25 May 2011 by

Land reform under review

The question of land reform is of critical importance to all developers and operators of renewable energy projects because security of land tenure is a critical element underpinning the success of all such projects.

The Ministry of Rural Development and Land Reform has signalled an intention to overhaul the legislation on land reform in South Africa. These amendments were to be proposed in a green paper to be drafted by the Ministry. The proposed measures in the green paper are designed to achieve equitable access to land and sustainable land use.

The green paper has not been released by the Ministry yet, after several postponements. However, media reports signal that the proposed amendments are far reaching and may change the complexion of restitution of land rights in South Africa.

This article explores aspects pertaining to this debate.

The method of valuating land has always been contentious, even when drafting the provisions of the Constitution of the Republic of South Africa, 1996, which gave birth to the various statutory enactments dealing with restitution. The willing buyer/willing seller method has been at the centre of this debate. Government has often commented that the price arrived at after applying the willing buyer/willing-seller method (which has been favoured by land owners because it reflects the market rate of the property) was excessive. We may see the introduction of an independent "Land Valuer-General" to be the final adjudicator on the price of land earmarked for redistribution.

The measure to determine the market value of the property is linked to other considerations: first, a revised expropriation policy; second, a "land reform discount" and third, the proposal to use the productive value of the land as a benchmark to determine the price. It is thought that some of the measures proposed in the maligned Expropriation Bill of 2008 might find expression in this legislation. A second major issue which has confronted the land redistribution process, has been the lack of productivity of the farms which have been redistributed. In order to combat this, the thought is to introduce a different manner of redistribution. Once acquired, the land may not be redistributed to the beneficiaries, but could remain under the control of the relevant Regional Land Claims Commission (RLCC). It is mooted that the beneficiaries might lease the land from the RLCC under long-term lease agreements. The beneficiaries' security of tenure would need to be dependent on their ability to utilise the land productively.

A possible progressive land tax could be considered, the aim of which would be to increase the cost of holding land with the aim of discouraging the under-utilisation of land. Naturally, it could also be an additional revenue-base from which Government might fund the various programmes on land reform.

This issue is at an embryonic stage and the green paper has yet to be published. We look forward to continuing this debate upon official publication of the green paper.

Fiona Leppan, Director, Employment Law
Mabasa Sibanda, Associate, Employment Law

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