New legislation allows developers to take action against objectors who cause financial loss through groundless objections

Cape property developers, often criticised for insensitivity and for riding rough shod over public opinion, are likely in the coming year to hit back through what is known as ‘vexatious legislation’, says Paul Henry, MD of Rawson Developers.

“This particular piece of legislation allows the developer to take action against any objector to his scheme who has caused him financial loss (usually by holding or denigrating a project) if it can be shown that he has used groundless or specious arguments to make his case,” says Henry. “The relevant legislation has very seldom been used - but it could well be implemented increasingly because objecting to new property developments has become something of a South African national pastime, even when there are absolutely no grounds for doing so.”

More and more South Africans, says Henry, are using their constitutional right as supposedly interested or affected parties to object to and hold up property developments - but, in his view, they are often in a weak position because what they are objecting to has, in fact, been condoned many years earlier by the zoning applied to the property concerned.

“The fundamental problem,” says Henry, “is that people buying into high density areas like Cape Town’s Southern or Atlantic Seaboard suburbs do not check the zonings of the erven close to theirs.

“When the developer, who has seen the potential for a multi-unit or a large-scale project on the property but who may have waited several years to press the button, finally goes ahead with his scheme, the residents are shocked and dismayed.

“This is because in some cases they may find their views impaired or traffic congestion in the area increased or the character of the precinct altered. In other cases the objections are far less serious. However, the residents, in fact, have no one but themselves to blame because they have ignored the basic rule in any purchase, caveat emptor. Let the buyer beware, let him know the possible ramifications of his decisions.”

The objectors, says Henry, are often very skilled at lining up support even though legally they have almost no case. They will enlist the help of their ward councilor, the local ratepayers association, top city officials and others.

“In nine out of ten cases,” says Henry, “this simply results in only one thing: the scheme is held up for two, three or more years.

“This, of course, can have dire consequences for the developer because the project that was financially viable and likely to be in great demand in one period may not be so three years later.”

This, says Henry, is what did, in fact, happen to several worthwhile projects for which the properties were bought in the 2000s but which were then delayed until the recession was well and truly upon us and the National Credit Act had eliminated 50% of the possible buyers.

Many developers, says Henry, went under in recent years as a direct consequence of objector action.

“What I find particularly disturbing in these cases,” he says, “is that these objectors seldom acknowledge the damage they have done. Those that did realise what they had done have even gone so far as to say that the developers got what they deserved.”

Henry points out, however, that it has not, on the whole, been pressure from the developers that has led to densification of Cape Town’s suburbs but the City Council’s decision to encourage densification where it is appropriate. In doing this, he says, they are following precedents set by most of the fast growing big cities in the world today who are trying to cut commuting distances and times (and the consequent traffic congestion) and are encouraging more live-work-shop-play developments and diversification into the suburbs.

“If these objectors had had real grievances,” says Henry, “the developers with whom I deal regularly would, I know, have accepted them. The plain truth is that most of them have acted out of sheer selfishness, adopting a ‘not in my backyard’ outlook, regardless of the financial consequences that this will have for the developer and regardless of the large numbers of people who would have liked to have taken advantage of the possibility of moving into these areas.”

The objectors also, he says, have shown almost no sympathy for the many hundreds of construction labourers and artisans who, as a result of their holding up tactics, have been deprived of work.

Article from: www.thepropertymag.co.za