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Cape Town - The state should have the right to regulate privately owned property through measures like first refusal, states government’s green paper on rural development and land reform.
The document calls for a new three-tier system of land tenure, aimed at circumventing property price hikes and thereby reducing the cost of government’s land reform drive.
The new system would cater for the leasehold, limited freehold extent and so-called precarious landownership for foreigners.
Aside from the proposal to ban foreigners from buying productive land in future and to limit them to medium- and long-term leasing, pre-emption right would form part of the state’s ability to further limit rights on property that was privately owned by foreigners and South Africans.
“A pre-emption right is a right to acquire certain property in preference to any other person. It usually refers to property newly coming into existence. A right to acquire existing property in preference to any other person is usually referred to as a right of first refusal. It’s proposed that the state combines the use of both pre-emption right and right of first refusal over certain types of land transactions,” reads the document in Fin24’s possession.
“Both pre-emption and right of first refusal will be used to regulate land owned by citizens and non-citizens. This is in accordance with what exists in many countries.”
The green paper, which will be released for discussion once it has approval from cabinet, says that if government does exercise its pre-emption right it usually purchases at a lower price than the purchase price.
In this situation the seller has three options: withdraw from the sale and keep the property, accept the offer at the lower price or maintain the asking price and let a judge fix the price at which the property can be bought.
While the green paper concedes that any new laws governing the proposed land tenure changes in the document should offer a bulwark against “arbitrary and capricious exercise of state power”, the right to first refusal proposal is part of a move that appears to be aimed at limiting the rise of real estate prices.
“The rise of real estate prices in urban areas influences the agricultural land price. Since land reform, especially the restitution programme, is based on a willing buyer willing seller model, and to a lesser extent expropriation but not confiscation approach, the success of agrarian reform hinges on the ability of the state to acquire land for the farmers to whom it intends to offer agricultural land.
“Land prices, whether pegged around so-called market rates (so-called because of the existence of distortions in land price determination), or at prices set by compulsory acquisition, are already prohibitive enough, making it difficult for government to raise the needed money to acquire land,” argues the paper.
“A sharp rise in land prices is a market signal that there is a need to consider measures to increase the supply of land more importantly (sic) for assuring food security, land reform and social housing. Where land values are very high, measures will be necessary to ensure that providers of food, social housing and land reform are not driven out of the market.
“It must be acknowledged that post-apartheid city-township formation patterns have only been changing one-dimensionally in so far as blacks migrate to former white areas,” reads the paper.
The document also outlines how the state needs to get a better handle on land owned by various levels of government, how they use it and how they dispose of it. The proposed land management commission would play a critical role in this, as well as a monitoring role over the land tenure system as a whole.
- Fin24.com
The document calls for a new three-tier system of land tenure, aimed at circumventing property price hikes and thereby reducing the cost of government’s land reform drive.
The new system would cater for the leasehold, limited freehold extent and so-called precarious landownership for foreigners.
Aside from the proposal to ban foreigners from buying productive land in future and to limit them to medium- and long-term leasing, pre-emption right would form part of the state’s ability to further limit rights on property that was privately owned by foreigners and South Africans.
“A pre-emption right is a right to acquire certain property in preference to any other person. It usually refers to property newly coming into existence. A right to acquire existing property in preference to any other person is usually referred to as a right of first refusal. It’s proposed that the state combines the use of both pre-emption right and right of first refusal over certain types of land transactions,” reads the document in Fin24’s possession.
“Both pre-emption and right of first refusal will be used to regulate land owned by citizens and non-citizens. This is in accordance with what exists in many countries.”
The green paper, which will be released for discussion once it has approval from cabinet, says that if government does exercise its pre-emption right it usually purchases at a lower price than the purchase price.
In this situation the seller has three options: withdraw from the sale and keep the property, accept the offer at the lower price or maintain the asking price and let a judge fix the price at which the property can be bought.
While the green paper concedes that any new laws governing the proposed land tenure changes in the document should offer a bulwark against “arbitrary and capricious exercise of state power”, the right to first refusal proposal is part of a move that appears to be aimed at limiting the rise of real estate prices.
“The rise of real estate prices in urban areas influences the agricultural land price. Since land reform, especially the restitution programme, is based on a willing buyer willing seller model, and to a lesser extent expropriation but not confiscation approach, the success of agrarian reform hinges on the ability of the state to acquire land for the farmers to whom it intends to offer agricultural land.
“Land prices, whether pegged around so-called market rates (so-called because of the existence of distortions in land price determination), or at prices set by compulsory acquisition, are already prohibitive enough, making it difficult for government to raise the needed money to acquire land,” argues the paper.
“A sharp rise in land prices is a market signal that there is a need to consider measures to increase the supply of land more importantly (sic) for assuring food security, land reform and social housing. Where land values are very high, measures will be necessary to ensure that providers of food, social housing and land reform are not driven out of the market.
“It must be acknowledged that post-apartheid city-township formation patterns have only been changing one-dimensionally in so far as blacks migrate to former white areas,” reads the paper.
The document also outlines how the state needs to get a better handle on land owned by various levels of government, how they use it and how they dispose of it. The proposed land management commission would play a critical role in this, as well as a monitoring role over the land tenure system as a whole.
- Fin24.com
