Probe on foreign-land ownership begins
The vexed land question has reared its head again. On Tuesday the Minister of Land Affairs, Thoko Didiza, appointed a panel of experts to look into the thorny and emotive issue of land ownership and land use by foreigners.
The department said its aim is ultimately to develop a policy dealing with the regulation of ownership of South African land by foreigners. The panel consists of the following members, Prof Shadrack Gutto: chairperson, Joe Mathews: deputy chairperson, Danisa Baloyi, Adv Leah Gcabashe, Fred Hendricks, Mandla Mabuza, Adv Christine Qunta, Cecil Morden, Dr Dirk Kotze and Bonile Jack.
Among other things, the panel will consider the nature, extent and impact of the acquisition of and investment in South African land by foreigners and, in particular, to explore the extent to which the current lack of regulatory framework contributes to this. Also, the panel will consider and recommend how most effectively, both through legislative and non-legislative means, the government can monitor and if necessary intervene in ensuring compliance to the constitutional imperatives of ensuring equitable access to land by citizens
Additionally, the experts will consider international practices on the issue of land ownership by foreigners and recommend the options most suitable to South Africa.
In June minister Didizas office announced plans to limit foreign property-ownership in South Africa. These plans were being proposed to curb escalating property prices, which minister Didiza attributes to the buying power of foreigners who are pushing up property prices in SA.
But economists have chided the government for endangering the perception that South Africa was a viable investment destination.
Chris Hart, Absas chief economist, said that the investigation would send a negative message to foreign investors. He believed that all investors should be treated equally as risk-takers in the economy. Hart argued that foreign property-buyers bring stable money into the country in that, unlike holdings of bonds and portfolio money, their investments are illiquid.
Hart also argued that the inflow of portfolio money poses a bigger risk that merits an investigation to determine its effect on the economy.
Property economist, Francois Viruly, does not believe that foreign landowners are responsible for pushing property prices high. Rather, he said, property investors from Gauteng were the culprits for spiralling property prices. He added that as an emerging market economy, the country has to strike a balance between land availability for middle-income housing and the requirements for attracting FDI.
Rode also noted that the influx of foreign investors in recent years has without doubt been good for the economy. It brings in foreign currency, as well as expertise and skills.
Some economists have argued that if government wants to get involved in the property market, it should rather look at the needs of first-time homeowners and perhaps consider a first-time home-ownership subsidy. The income generated by a profitable property market, through capital gains tax and transfer costs, could then be properly harnessed.
Article By: Chris Nthite - www.moneyweb.co.za