South Africa - Restrictions on Foreign Land Ownership

During President Zuma’s SONA to a joint sitting of Parliament, he stated that land ownership by foreigners will be prohibited. The President’s statement raises concern about the possible impact on foreign land ownership of property companies, game farms as well as foreign investments in hotels in South Africa. “Foreigners will not be allowed to own land in South Africa,” said President Zuma. He added that foreigners would instead be eligible for long-term leases. “In this regard, the Regulation of Land Holdings Bill will be submitted to Parliament this year,” he noted.

The ANC’s proposed reforms regarding land ownership is a great concern, believes SAPOA. The ANC Secretary General Gwede Mantashe said last month that there should be “a ceiling on land ownership”. Mantashe said that if legislation were passed, “its application retrospectively is an issue which will be tested constitutionally. The government must pass the law and test it constitutionally. It must comply with constitutional requirement.” “The ANC has committed that land will be returned to our people and the government must move with the necessary speed to put legislation in place to effect this.” said Mantashe. “The implementation of such a policy would reduce foreign investor confidence in South Africa, affecting the economy as a whole,” highlights Neil Gopal, Chief Executive Officer of SAPOA. “The issue of land reform proposals in South Africa is nothing new,” says Gopal. “As the issue escalates, it has the potential to hamper investor confidence in the country and curb foreign direct investment flows. Fore gn investment in property boasts benefits for the commercial property industry, and with such proposals put forward, the industry falls prey to negative knock-on effects, adds Gopal.

SAPOA feels that the change in policy is not justified. “South Africa’s property market is best served by a policy framework which offers investors certainty of land tenure, the promotion of domestic and foreign investment and which supports the allocation of land to its highest and best use on a sustainable basis,” explains Gopal. While we support initiatives to redress the injustices of the past in a balanced manner, we don’t believe such land reforms will be positive as the policy is discriminatory and will most likely impede foreign direct investment and job creation,” adds Gopal. “I do not believe that the Deeds Registries is in any position to provide reliable or accurate information on the actual extent of foreign land ownership in South Africa. Until we know this, one cannot implement policy changes,” says Gopal. “We would like to engage with government with the view of jointly finding solutions to this matter,” concludes Gopal.

Of further concern is the plan to do away with the willing buyer willing seller principle. “Section 25 of the SA Constitution enshrines the right to property. No law may permit arbitrary deprivation of property.” says Gopal. “It is critical that South Africa navigates through the sensitivities of land reform with greater vision to ensure that the injustices of the past are dealt with and that economic stability continues to be reinforced” added Gopal.

Source: Press Release issued by SAPOA

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