Words and Deeds
Current news in the field of property law
An Information Service supplied by the KwaZulu-Natal Law Society

Dirk De Vynck

Cape Town - The property boom has continued to fill the government's coffers, with revenue from transfer duties reaching a record high of R754 million in March, slightly up on the previous record level of R742 million in November last year.

Total transfer duties paid for the first three months of the year increased by 34.3 percent to R1.952 billion. In 2004, the government earned R6.62 billion from transfer duties, a whopping 53.3 percent ahead of 2003.

Despite March's record performance, Johan Snyman, a director of Medium-Term Forecasting Associates, said the figure could have been distorted by a backlog at the SA Revenue Service (Sars) and conveyancy lawyers following the festive period.

According to a conveyancy lawyer from a major law firm, there was definitely a backlog in Sars issuing transfer duty receipts.

"Normally it takes about a week to issue a transfer duty receipt, but the beginning of the year saw this being stretched out to two to three weeks".

The increase in transfer duties is a direct result of the increase in the value and number of sales of both residential and non-residential property.

According to property economist Francois Viruly, the latest growth in the residential market was coming from lower- and medium-priced houses. Many residential developments were also coming on stream.

Jacques du Toit, a senior economist at Absa, said although the growth in house prices was slowing down from the hefty levels of last year, prices were still on the increase, which would continue to add to the revenue from transfer duties.

Growth in non-residential property values has been evident in the continued decline in capitalisation rates, the non-listed commercial property sector's equivalent of the forward earnings yield of shares. They decline when prices rise.

Property economists and valuers Rode & Associates noted recently that the capitalisation rates of office and industrial properties were at levels last seen in the late 1990s.

Arnold Meyer, the chief executive of the Broll property group, said there was strong demand for prime non-residential properties, which had led to good growth in property values.

Despite the appreciation in commercial property, Meyer still believed the lion's share of transfer duties was attributable to residential sales.

The Reserve Bank, which supplies the data, does not give a breakdown between residential and non-residential property in its transfer duty data.

The increase in transfer duties has come despite the government's gradual increase in the threshold for exemption. Up to 2000, all properties were subject to transfer duties.

But since the 2001/02 budget, the government has consistently lifted the threshold for exemption, from 1 percent on properties valued up to R70 000 to the current situation where all properties below R190 000 are exempt from transfer duties.

Properties between R190 001 and R330 000 are subject to a 5 percent tax, while properties valued at R330 001 and above are liable for R7 000 plus 8 percent tax on the value above R330 000.

Business Report website

The Oudekraal development issue is going to court for the third time. The City of Cape Town has now applied to have the authorities' decision, which gives Oudekraal owners the right to develop the land, reviewed and set aside - nearly 50 years after the decision was made.

If the city wins, Oudekraal owner Kassie Wiehahn will not be able to use township rights, granted in 1957, to develop a portion of the Oudekraal property, and the rights would be removed from the title deeds. He could apply afresh for development rights, but in the context of tougher new environmental laws.

If the city loses, Wiehahn could develop portion 7 of Oudekraal using the old township rights.

The city says the court action is necessary after the Supreme Court of Appeal upheld the Cape High Court decision last year that the township approval was invalid. This was because the then administrator had failed to take into account the existence of graves at Oudekraal when giving development rights. This was unlawful.

However, the development rights are still on Oudekraal's title deeds. The Appeal Court ruled that the city could not simply ignore them or refuse to allow development, by relying on the fact that the township approval was invalid. It had to have the decision taken on judicial review and set aside.

The SA Heritage Resources Agency (Sahra) and SA National Parks are also applicants in the case.

Wiehahn, however, says in court papers that he believes the city's real motive is so SA National Parks can buy the land cheaply. He says portion 7 of Oudekraal is worth R570 million with development rights and only R20 million without rights.

He says the city is not motivated by the "apparently laudatory purposes" it puts forward of the cultural and environmental value of Oudekraal, but by a desire to "to diminish the price that would have to be paid by SA National Parks, or any other organ of state, were it to expropriate (Oudekraal) or endeavour to purchase that land".

Wiehahn says although the city told him in 1996 that his development rights were invalid, it took no steps to have the invalid decision set aside.

The presence of Muslim graves on the land did not justify the setting aside of his development rights, he said, as there was adequate legislation to protect the interests of the Muslim community and the sanctity of graves and kramats (shrines).

He referred to the human remains found in 2003 at Prestwich Place in Green Point during building excavations.

Although the site was considered to be of international significance, the authorities had given permission for the skeletons to be exhumed on the understanding they would be reinterred at a memorial park elsewhere in Green Point.

In the case of Oudekraal, roads could be rerouted and erven subdivided so that the graves were undisturbed.

"It should be noted that... Oudekraal Estates would in any event be amenable to a land swop, in terms of which the Oudekraal land was exchanged for properties with development potential in less environmentally and culturally sensitive areas," Wiehahn said.

Cape Times website

Mthatha – Argument in a four-year-long case against people with holiday cottages along the Wild Coast came to an end here yesterday.

The case was originally against 45 cottage owners. The figure dropped to 30, and now only 17 are challenging the original order.

The cottages are in Black Sands, Manteku, Mnyameni River and Mpantsana near Port St Johns.

The argument that all State land along the coast was part of a conservation area would then have to include things like the post office or the police station at Port St Johns, the cottage owners argued.

This meant that if a piece of paper was dropped on the floor there, this would make the litterer open to be charged in terms of nature conservation law.

Counsel for the 17 cottage owners Kemp Kemp told Judge Selwyn Miller he had cited this example to point out just how ludicrous the notion was.

In terms of the proclamation of the nature conservation area, the exceptions included people who owned land, had leases for the land, had permission to occupy land, seaside resorts and "others".

Kemp argued that his clients represented the "others" mentioned in the 1993 proclamation.

Rebutting Kemp’s argument that his clients also were covered by the Informal Land Rights Act of 1996, advocate Marumo Moerane said that Kemp should have made a special plea to bring up the Act at this late stage of the case.

Miller reserved judgment.

The Herald Online website

South Africa's land reform programme could soon face an overhaul to make provision for the more rapid release of urban land for housing and human settlement.

Lindiwe Sisulu, the housing minister, said she was due to meet Thoko Didiza, the minister of agriculture, soon to thrash out details of the possible policy shift.

"We've had discussions with the minister of land [already] and we decided there was indeed a caveat," said Sisulu when asked about criticism that there was a gap in urban land policy.

"All along land reform was dealt with very globally and concentrated on rural land through the department of land affairs. Urban land is outside the land reform process."

The need for a more focused urban land reform to ensure faster housing provision for the poor has been driven home by several events and surveys recently. In the past week residents of both Cape Town and Port Elizabeth went on the rampage against lack of housing and urban services.

Also this week, Ann Bernstein, director of the Centre for Development and Enterprise (CDE), said a study showed that South Africa's urban areas, rather than its rural areas, should be the main focus of land reform strategy.

The CDE study, conducted among 2 144 South Africans over the past three years, found that only 9 percent of black people who were not farmers had farming aspirations. Most South Africans now saw land as a place to stay rather than a place to farm, with more than 60 percent already living in urban areas while 38 percent would prefer a job and housing in an urban area.

Bernstein said successful urban release and settlement had to include the rapid and large-scale release of urban land, combined with housing programmes that included the upgrading of informal settlements, the improvement of backyard rental stock and urban upgrading and renewal.

These suggestions, however, were already part of the government's Comprehensive Plan on Sustainable Human Settlements announced late last year, while details of a sweeping plan to transform the face of our cities were outlined by Sisulu last week.

A speeded-up land reform and housing programme was urged after the constitutional court's Modderklip judgment this month, which placed the onus on the state to protect the rights of both private land owners and squatters. Land reform experts said the Modderklip issue revealed a vacuum in urban land reform policy.

However, Sisulu said the government was still studying the judgment.

"But the issue had been raised [previously] about where we draw the line between ministers over urban and rural land reform," she said. It hit home when African housing ministers met in Durban earlier this year and it became clear that in the majority of these countries the minister of land was responsible for housing.

"We've formed in cabinet an inter-ministerial committee on human settlement. In the foreseeable future, the [urban] land matter would be dealt with at that committee," she said.

"We are hoping to thrash this out and see how best we can address this overlapping responsibility".

Last week Sisulu told parliament that most state-owned land was in the hands of municipalities and the criteria used to dispose of it were not clear. In future, the government wants a first option on acquiring this land and an audit was in the pipeline. She said land allocation was pivotal to the success of her new housing plan.

"We have determined that land for human settlements will be well located within easy access to all those amenities that contribute to the social and economic viability of the community," she said.

The plan also included the speeding up of "decent" low-cost housing through a social contract being negotiated with property developers and construction companies, and a deal with banks to provide loans to groups such as teachers, nurses and policemen. It would put private property within the reach of those households with an income of between R1 500 to R7 500 and eliminate red-lining.

Sunday Independent website

Yolandi Groenewald

An important new land study warns the government against setting up poor black South Africans for failure in the farming sector.

The report, released this week by the Johannesburg-based Centre for Development and Enterprise (CDE), says the hard truth is that agriculture offers few opportunities for addressing unemployment, poverty or inequality on a significant scale, and provides an economic future for fewer and fewer people.

"We need to adopt a modern 21st-century approach to land reform in South Africa," Ann Bernstein, CDE executive director told the Mail & Guardian. "The vast majority of interest groups involved in the land reform debate are not taking account of the realities of modern South Africa, such as urbanisation".

Bernstein said state policies such as the black empowerment charter in agriculture and the land reform target of 30% of land in black hands by 2015 had raised unrealistic expectations. "How are we going to get to the 30% target? No one in government can you tell you that".

The CDE report says that because of the extreme competitive pressures in agriculture, "the sector cannot be transformed into a large-scale anti-poverty relief mechanism".

It quotes bankers in the agricultural sector as saying there is no longer room for the average commercial farmer in South Africa. White South Africans were moving out of farming because of the difficulties of making a living.

"We should avoid former homeland settlement approaches that lead to overcrowding and other poor development outcomes," the report advises.

Bernstein said that about 60% of South Africans were urbanised and the country was heading towards a 70% figure. The report says most South Africans now see land as a "place to stay" rather than a "place to farm".

A national survey commissioned by CDE shows that only 9% of black people who are currently not farmers have clear farming aspirations. Other surveys suggest that only about 15% of farmworkers aspire to farm on their own or full-time.

"Most blacks regard jobs and housing in urban areas as more important priorities," the report says.

It argues that the current focus on rural land arises from an old-fashioned image of South Africa as a rural country in which prosperity is land-based, rather than urban. Land reform lobby groups should realise that black South Africans mostly want land in urban and peri-urban areas.

Bernstein emphasised that participation in state programmes was not the only way for disadvantaged people to gain access to land and use it to best effect.

"Black people also buy land through the market, and [in assessing the proportion of land owned by blacks] the government is not taking account of this," she said. "Agricultural businesses are also doing a great deal in land reform and could do even more in future".

Mail & Guardian website

Nicky Smith

Johannesburg - After five years of negotiations between De Beers and the Angolan government, the world's largest diamond producer has landed a far-reaching agreement that allows it to explore, mine and market the country's diamonds.

De Beers and Angolan state-owned diamond company Empresa National de Diamantes de Angola (Endiama) have agreed to establish a joint venture company, which has been granted exploration rights in the diamond-rich Angolan province of Lunda Norte.

The exploration area is 3 000km2, which is about one-fifth of the size of the area that De Beers had exploration rights for in the 1990s before its relationship with the Angolan government soured and it stopped actively exploring, keeping only a skeleton staff.

In February 2000 the Angolan government cancelled all mining agreements and invited companies to reapply for rights.

At the time De Beers had loaned Endiama about $50 million (R33 million), it had exclusive marketing agreements with Endiama and had built large sorting houses. It also held exploration rights for vast tracts of land, in the north, central and southern parts of the country.

Tom Tweedy, a spokesperson for De Beers, said the agreement "is a very big thing".

In terms of the agreement, should the exploration joint venture company find an economically exploitable deposit, there was scope for the two companies to establish another joint venture company, which would then mine and market all the diamonds found by the exploration joint venture.

"We have never been here [had this type of agreement] before," Tweedy said, adding that De Beers had in the past had a buying agreement with Endiama and exploration rights.

An analyst who spoke anonymously said the partnership with Endiama "is certainly good news".

But "traditionally companies that have had relationships with Endiama have travelled a bit of a rocky road. De Beers had a similar arrangement with Endiama before and it soured. So the market will be a bit sceptical.

"But if they can make the agreement stick, that would be good for De Beers," he said, adding that Angola should by rights be the world's largest diamond producer.

All outstanding issues between the partners, such as outstanding loans, were resolved through an arbitration process late last year.

Tweedy said it had been agreed the joint venture company would settle the debt once it was up and running.

Business Report website

Impeccable sources said under the plan the Ministry of Agriculture will in coming months approach selected farmers, especially those with expertise in horticulture, tobacco and dairy production to ask them to return to Zimbabwe to farm.

The farmers will be compensated for property and equipment destroyed during the government’s chaotic and often violent land reform exercise and not for loss of revenue. But the farmers will receive immense support and preferential treatment from the state to reestablish themselves on the land, according to the sources.

As well as luring white farmers back to the land the government shall also select another group of farmers whom it will compensate at market value both for loss of land and equipment during the farm seizures.

The sources said the two-pronged strategy was meant to portray the government as committed to reviving the mainstay agriculture sector as well as to paying fair compensation to white farmers in a bid to pave way for reengagement with the international community.

"Kondozi is only the beginning," said a senior Agricultural Ministry official, who did not want to be named. He added: "we will target two groups of farmers, the first will be lured back to resume farming while the second will be paid real market level compensation to demonstrate to all that the government is willing to compensate white farmers, resources permitting".

Agriculture Minister Joseph Made refused to discuss the matter when contacted only saying "I do not know about that," before slamming the phone down. Neither Moyo nor the De Klerks could be reached for comment on the matter.

But sources said the government’s overtures had so far yielded little with for example the former owners of Kondozi refusing to return to Zimbabwe because they have already established a similar venture in neighbouring Zambia.

Dozens of white farmers chased from Zimbabwe settled in Zambia, Malawi, Mozambique, Tanzania, with some as far afield as Australia and Nigeria and are unlikely to easily give up their new homes to return to Zimbabwe.

Agriculture has plummeted since the farm seizure with production of tobacco, the country’s biggest single foreign currency earner, falling from more than 200 million kg in the 1999/2000 season to a merger 60 million kg this year.

Food production fell by more than 60 percent with Zimbabwe, which once exported food surplus to neighboring countries, now surviving on handouts from international food agencies. About four million or a quarter of the country’s 12 million people could starve this year unless donor groups chip in with food aid.

Zim Online website