Jun 24,2013 / News / Legal Brief

The pace of land reform in South Africa may be accelerating. The cabinet’s recent approval of the policy for the establishment of the Office of the Valuer-General could be interpreted as a step towards implementing the principles expressed in the Green Paper on Land Reform.

“The Office of the Valuer-General is one of the institutions proposed in the Green Paper and would play a major role in changing the land reform landscape,” says Bulelwa Mabasa, director at Werksmans Attorneys. “In particular, it will determine land values and the financial compensation to be paid for all land acquired or expropriated for land reform purposes.”

This is in contrast to the current land reform policy, which uses market values to determine compensation.

“The new policy proposes that the government should stop using market value as the sole criterion for deciding on compensation,” Mabasa says. “Instead, it supports the implementation of just and equitable compensation, as provided for in the Constitution.”

The policy, which Cabinet approved in mid-November, also advocates that government make greater use of expropriation for land reform – with the proviso that this be ‘carefully thought through to mitigate potential adverse consequences’.

MOVING AWAY FROM WILLING-BUYER WILLING-SELLER

“The policy signals a likely shift away from the ‘willing-buyer willing-seller’ approach that has been followed up to now in the land reform arena,” she says. “Such a shift would not come as too much of a surprise; it is widely known that the authorities are unhappy with the prices being paid for land reform land.”

Clearly spelling out the government’s misgivings about market value, the policy states: “An extremely bad problem with market value arises when prices paid merely represent speculative behaviour, causing price bubbles and distortions in markets”.

It goes on to state that “… the presence of government in the land market in South Africa, ostensibly with unlimited resources at its disposal, have served  to attract speculative behaviour on the part of some landowners, causing price distortions”.

To prevent price distortion, the Office of the Valuer-General would have the power to determine just and equitable compensation in all cases where government has an interest, according to the policy.

This would be achieved by using recognised valuation methodology and professional valuation practice and standards, and in line with relevant laws and the Constitution. “The policy explicitly says that the valuer-general and senior valuation officials should be professional valuers or associated valuers registered with the South African Council of the Property Valuers Profession,” says Mabasa.

POWERS TO GO WIDER THAN LAND REFORM

“Significantly, the policy proposes that the Valuer-General’s powers would not be limited to land reform matters, but would extend to any transactions to which the state is party. In other words, the institution would provide valuation and property advice to the entire government system,” she says.

The policy says that a number of laws will have to be introduced or amended to provide for the establishment and powers of the Office of the Valuer-General.  “For instance, a new Land Valuation Act would have to be created, and a plethora of existing laws would need to be amended, from the Land Affairs Act to the Property Valuers Profession Act,” says Mabasa.

No timelines are mentioned in the policy on the Office of the Valuer-General, which is likely to be an autonomous body reporting to the Minister of Rural Development and Land Reform.

“While it is unclear what timelines the authorities have in mind for the Office of the Valuer-General, there is still a public participation process that must take place, and parliamentary oversight,” Mabasa says.

“It remains to be seen whether the valuer’s office, for example, will survive all the other processes that must take place before the Green Paper becomes an Act of Parliament. What will be interesting is whether or not the principles established in the Green Paper will, in their totality, survive constitutional scrutiny,” she concludes.

Contact Bulelwa Mabasa.