At the 2015 State of the Nation Address, delivered on 12 February 2015, President Zuma announced the introduction of the Regulation of Land Holdings Bill. His announcement was met with confusion and outcry from both local agricultural land owners and investors abroad. From the President’s address and a statement released by the Presidency in the days following the announcement, the Bill’s main points can be summarised as follows:
- foreign nationals will not be able to own certain types of land in South Africa.
- “foreign nationals” shall include all non-citizens of South Africa and foreign juristic persons, being juristic persons whose dominant shareholder(s) is / are under foreign control.
- the Bill will not operate retrospectively. This means that foreign nationals who already own land in South Africa will be unaffected. This is largely due to the Constitutional barriers which such a proposition would face.
- the Bill does not apply to all land. Foreign investors will note with much relief that the Bill will only apply to agricultural land. Residential, commercial and industrial property will still be available to foreign nationals for purchase and ownership.
- the Bill does not mark a complete end to foreign investment in South African agriculture. Government has recognised the need for such investment and as such has made provision for long leases, with lease terms between 30 and 50 years.
- the Bill also seeks to impose a ceiling on the amount of land which can be held by any single natural or juristic person. The proposed limit is 12 000 hectares. Any agricultural land in excess of this will be purchased from the owner by the State for purposes of redistribution.
- a further category of land owners which may be affected are those who hold land which is environmentally sensitive, sensitive regarding security or are of cultural or historical significance. In these cases, foreign land ownership will be ‘discouraged’.
Although at present the Bill is still being drafted, Rural Development and Land Reform Minister Gugile Nkwinti has stated that the Bill will be submitted to Parliament this year. Only once the Bill has been published for public comment will it be possible to properly assess the Bill on its merits. At this stage it is highly probable that the Bill may face constitutional challenges and litigation against its implementation. Due to its constitutional sensitivity it is likely that the drafters of the Bill will require some time to ensure the Bill passes constitutional scrutiny, particularly in light of the Constitution’s Section 25 Property clause.
It is worth noting that the Regulation of Land Holdings Bill is one of various other pieces of legislation directed at land ownership and redistribution which are anticipated to come to the force in 2015. The effect of the Bill can only be properly evaluated once all the legislation has come into force. For example, when land is purchased by the State for redistribution, from owners in excess of 12000ha, the price of such land may be determined by the Office of the Valuer General, established by the Property Valuation Draft Bill.
This article should not be used or relied upon as professional advice and is for information and marketing purposes. Please consult with one of our attorneys should you need legal assistance relating to this area of law.