• From the Departments side, the latter has, in
  liaison with GCIS, developed a comprehensive
  communication strategy.

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• Presentation to Cabinet
• (continues)
• The Report has been published in the Government
  Gazette for public comments.
• THE END.