DEPARTMENT OF LAND AFFAIRS
REPUBLIC OF SOUTH AFRICA
REPORT OF THE PANEL OF
EXPERTS ON OWNERSHIP OF
LAND BY FOREIGNERS IN SOUTH
AFRICA
Presentation to the Portfolio Committee on
Agriculture and Land Affairs
17 October 2007
by
DR S M D SIBANDA
1
Background to the Study
•In
the past five years there has been
growing public concern on the proliferation of
foreign ownership of land in the country.
•Foreign
ownership was considered to be one
of the factors denying South Africans access
to land in their country.
2
Background (continues)

Therefore, Cabinet took a decision in August
2004 to appoint a panel of experts to
investigate the specter of ownership of land by
foreigners in South Africa.

The Minister appointed a panel of experts on
24 August 2004 to give effect to the Cabinet
decision.

The Department of Land Affairs provided
administrative and technical support.
3
Terms of Reference of the Panel
To investigate, consider and make
recommendations regarding:

The nature, extent, trends and impact of the
acquisition and use of, and
investment
in
land
in
South
Africa
by
non-South
African citizens;

The extent to which the current lack of a
comprehensive policy and legislative framework
contributes to the acquisition, use and
investment in land by non-South African
citizens;
4
Terms of Reference (continues)

Whether the Government should (and how)
monitor and intervene by policy, legislative
and
other
means, in preventing any
possible negative consequence of land
acquisition/use by non-South African citizens;

The impact on the property markets of land
acquisition and use by non-South African
citizens, distinguishing between land use
for residential, commercial, agricultural, ecotourism/ tourism/ game lodge and golf course
purposes; and
5
Terms of Reference (continues)

Comparative international/ foreign practices
(laws, policies, impact, etc) on the issue of
land ownership by non-South African
citizens.
6
Contents of the Report : A Synopsis

The Report provides indicative data and
information as far as ownership by foreign
individuals is concerned.

The ownership by foreign natural persons
varies between 1% and 3% depending on the
category of the land in question.

Ownership by foreign natural persons is
significantly higher in percentages in coastal
and game farming areas and of land in the
categories of erwen, agricultural holdings, farm
land and sectional titles.
7
Contents of the Report : A Synopsis
(continues)

A distinction should be made between
individual and corporate foreign ownership.

Individual foreign ownership varies between
about 1% for residential houses to 3% for
sectional title properties. The values of these
properties are more or less in line with the
number of them.
8
Contents of the Report : A Synopsis
(continues)

Corporate ownership is more problematic to
determine, and clear distinctions at a
statistical level between foreign and South
African-owned is not yet possible. (Therefore
the recommendation for disclosure.)
9
Contents of the Report : A Synopsis
(continues)
The overall situation is the following:
Measurement
Erf
Farm
AH
Sectional
Value
Count
Size
63.61%
4.67%
4.13%
78.09%
27.45%
33.63%
50.82%
11.57%
8.23%
37.97%
16.26%
75.93%
10
Contents of the Report : A Synopsis
(continues)

This table means that business and other
corporate bodies own 4.67% of all the
residential houses in South Africa. These
houses occupy 4.13% of the total land used
for residential housing, and the value of these
houses is 63.61% of all the houses. They also
own 27.45% of all the farms in South Africa,
which have a combined value of 78.09% of
the total value of farms in the country.
11
Contents of the Report : A Synopsis
(continues)

It is clear from the table that, although the
number of properties in each of the four
categories, and their physical size, are
relatively small, their value is very high. It
means that they are properties mainly in the
upper market, which also means that they
have a high value for speculation. It is
therefore important to interpret the statistics in
terms of not only the number of properties,
but also their value, and therefore their
possible impact on the property market.
12
Contents of the Report : A Synopsis
(continues)

All this justifies the regulation of land for its
use for land reform and housing purposes.
13
Contents of the Report: A Synopsis
(continues)

The Panel has only just completed and
presented to the Department its report on
the determination of the extent of foreign
ownership and use of land through
corporations and trusts. The results of this
study will be made available at a later date.
14
Contents of the Report: A Synopsis
(continues)

The Panel established that the lack of a
national policy on the regulation of foreign
ownership of land in South Africa is certainly not
the norm in the world, including in countries
with comparable economic systems and levels
of development and countries with more
advanced economies;

Some form of regulation is therefore important
irrespective of the extent of ownership and use
of land by foreigners.
15
Recommendations: A Summary
1.
Compulsory Disclosure of Nationality,
Race, Gender and other information

Similar to the requirements of the
Financial Intelligence Centre Act, 2001
(FICA).
Requires
amendment
of
Deeds
Registries Act, 1937 (Act No. 47 of 1937)
and Regulations.

16
2. Special Ministerial Approval
•
For certain changes in land use, and
disposal of certain categories of land to
foreigners – especially where such
change of use or disposal has the
potential to negatively impact on the
state’s constitutional obligations to effect
land reform, land that is subject to
restitution claims or that is earmarked
for redistribution or integrated human
settlement.
17
2. Special Ministerial Approval
(continues)

Currently there exists a State Land Disposal
Committee and there are provisions allowing
the establishment of Provincial State Land
Disposal Committees. These committees have
no jurisdiction over municipal lands that
continue
to
be
incorrectly
and
unconstitutionally categorized as “private
land”.
Further, not all provinces have
functioning committees.
18
2. Special Ministerial Approval
(continues)

As the third tier of government, municipalities
may own and dispose of land registered in their
name. This category of land falls within the
ambit of public land.

Although municipalities may deal with land
which they own within the limits of the relevant
legislation, objectives of government as a whole
should be considered when disposing of public
land which includes land from all three spheres
of government in the spirit of cooperative
governance as required in terms of the
Constitution.
19
2. Special Ministerial Approval
(continues)

For this reason, the national, provincial and
municipal spheres of government should be
represented at the Provincial State Land
Disposal Committees to achieve the synergy
required by the Constitution.
20
3. Inter-ministerial/departmental
oversight committee

A permanent inter-ministerial/departmental
oversight committee consisting of at least
the Departments of Agriculture, Land
Affairs, Provincial and Local Government,
Environmental Affairs and Tourism and
Housing must be established as a matter
of urgency.
21
3. Inter-ministerial/departmental
oversight committee (continues)

Such a committee has to:

monitor trends in foreign ownership of
land and changes in land use; and

recommend to government appropriate
corrective interventions.
22
3. Inter-ministerial/departmental
oversight committee (continues)

The interministerial oversight committee has
to be supported by an interdepartmental
task team.

The Ministers have to appoint persons with
relevant skill to be part of the envisaged
interdepartmental task team.
23
3. Inter-ministerial/departmental
oversight committee (continues)

This inter-departmental task team will also be
involved in giving effect to recommendation 1
dealing with disclosure. The amendments to
the Deeds Registries Act and Regulation 18
of the Deeds Registries Act have to be
driven by this task team.
24
Inter-ministerial/departmental
oversight committee (continues)

What is needed at this point in time is the
following:


The constitution of the interministerial
committee;
The constitution of the interdepartmental task
team to process responses from members of
the public following the expiry of the sixty days
permitted for public comments on the Report;
consolidation of the final report and giving
effect to recommendations 1 and 3 of the
Report.
25
4. Classified/protected areas and
outright prohibition on foreign
ownership

Prohibition of private ownership of land by
foreigners (and in some cases nationals) in
certain areas (to be classified) on grounds of
national
interest,
environmental
considerations and national security. E.g.
National
Key
Points,
coastal
areas,
conservation areas, land close to military
installations, water catchments and land along
borders/ international boundaries.
26
5.Limited temporary moratorium
on the disposal of State land to
foreigners

Moratorium of about 2 years prohibiting disposal of
State land to foreigners and, in limited cases, to
nationals who do not qualify for redress under the
national land reform policies and legislation should
be put in place. This is not a blanket prohibition
but meant to prevent certain spheres of
government and organs of state from disposing of
land that may be used for land reform and human
settlements for the dispossessed and marginalized
individuals and communities.
27
5. Limited temporary moratorium
(continues)


Such a moratorium could be lifted once the
Ministerial Approval process and the InterMinisterial/Departmental Oversight Committee
suggested above have been established and are
operational.
Legislation, including municipal by-laws and
ordinances, that categorise land belonging to any
organ of State/sphere of government as “private
land”, would be unconstitutional and the
Constitutional Court may be approached for an
order under section 167 (5) of the Constitution for
an appropriate declaration.
28
6. Zoning, land use and planning
legislation

The rationalisation and harmonization of land
use planning and zoning laws through
enactment of overarching national legislation
should be prioritised as a matter of urgency.

The current Land Use Management Bill
(LUMB) is well placed amongst other things to
achieve the recommendation in question.
29
6. Zoning, land use and planning
legislation (continues)

A review of current practices in the zoning and
rezoning procedures, the development of golf
estates, hobby farms, polo estates and game
farming ought to be brought under the preview of
the Special Ministerial Approval processes and
Inter-Ministerial/Department Oversight Committee.

The country is already sitting with a case of
murder of a farm manager connected to the
conversion of land use to game farming (see, W
Hlongwa, “Make Way for Wild Animals” City Press,
28 January 2007 on p. 21)
30
7. Disposal of State Land

All three spheres of government should be
covered by all the recommendations in this
Report and that government and all organs of
State ought to lead by example in
implementing the regulatory regime on
foreign ownership of land and a general
prohibition of disposal or change in land use
that may undermine land reform, the
attainment of integrated human settlements
and compromise the sovereignty of the nation
and the citizens.
31
8. Leaseholds

In line with the practice in some countries
studied, the government may consider
medium and long term leases of public
land as a viable mechanism for future
acquisition of land and interests in land by
foreigners. Leaseholds have time limits
and may be less controversial than full
ownership rights even though they still
exclude citizens from ownership and use.
32
9. Enabling omnibus legislative
amendments

Giving
effect
to
some
of
the
recommendations through a comprehensive
General Laws or Land Matters Amendment
Bill, similar to Judicial Matters Amendment
Bills that the Department of Justice and
Constitutional Development use. The
advantage of such an approach is that the
consequences to other pieces of legislation
that may arise from amendments to a
specific Act or Acts are easily catered for in
a single Bill.
33
10. Fronting

Fronting has been identified as an
issue that can undermine the government’s
policy on land reform and regulation of
foreign land ownership. It is therefore
recommended that measures should be
included in any policy formulation to deal
with this problem. Consideration may be
given to various sanctions, including assets
forfeiture.
34
The Constitutional Authority for
the Recommendations

These recommendations of the Panel of Experts
are underpinned by sections 21(3), 25(5) and 26
of the Constitution dealing with:
 the right of every citizen to enter, to remain in
and to reside anywhere in, the Republic;
 the State’s constitutional obligation to 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; and
35
The Constitutional Authority for the
Recommendations (continues)

The right of everyone to have adequate
access to housing;

The State’s constitutional obligation to take
reasonable legislative and other measures,
within its available resources, to achieve
the progressive realisation of this right; and
36
The Constitutional Authority for
the Recommendations (continues)

Persons constitutional rights not •
to be evicted from their home;
•
to have their home demolished without an
order of court made after considering all the
relevant circumstances.
37
Presentation of the Report to
the Minister

The Panel of Experts presented the report to the
Minister on 6 March 2007.

The Minister accepted the report in principle
subject to further consultation with key
stakeholders.
38
Consultation with senior
managers of the DLA

On 20 March 2007, the report was presented
to Senior Managers who also accepted the
report together with the recommendations
with the provisos:

that the report be edited and integrated
properly to allow easy reading and logical
flow of issues raised;

that institutional preparations for the
implementation of the recommendations
needed to be looked into.
39
Consultation with senior
managers of the DLA (continues)

Consultation with DLA TOP Management took
place on 15 June 2007

The Department endorses recommendation
1. The issue of nationality, race and gender
is important for the purpose of knowing who
owns South Africa as well as for determining
the extent of transformation in the
ownership of land across race and gender
configurations over time.
40
Consultation with senior
managers of the DLA (continues)

The
Department
recommendation 2 and 3.
similarly
endorses

In line with the position taken by the Social
and Economic Clusters as well as the Presidency,
the Department supports recommendation 4
subject to linking up this effort with the policy and
legislative requirements of the Water Act, 1998
(Act No. 36 of 1998), National Environmental
Management Act, 2003 (Act No. 57 of 2003),
Protected Areas Act, 2004 (Act No. 31 of 2004),
Integrated Coastal Management Bill and the Land
Use Management Bill to name a few.
41
Consultation with senior
managers of the DLA (continues)

On recommendation 5, the Department is of
the view that the imposition of a moratorium
on State land is in order.

However, this is not possible on privately
owned land in the absence of an enabling
policy and legislative framework.
42
Consultation with senior
managers of the DLA (continues)





Recommendation 6 is supported and
must be taken forward in terms of the Land
Use Management Bill (LUMB).
The principle of recommendation 7 is
supported by the Department.
Recommendation 8 is supported in the sense
that it is a viable alternative to giving outright
ownership of State land to foreigners.
Recommendation 9 states the obvious and is
supported by the Department.
Recommendation 10 is acknowledged as a
cautionary measure.
43
Consultation with the Social
and Economic Clusters

On 18 April 2007, the Report was presented
to the Social and Economic Clusters and
useful inputs were made on the subject
matter at hand.
44
Presentation to Cabinet


On 18 July 2007, the Minister presented to
Cabinet the Report of the Panel of Experts
on Ownership of Land by Foreigners in
South Africa. Cabinet deliberated on the
report presented to it by three members of
the Panel of Experts supported by Dr S M D
Sibanda from the Department of Land
Affairs.
Cabinet generally supported the Report and
recommendations and approved that the
Report be finalized before releasing it for
public comment.
45
Presentation to Cabinet
(continues)
The Panel of Experts have since attended to the
issues raised by Cabinet. As such, the Report
contains all aspects that Cabinet instructed the
Panel of Experts to do.
From the Department’s side, the latter has, in
liaison with GCIS, developed a comprehensive
communication strategy.
46
Presentation to Cabinet
(continues)

The Report has been published in the
Government Gazette for public comments.
THE END.
47