Tribal land: just this phrase, harkening back to feudal times, says it all. Traditional leaders are in a bind: the tenure under which land is held in traditional areas is simply unsustainable. Land “owners” don’t pay rates which makes it difficult to render services. Development is higgledy-piggledy as planning rules and building standards don’t apply, which will, without doubt, end in tears many years hence. “Owners” cannot leverage loans off their land as they don’t own it and so on.
The result of all this is the chaos that, for instance, the Ingonyama trust has entered into. It is being sued by a bunch of churches for its intent to convert PTOs to leases (no doubt driven by need the income); it owes hundreds of millions to local authorities whilst having no real source of income of its own other than state largesse and, of late, it has to defend itself, ironically, against expropriation and the unspoken assumption that one must be a Zulu to “own” land under the governance of the king.
When is a farm a farm? Property descriptions in KZN can be strange: I recently dealt with an erf in Underberg which is hundreds of hectares in extent and is clearly a farm despite the description. Many suburban erven are described as farms. The inexplicable result of this is that, if one wishes to transfer an erf within a town, named as a farm, to more than one owner, one needs the consent of Agriculture to avoid sanction in terms of the Subdivision of Agricultural Land Act. The contrary applies in that one can presumably subdivide a file named as an erf without consent from Agriculture. These difficulties are one of the results that, in order to extend planning and tax collection to the whole of South Africa, all rural land has been drawn into municipal boundaries, which blurs the distinction between rural and urban land. The exceptions are tribal land which is a disaster in the making. Seriously, how does tribal land differ from urban/farmland?
On top of this, the MEC of the Department of Agriculture and Rural Development in KZN this week described his department as being “like a house that is infested with mice, cockroaches and bugs”.
Property professionals really need more sympathy.
The South African listed property sector on the JSE, the darling of previous years, is one of the worst performing market sectors since the end of last year, with a total return of -22% (with income distributions reinvested). Clearly a bubble of sorts had burst. The question is whether one should buy now or await the development of the expropriation debacle?
The hoo-hah around property rights have caused our global property rights ranking to slump fifteen places to 37th in the last global property rights ranking. Of course, this is done from Washington and does not count…
An interesting aside is that New Zealand has passed a law restricting foreigners from buying existing homes in that country. Ironically only about 3% of property transfers in that country go to foreigners (excluding trusts). The government says that this ban would not apply to Australians….
Despite this New Zealand is still ranked second in the world in the global property rights ranking. Go figure.