No freeze on land sales to foreigners

CAPE TOWN — There would be no short-term moratorium on the sale of land to foreigners as proposed by a ministerial task team on foreign land ownership in SA — but there would in future be regulations aimed at reducing speculative activity, Parliament was told yesterday.

The assurance, from Land and Agriculture Deputy Minister Dirk du Toit, may go some way towards soothing jitters caused by the interim report from the task team, chaired by legal academic Shadrack Gutto. Its report recently sent shockwaves through the market by recommending an immediate moratorium.

The report came after President Thabo Mbeki said in his state of the nation address last month that land sales to foreigners would be regulated this year.

Answering questions in the National Council of Provinces, Du Toit said the problem with a moratorium was that it contravened some of the rights in the constitution, such as those under the property clause and those pertaining to equality of treatment and freedom of association.

In a response to a question from Democratic Alliance MP Wilhelm le Roux, Du Toit said no decision on a moratorium had been made by government. However, a decision would be made once the task team’s final report had been received and duly considered, he said.

Du Toit also denied that companies, close corporations, trusts or partnerships where shareholders were not South Africans would also be considered as prohibited buyers. His response indicated that there would be no outright ban, and that disclosure of foreign status of buyers and ministerial approval for foreign buyers of land could be used as regulatory measures.

Du Toit said the idea of a moratorium was to halt speculation ahead of the introduction of regulatory measures, and stressed that foreigners with good advice would not speculate in the South African land market until there was certainty in the regulatory framework.

Citing the situation in China, where there was strict regulation of foreign land ownership but also a high level of foreign direct investment, Du Toit said that if the regulation was done correctly it would not have a negative effect on foreign direct investment.

Du Toit said the regulation of foreign land ownership would apply to foreigners who had permanent residence in SA because there were very few foreign residents or “foreign foreigners” buying land in SA. He said there were two areas of concern where foreigners were buying land — the Atlantic seaboard in the Cape and areas abutting on game reserves in Limpopo.

Du Toit also rejected the use of expropriation as a way of regaining foreign-owned property, saying that it was permitted constitutionally for land restitution but in other cases the state had to demonstrate a reason for expropriation.

The ministerial task team was appointed about two years ago by Land and Agriculture Minister Thoko Didiza to investigate “the development of policy on the regulation of ownership of land in SA by foreigners”.

In its interim report last month, Gutto’s team recommended an immediate moratorium on the sale of land to foreigners.

The probe came amid speculation that the astronomical increases in the price of land in SA was a result of foreigners with stronger currencies buying up properties, to the detriment of local buyers.

The theory was that entry into the market for local people was being made increasingly difficult by the escalating prices.

The findings of the committee have been criticised as being made without reliable evidence.

One commentator said western Europeans had second homes in places like southern Europe, Florida and Barbados. Real estate and investment analyst John Morgan said these regions had one thing in common: no restrictions on the acquisition of residential properties by foreigners.

The final report is expected to be placed before Didiza next month.

Article by: Wyndham Hartley - www.businessday.co.za