Section 25 of the Constitution sets out the balance that must be struck in protecting property rights while enabling equitable access to land, advancing land and water reform, ensuring security of tenure and restoring rights lost through dispossession and forced removals.
Section 25 of the South African Constitution strikes a delicate balance between the interest of existing property owners and the interests of society as a whole. Because
section 25 of the Constitution makes it clear that expropriation of property is permissible to effect land redistribution or to achieve some other public purpose or for the public interest.
Section 25(1) – Section 25(4) set out core property rights. However, it is important to understand that the Constitution does not guarantee private property. It allows for the state to expropriate private property, but determines the circumstances and steps that the state must take to lawfully deprive someone of their property rights.
(1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.
The state is required to draft laws which specifically regulate the process of expropriation. These laws must comply with constitutional principles. Section 25(1) is mindful of the injustices associated with the arbitrary deprivation of property which characterise South Africa’s colonial and apartheid history. Arbitrary actions lack procedural fairness. These are designed to prevent abuses in the exercise of public power.
(2) Property may be expropriated only in terms of law of general application—
(a) for a public purpose or in the public interest; and
(b) subject to 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.
This section reiterates the requirement that expropriation must be effected in terms of a law of general application such as the Expropriation Act. Several laws currently enable the expropriation of property. In all instances this must be consistent with the Constitution and the procedures set out in the Expropriation Act.
Sub clause (a) distinguishes between expropriation for public purposes (such as acquiring land to build a dam or a road) and in the public interest. Section 25(4) below specifically identifies land reform as being in the public interest by enabling equitable access to land and redressing arbitrary dispossession. Land reform is intended to correct the huge inequalities in access and ownership of land in South Africa.
(3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including—
(a) the current use of the property;
(b) the history of the acquisition and use of the property;
(c) the market value of the property;
(d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and
(e) the purpose of the expropriation.
Section 25(3) sets out a detailed set of criteria which must be taken into account in the determination of compensation. The clause as a whole hinges on how the courts will interpret the balance of public and private interests in determining just and equitable compensation. This may vary on a case by case basis. Sub clauses (a) – (e) identify the factors influencing the balance of interests and the ways in which they will influence the calculation of compensation.
The courts are directed to consider a range of factors to determine appropriate calculation of compensation:
Given the above it is possible that a combination of factors could result in a property being expropriated and zero compensation being awarded to the owner.
(4) For the purposes of this section—
(a) the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources; and
(b) property is not limited to land.
This clause firmly locates land reform as being in the public interest and extends this to bring about equitable access to all natural resources. This implies that access to water, forests, fisheries and mineral resources are also in need of reform to promote equitable access. (See clause 25(8) below)
(5) The state must 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.
(6) A person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to tenure which is legally secure or to comparable redress.
(7) A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress.
These three clauses provide the mandate for the land reform programme. They link land redistribution with tenure security and the right to restitution of property, alternative land and/or compensation.
“The notion of a right of “equitable access to land” establishes property rights for those without property. This constitutional framework imposes a positive obligation on the state to provide suitable land and housing for the landless and homeless, empowering them to press their claims, and shape the behaviour of state officials to facilitate a responsive land reform”
(8) No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36(1).
This powerful clause places a duty on the state to put in place land, water and related reforms to address the impacts of past racial discrimination. However the clause also requires that any reforms undertaken by the state are “reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom”.
Any such reform must take into account all relevant factors specified in section 36(1) including:
(a) the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.
This qualification indicates the careful balancing act which lies at the heart of the Constitution. The Constitution provides enormous transformative potential while ensuring that any such transformation furthers an open and democratic society and the key values of dignity, equality and freedom.
(9) Parliament must enact the legislation referred to in subsection (6).
Sub clause 9 places a binding obligation on the state to pass legislation which ensures tenure security for all and to ensure adequate redress where people’s land rights are undermined.
As will be explored in other sections, the state remains in breach of this section of the constitution, as to date no permanent legislation is in place to secure the rights of citizens living in the former bantustans.
As constitutional lawyer Pierre de Vos has explained:
‘Section 25 of the South African Constitution strikes a delicate balance between the interest of existing property owners and the interests of society as a whole. Because property is a social good, because the majority of South Africans were denied the right to acquire property and because many South Africans were dispossessed of their property during the colonial and apartheid eras, section 25 of the Constitution makes it clear that expropriation of property is permissible to effect land redistribution or to achieve some other public purpose or for the public interest.
But because many property owners use their land productively, paid market value for the property, owe money on bonds taken out to pay for such property or need access to property for housing purposes, section 25 prohibits the arbitrary deprivation of property as well as the expropriation of property without payment of just and equitable compensation which has either been agreed upon or which has been decided by a court of law.’
Although the Constitution is clear, the content of “just and equitable” compensation remains insufficiently developed or understood in practice. To date neither government nor the courts have developed transparent procedures for arriving at what is “just and equitable” compensation.
The DLA was established in 1994 and incorporated the former Department of Regional and Land Affairs, itself a successor to the Department of Native Affairs. It inherited an old guard of government officials, but also recruited staff from NGOs that had been in the forefront of resistance to apartheid land policies.
Restitution was the initial focus of the land reform programme. The Restitution of Land Rights Act (No. 22 of 1994) was the first statute passed to deal specifically with forced removals and dispossession post 1913.
The 1997 White Paper prepared by the new DLA was the culmination of two and a half years of policy development coupled with extensive consultation, and the foreword by Minister highlighted the “complex and difficult legacy” of South Africa’s past in relation to land in South Africa.
The White Paper acknowledged that:
The property clause was highly disputed in the constitutional negotiations and was one of the last issues to be resolved. The new Constitution seeks to achieve a balance between the protection of existing property rights on the one hand, and constitutional guarantees of land reform on the other hand. The property clause itself now provides clear constitutional authority for land reform.
The White Paper addressed the mandate for a land reform programme as derived from Section 25 of the Constitution:
In seeking to fulfill this mandate the White Paper adopted a clear pro-poor focus.
With regard to redistribution, it restricted those eligible for grants to:
With regard to tenure reform, the White Paper sought to broadly to assist residents to secure and upgrade the conditions of tenure under which they live.
With regard to Restitution, the White Paper recognised that restoration of land would not be enough and undertook to provide successful claimants with “additional funds for meeting basic needs on restored land”.
The 1997 White Paper stated that:
The government is committed to a land reform programme that will take place on a willing-seller willing-buyer basis. Rather than become directly involved in land purchase for the land redistribution programme, government will provide grants and services to assist the needy with the purchase of land. However, where this is not possible, the state must be able to expropriate land required in the public interest. The new Bill of Rights expressly recognises that the public interest includes ‘the nation’s commitment to land reform’.
The review of Section 25 above makes it clear that willing buyer-willing seller (WBWS) is not a constitutional requirement. WBWS is a policy principle adopted in the White Paper which reflects advice provided by the World Bank at the time.
Despite the WBWS policy position, the state has a range of policy options for land acquisition. It can choose to identify willing sellers and acquire land at market value. It also has the option to negotiate land prices and can invoke expropriation to bring prices down.
Cases of expropriation that result in zero compensation are likely to be rare as a court would have to find that this calculation is just and equitable.
The calculation of compensation and the form in which compensation is awarded will vary from case to case. It is important to note that there is no requirement that such compensation be paid in cash. Government could opt to finance land acquisition by the issue of government bonds.
In Brazil a Constitutional amendment was passed in 1964 which no longer required that fair payment for land be paid in cash. It enabled land expropriation to be paid for with government bonds that would mature in twenty years, their values adjusted periodically to incorporate inflation. (We will feature analysis of land reform in Brazil on our international land reform pages as KB.L expands in 2019.)
The issuing of a government bond has the effect of deferring full payment by the state to the land owner. The price of the land to be acquired is treated as an interest bearing loan to government with a fixed maturity date. The expropriated land owner receives an annual interest payment for the duration of the bond period and at the maturity date the government pays over the original purchase price agreed for the land. The owner can hold the bond as an investment or could choose to sell the bond to dealers who trade on the bond market.
Alongside the registered owner, there are often others with rights in the land which is subject of expropriation. Used incorrectly, expropriation has a potential to extinguish or undermine these rights. While the focus of the expropriation debate has been on the registered rights of the owners with title, expropriation also has enormous repercussions for those with off-register rights. Before expropriation, it is essential to identify and recognise those with off-register rights who are also eligible to compensation (or comparable redress). These could be farm dwellers, rights holders on communal land, informal settlement dwellers etc. Section 25(6) of the Constitution provides for “comparable redress” for such groups, as part of what will constitute “just and equitable” compensation.
South Africans have been in debate as to whether to amend the Constitution to allow for expropriation without compensation (EWOC). There are strong arguments that this is a political diversion.
Many in the land sector agree that the principal obstacle preventing land expropriation and the testing of compensation levels payable has been a general lack of political will to implement pro-poor land reform, and a failure to pass an updated Expropriation Act.
Even if these obstacles are overcome, there is no evidence to demonstrate that EWOC will make land reform cheaper or faster. Indeed, expropriation may have the unintended consequence of slowing down and inflating the costs of land acquisition as a consequence of litigation.
“All of us know that the problem is not with the constitution‚ the problem has been the failure to resolve the unresolved issues despite an enabling environment‚ despite an enabling legal framework.”
To date many agree that the state has failed to realise the transformative power of the constitution to promote land reform in the public interest.
The failure to meaningfully advance equitable access to land and security of tenure and make land reform work for poor and landless South Africans is reflected in ongoing critical incapacity within the state, exacerbated by the relatively insignificant share of the national budget.
Much of the 0,4% of the national budget allocated to the DRDLR has been reallocated to costly and rural development and agriparks initiatives of questionable sustainability, with the result that the number of hectares acquired for land reform have declined year on year since 2009.
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