Expropriation Act 2024 explained
There is no need for residential property owners, buyers, sellers, and investors to be concerned about the recently enacted Expropriation Act of 2024, says Samuel Seeff, chairman of the Seeff Property Group.
The new Act is very specific in terms of the conditions for expropriation, and, importantly, the protection of the “property clause” under Section 25 of the Constitution remains in place.
The Act, which replaces the outdated Expropriation Act of 1975, was largely expected by the property industry. It has been in the works since 2018 and was passed by Parliament in March last year.
The concern is that expropriation has been sensationalised, and conflated beyond the actual implications of the Act, he says. Arbitrary property deprivation is specifically prohibited.
While the Act provides for expropriation at nil-compensation, there are checks and balances contained in the Act. This includes that it must be in the public interest, and follow extensive consultation and negotiation with the courts having the final say if no agreement is reached.
Seeff says further that President Ramaphosa and the ANC have also been firm in their commitment that no land grabs of whatsoever form will be tolerated. The aim is for expropriation to be lawful and done with careful consideration so as to promote economic growth, development, and investor confidence.
Nil-compensation is also specifically confined to public interest. Four potential scenarios are envisaged in Section 12(3), being;
- (1) Where land is held solely for speculative appreciation without productive use or development intent;
- (2) State land which is unused, and unlikely needed for future core functions;
- (3) Abandoned land where, despite being reasonably capable, the owner has demonstrably relinquished control;
- (4) Where the market value of the land is less than, or equal to the state's investment in its acquisition and improvement.
Seeff points out that the Act is also subject to the Constitution, and it is expected that it will likely face rigorous legal challenges.
As for residential property, and having regard to the Zimbabwe experience, Seeff notes that it never involved residential homes. Compensation has also since been paid for the expropriated farms. There are also additional implications when it comes to residences such as the banks and mortgage loans over properties.
It therefore remains business as usual for the property market with the legal protections of private property in place. In fact, Seeff says the property market has started this year on a better footing compared to last January following three successive interest rate cuts which have hugely boosted affordability and confidence in the property market.
It is a new year, and many young professionals will be looking to get their foot on the property ladder, and what better time, he says. There is excellent value for buyers in the inland provinces, including Gauteng which usually sees the highest influx of first-time buyers in the country.
While the traditionally strong areas such as the Western Cape and coastal hotspots are expected to enjoy a good year, Seeff expects the Gauteng and inland markets to gain good momentum, and once stock levels start coming down, to see property values in those areas starting to rise meaningfully again.
FAQ's
1. What is expropriation and when can it happen?
Expropriation is the legal process where the government takes ownership of private property for public use or land reform. This can include:
- Infrastructure development (roads, schools, hospitals).
- Utilities and public services (electricity, water systems).
- Land redistribution to address historical inequalities.
2. Can property be taken without compensation?
Yes, in certain situations, the government may not be required to pay compensation. This applies if:
- The land has been abandoned or unused for long periods.
- The owner only holds it for speculative investment without using or developing it.
- The state has already invested in the land (e.g., through subsidies or improvements).
- The market value is less than or equal to government investment in the land.
3. What legal process must be followed?
The government cannot take property without due process. The law requires:
- A written notice to the owner explaining the reason for expropriation.
- Public consultation to assess the impact.
- An opportunity for the owner to negotiate or object before a final decision is made.
- A court ruling if no agreement is reached.
4. How is compensation determined?
When compensation is given, it is not based solely on market value. The government considers:
- The history of the land (how it was acquired).
- Current usage (is it actively used or left idle?).
- Government investment (e.g., subsidies, infrastructure improvements).
- The purpose of expropriation and its public benefit.
5. Can foreign-owned property be expropriated?
Yes, foreign investors are not exempt. If the government determines that a foreign-owned property is needed for public projects or land reform, it can be taken under the same conditions as local property owners. Compensation (if applicable) will be decided on a case-by-case basis.
6. How do municipalities play a role in expropriation?
Before any expropriation, the government must consult municipalities to:
- Assess how taking the land will affect town planning.
- Ensure it does not negatively impact local businesses or communities.
- Avoid unnecessary disruptions to public services.
7. Can the government take property before compensation is finalized?
Yes, once expropriation is approved:
- Ownership transfers to the government immediately.
- Compensation can still be disputed in court, but the property is no longer under the owner's control.
8. What happens if a property has a mortgage or debt?
If a property has an existing home loan or unpaid municipal rates, expropriation can still happen. In such cases:
- Compensation (if any) must first pay off outstanding debts.
- If the amount is not enough to cover the debt, the owner remains responsible for the balance.
9. Can the government fast-track expropriation?
Yes, in urgent cases, the government can speed up the expropriation process. However, it must:
- Provide notice to the owner.
- Follow all legal requirements.
- Ensure compensation (if any) is paid as soon as possible.
10. Can property owners challenge expropriation?
Yes, property owners can take the matter to court if they believe the expropriation is:
- Unlawful or unconstitutional.
- Unfair or improperly conducted.
- Based on an incorrect compensation amount.
However, courts cannot stop expropriation simply because an owner disagrees with it—there must be a valid legal reason.