The land reform debate over the last few years in South Africa can, at best, be described as controversial, political, and primarily emotional, specifically in the context of expropriation. The significant reactions to the President’s signing of the Expropriation Act[1] are unsurprising.
Even though the President has signed the Expropriation Act, it has not yet been promulgated as to when the Expropriation Act or different provisions thereof will come into effect.
Over the last few years, during the public participation processes regarding the Expropriation Bill, numerous stakeholders objected to some of the more controversial compensation provisions, and the majority of the opposition parties in the National Assembly voted against adopting the Expropriation Act. Some stakeholders and political parties have since indicated that they intend to bring court applications to declare some of the Expropriation Act provisions unconstitutional.
In this bulletin, we will assess the following aspects of and key concerns about the new Expropriation Act, namely:
- Its effect on constitutionally protected private property rights.
- For what purpose may expropriation be done?
- Nil compensation payable for the expropriation of land.
- What happens next?
Its effect on constitutionally protected private property rights
Section 25 of the South African Constitution[2] protects the right to own property by stipulating that no one may be deprived of property except in terms of a law of general application, and no law may permit arbitrary deprivation of property. Notably, the section provides that deprivation is not limited to land; in other words, movable and immovable property can be expropriated.
The Constitution is the supreme law of South Africa; legislation or conduct inconsistent with it is invalid, and the obligations it imposes must be fulfilled. Property may be expropriated only in terms of a law of general application, for a public purpose, or in the public interest, and subject to compensation, the amount of which and the time and manner of payment which have been either agreed to by those affected or decided or approved by a court.
Notably, the Bill of Rights[3] binds the legislature, the executive, the judiciary and all organs of the state[4]. Against this context, section 25(3) of the Constitution presently imposes a positive duty on the State to ensure that compensation paid pursuant to expropriation is just and equitable regardless of what the legislation concerned with compensation provides[5]. Therefore, even though the State is empowered to expropriate property (including but not limited to land and rights in land), compensation for expropriation remains a fundamental requirement.
Furthermore, in terms of section 25(3) of the Constitution, compensation must be just and equitable, reflecting an equitable balance between the public interest and those affected, having regard to all relevant circumstances, including but not limited to i) the current use of the property; ii) the history of acquisition and use of the property; ii) the market value of the property; iv) the extent of state investment made and subsidies granted in respect of the property, and v) the purpose of the expropriation.
The previous Expropriation Act of 1975[6], was pre-constitutional legislation. Consequently, it was always anticipated that the legislation would need to be amended to align with the South African Constitution.
Generally, the Expropriation Act is consistent with the spirit and provisions of the Constitution, including the right to equality (section 9), property rights (section 25), access to information (section 32), and lawful, reasonable and procedurally fair administrative action (section 33).
Notably, section 19 of the Expropriation Act provides that in the absence of a compensation agreement, either party may institute legal proceedings in a competent court within a stipulated period. This means that, in effect, a competent court will have the final say in determining compensation for expropriation.
Based on this analysis, it is doubtful if the Expropriation Act will generally affect private property rights as envisaged in section 25 of the Constitution. This view is, however, qualified by some of the more controversial provisions discussed below.
For what purpose may expropriation be done?
Expropriation can essentially be done in two instances, namely if the expropriation has to be done for 1) a public purpose or 2) that it is in the public interest. Both instances are not new concepts in our law and are briefly discussed below:
Public purpose
“public purpose” is defined[7] as to include “…any purposes connected with the administration of the provisions of any law by any organ of state, in terms of which the property concerned will be used by or for the benefit of the public”.
Expropriation for a public purpose is generally known and accepted in other jurisdictions and is in line with previous expropriation laws in South Africa. Examples would be when land is required for building a dam, a road or a public nature reserve.
Public interest
“public interest” was formally introduced in section 25[8] of the Constitution and reads: “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.”
The first part of the definition used in the Expropriation Act[9] is the same as that used in the Constitution. Still, it is noteworthy that the following additional wording is used “… to redress the results of past racial discriminatory laws or practices”. It is self-evident that the effect will be that this provision would be used for land reform purposes. It is, again, wide and consists of general concepts, but interestingly, there is no limitation, and from the State’s perspective, it is open to use generally. Some guidelines may follow in terms of regulations that the Minister will publish[10] and when courts decide on these aspects, but it is understandable why there is uncertainty and confusion on how these provisions will be implemented.
However, as mentioned above, it is evident that the provisions of the Expropriation Act must be followed as checks and balances to comply with constitutional principles. In the end, it should be considered that the courts will have the final say, mainly regarding determining compensation for expropriation.
Nil compensation payable for the expropriation of land.
The most controversial provision of the Expropriation Act is section 12(3), which introduces the notion of the payment by the State of ‘nil’ compensation where land is expropriated, provided that it is determined by the State to be just and equitable. Instances where it may be just and equitable for the State to pay ‘nil’ compensation are listed under section 12(3).
The instances where it may be just and equitable for the State to pay ‘nil’ compensation listed under section 12(3) are quite controversial, especially section 12(3)(a), which refers to “where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income but to benefit from appreciation of its market value” (in other words for speculative purposes). The principle of “use it or lose it” seems to be the best protection against this. Several concerns immediately arise, for example, who will determine this and what will happen to land that is used, for example, for conservation purposes and cannot be developed for a valid reason? The wording is broad by not limiting it to these instances, which could leave it open to the State’s discretion when ‘nil’ compensation becomes payable. Hopefully, these types of issues will be clarified in the regulations.
It is important to note that the ‘nil’ compensation section only applies to property, which is land and does not apply to any other form of property, such as any movable or intellectual property. More importantly (which appears to be widely misunderstood), the Expropriation Act does not provide a blanket provision for expropriating land at ‘nil’ compensation.
Under the circumstances, the payment of ‘nil’ compensation must be just and equitable. When it is determined by the State to be just and equitable, the State must provide particulars of how such an amount was determined. Although not expressly stated, given that ‘nil’ compensation albeit at ‘nil’ Rand is still regarded as “compensation”, the Expropriation Act can be interpreted to imply that the process of determining compensation discussed above also applies to ‘nil’ compensation, which means that it can be challenged.
The use of the word “may” further imply that section 12(3) is a discretionary provision. It would be interesting to see if regulations on how such discretion must be exercised will be published.
There is the further challenge of how the State will implement section 12(3) with section 2(2) of the Expropriation Act requiring the State to try to reach an agreement with the owner or holder of a right in property for the acquisition thereof on reasonable terms (unless the expropriation is done on an urgent basis) before the State is able to expropriate the property. It is difficult to foresee the circumstances where ‘nil’ compensation may be regarded as a reasonable term, and it is possible that section 2(2) may not be regarded as being fulfilled.
What happens next?
The Minister has not yet published any regulations. The Minister is a DA member of the Government of National Unity who publicly opposes the Expropriation Act. This may lead to an impasse, which could delay the implementation of the provisions.
Most opposition parties and some stakeholders have indicated that the controversial provisions of the Expropriation Act will be challenged in court.
With all new legislation, the effect will only be seen once the provisions are implemented. It is still unknown whether the Expropriation Act will assist in achieving any of the objectives of land reform.
Implementing the Expropriation Act will still be a rocky road ahead, and we must wait to see its impact on land reform and our economy.
[1] Act No 13 of 2024: Expropriation Act as published in Government Gazette No 5194 on 24 January 2025.
[2] Act 108 of 1996.
[3] Chapter 2 of Act 108 of 1996.
[4] Section 8(1) of Act 108 of 1996.
[5] Du Toit v Minister of Transport [2005] JOL 15424 (CC) par 31.
[6] Act 63 of 1975, which is repealed by the Expropriation Act.
[7] Section 1.
[8] Section 1.
[9] Section 1.
[10] Minister of Public Works and Infrastructure.
